Drawing an inference from SEC Director William Hinman’s statement on Thursday, Kyle Samani, a managing partner at cryptocurrency hedge fund Multicoin Capital, believes the majority of the top cryptocurrencies could be considered securities. Hinman was responsible for revealing to the public the agency’s stance on cryptocurrencies. The explanation from Kyle comes from his 17-part Twitter thread.

SEC has already made it clear that the digital asset by itself cannot be considered a security, however, depending on how its creators decide to handle advertising and sales, it can become a security. Essentially, tokens which depend on an identifiable person or group to succeed will be considered securities, contrary to those assets which are truly decentralized and no single entity can control it.

Bitcoin and Ethereum are examples of this latter type of digital asset and thus are not securities. As Hinman explains,

“If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.”

As Samani points out in his tweets, “sufficiently decentralized” isn’t a quantifiable measurement and could lead to ambiguity. The analysis is not set in stone and could change at any moment. In Hinman’s example, if someone were to place bitcoins in a fund and sell interests, this particular product would be considered a security.

Given the SEC’s guidelines, Samani believes that the number of implementations by independent teams is one valid metric which can be used to determine if an asset is truly decentralized. Following his logic, apart from bitcoin and ethereum, litecoin, bitcoin cash, and ethereum classic may be the only digital assets in the clear.

As of now, Ripple (XRP), TRON (TRX), Stellar Lumens (XLM), Cardano’s (ADA) token, and IOTA are almost certainly securities, while EOS may also be considered a security.

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