US SEC Executive Who said Ethereum is Not a Security to Leave the Agency

The US Securities and Exchange Commission (SEC) announced that William Hinman, the current director of the Division of Corporate Finance, would leave the agency by the end of this year. The reason for stepping down is part of the normal departures from federal regulatory agencies at the end of a presidential term. As the term of President Trump comes to an end, several top SEC executives, including William Hinman, are said to leave the commission.

Hinman has worked for the agency for more than three years, helping the commission’s work to regulate the crypto industry. He started working for the agency in 2017. He led the commission’s task on revising standards for accredited investors.

He assisted spearheading the agency’s early task related to digital assets, playing a leading role in the discussion looking into which cryptocurrencies qualify as securities. His legacy for the crypto industry is a regulatory framework that crypto firms could use to assess whether or not digital assets constituted securities. According to SEC’s blog:

"Mr. Hinman led efforts regarding the rapid innovation in digital assets, including by providing a framework that market participants could use to evaluate whether digital assets are offered and sold as securities."

However, several crypto participants continue criticizing the agency for its lack of regulatory clarity regarding this rule.

Hinman was the first executive at the commission to declare that Ethereum (ETH) was not a security.  In 2018, Hinman spoke at an event where he stated that the cryptocurrency “may not represent an investment contract since there is no group or central figure responsible for ETH.”

The executive assisted the commission in writing rules for Initial Public Offerings (IPOs) and other corporate disclosures. His work has been a great contribution to the agency, touching into multiple areas like leading the task of the formation of the Strategic Hub for Innovation and Financial Technology (FinHub), a unit that promotes public engagements with the focus of addressing fintech issues and initiatives like digital assets, Distributed Ledger Technology (DLT), blockchain, machine learning/artificial intelligence, digital marketplace financing, and automated investment advice.

Hinman is also remembered for the use of the phrase “sufficiently decentralized,” meaning the degree to which crypto firms had to be decentralized to avoid the regulator’s wrath.  

The commission has appointed Shelley Parratt, the current deputy director of the division, to take over Hinman’s current position on an acting capacity.