Nikolaos Panigirtzoglou, a managing director at JPMorgan, believes the release of the Hinman docs in the Ripple vs. SEC case will influence crypto regulation. Panigirtzoglou stated this document release is likely to start a race for other cryptocurrency projects to become more decentralized and look “more like ethereum” to avoid being labeled as securities.
JPMorgan Managing Director Nikolaos Panigirtzoglou: Hinman Docs Might Spark Decentralization Race
Nikolaos Panigirtzoglou, managing director at JPMorgan, has recently examined the effect that the release of the Hinman docs, a series of internal discussions and emails the U.S. Securities and Exchange Commission (SEC) had before the 2018 speech of Former SEC Official Willian Hinman, will have on future crypto regulation.
To Panigirtzoglou, who also serves as cross asset market strategist at JPMorgan, the speech will influence how cryptocurrency regulation will be carried out eventually by the U.S. Congress “in a way that ethereum would avoid being designated as security.”
Senior leadership at SEC did not believe that ether was a security in 2018 … SEC officials had reservations about Hinman including a direct statement on ether in his speech because ‘it would be difficult for the agency to take a different position on ether in the future.’
The Ethereum Dilemma
The JPMorgan strategist believes one of Hinman’s declarations — which declares that “if the network on which the token or coin is to function is sufficiently decentralized, the assets may not represent an investment contract,” — explains why the SEC has refrained from acting against ethereum while still targeting its competitors this year.
Panigirtzoglou explains that ethereum could be put in the same category as bitcoin to be regulated by the Commodity Futures Trading Commission (CFTC) as a commodity; however, he states that these “sufficiently decentralized” assets might also be put in another category that “would involve more restrictions and investor protections than currently envisaged for commodities but less onerous than those required for securities.”
No matter what is decided in that regard, Panigirtzoglou commented that the Hinman docs will be a catalyst to bring more decentralization to the crypto space, as they “would likely intensify the race among major cryptocurrencies and their respective blockchains to become more decentralized and look even more like ethereum in order to avoid being designated as securities.”
Ripple CEO Brad Garlinghouse has also recently criticized the SEC’s stance on crypto enforcement after the release of the Hinman docs. Garlinghouse stated that even with this internal debate, the SEC “weaponized the lack of regulatory clarity,” deciding to charge Ripple for conducting an unregistered securities offering.
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