Ripple lawyer Stuart Alderoty has raised concerns regarding the impartiality regulations governing employees of the U.S. Securities and Exchange Commission (SEC), suggesting possible bias in the commission’s stance on various digital assets.
Alderoty emphasizes that federal law, specifically 5 CFR 2635.101(b)(14), obligates SEC personnel to demonstrate impartiality and maintain an appearance of fairness. The key question posed by the law, as stated by Alderoty, is whether individuals, armed with relevant information, would question the impartiality of SEC employees.
The recent emergence of the “Hinman emails” has brought attention to a series of communications exchanged between William Hinman, the former director of the SEC, and fellow SEC staff members.
These emails were initially drafted in preparation for Hinman’s widely discussed speech in June 2018, which focused on the classification and regulatory approach towards different digital assets.
The claim by William Hinman that Bitcoin and Ethereum are not securities has piqued the interest of the cryptocurrency community. This statement has sparked speculation within the community, suggesting the existence of a potential bias in favor of these two prominent cryptocurrencies within the SEC.
The emails in question have raised eyebrows, as they are believed to shed light on a favorable disposition towards Bitcoin and Ethereum within the regulatory body.
These emails provide insights into the agency’s deliberations regarding the application of the Howey Test, a crucial criterion used to determine whether a digital asset qualifies as a security under U.S. law.
Despite encountering reservations from some SEC staff members, Hinman proceeded to express his perspective during the speech, stating that he did not consider Bitcoin and Ethereum as securities.
This assertion raised eyebrows within the cryptocurrency community and sparked discussions regarding the SEC’s stance on the classification of these prominent cryptocurrencies.
JPM: Hinnan Emailsin Ripple Lawsuit a Boost to Major Cryptocurrencies and Decentralization
According to a research report by JPMorgan, the recent disclosure of the Hinman papers in the ongoing legal battle between the U.S. SEC and Ripple has provided a significant boost to the cryptocurrency Ether (ETH).
The report, released on Thursday, suggests that this development is expected to prompt a shift towards greater decentralization within the crypto market. JPMorgan highlights the potential positive implications of the Hinman papers’ release on Ether and its potential impact on the overall landscape of digital currencies.
According to the report, the senior executives at the Securities and Exchange Commission (SEC) did not classify ether as a security back in 2018.
Furthermore, the report highlighted that SEC officials recognized the existence of a regulatory gap resulting from the determination that tokens on a decentralized network are no longer considered securities.
In their analysis, led by Nikolaos Panigirtzoglou, experts have acknowledged the existence of a distinct category that is not classified as a security according to the Howey test.
They further explained that the absence of a controlling entity in this category differentiates it from traditional securities. However, they also highlighted the potential necessity for regulatory measures to safeguard buyers in this category.
The CEO of Ripple, Brad Garlinghouse, has expressed concerns that the SEC is deliberately obstructing cryptocurrency innovation in the United States. He asserts that the SEC is using the regulatory ambiguity as a weapon to expand its control over the entire crypto industry. This is not the first time Garlinghouse has voiced such opinions.
Similarly, Brian Armstrong, the CEO of Coinbase, one of the largest cryptocurrency exchanges in the U.S., has also raised alarms about the repercussions of pushing the crypto industry out of the country.
As Coinbase faces a lawsuit from the SEC for allegedly operating as an unregistered securities brokerage, Armstrong emphasizes the potential costs and challenges of repatriating the industry in the future if it is forced to relocate overseas.
