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Hinman Documents Release in SEC-Ripple Case Is a Boost to Ether: JPMorgan
The documents are likely to intensify the move among major cryptocurrencies to become more decentralized and look more like ether, the report said.
Jun 19, 2023, 7:52 a.m.
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The release of the Hinman papers last week in the U.S. Securities and Exchange Commission’s (SEC) case against Ripple is a boost to ether , and is likely to trigger a move to more decentralization in the crypto market, JPMorgan (JPM) said in a research report Thursday.
Emails tied to former Director of Corporation Finance William Hinman’s 2018 speech saying ether did not look like a security were published last Tuesday by Ripple in its defense against an SEC lawsuit.
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Senior leadership at the SEC did not rank ether as a security in 2018, the report noted, and SEC officials acknowledged that the “fact that tokens on a sufficiently decentralized network are no longer securities creates a regulatory gap.”
“The speech acknowledges that there is an other category,” analysts led by Nikolaos Panigirtzoglou wrote, adding that “it is not a security because there is no controlling group (at least in the Howey sense) yet there may be a need for regulation to protect purchasers.”
Panigirtzoglou was referring to the Howey Test, which is used to determine which transactions qualify as investment contracts and thus subject to U.S. securities laws. An asset can be classed as a security if there is an investment of money in a common enterprise and the expectation of profits derived from the efforts of others.
JPMorgan says these revelations could explain why the regulator has not taken action against ether while targeting other crypto tokens this year.
“The Hinman documents are likely to influence the direction of the current U.S. congressional effort to regulate the crypto industry in a way that ether would avoid being designated as a security,” the analysts wrote.
The easiest solution for Congress would be to put ether in the same category as bitcoin , and regulate it as a commodity under the oversight of the Commodity Futures Trading Commission (CFTC).
A new “other category” could be introduced specific to ether and other cryptocurrencies that are decentralized enough to avoid being classed as securities, the bank said, adding that the “more decentralized a cryptocurrency is the higher its chance that it would avoid being designated as a security.”
The Hinman documents will probably intensify the race among major cryptocurrencies to become more decentralized and look more like ether, the report said.
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WH advisor Patrick Witt: Davos 2026 was ‘turning point’ for global crypto normalization
White House crypto advisor Patrick Witt said stablecoins are the “gateway drug” for global finance and that Washington is racing to deliver regulatory clarity.
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The Context: The Executive Director of the President’s Council for Advisors for Digital Assets sat down for an interview with CoinDesk where he said the recent World Economic Forum in Davos served as a stage for the Trump administration to signal its commitment to normalizing digital assets as a permanent asset class. He said:
- The administration aims to strike a balance between traditional financial incumbents and new crypto entrants through a "symbiosis" where they can coexist and compete.
- Consumers benefit from this competition, positioning the current administration as firmly on the side of technological innovation.
- The President renewed a pledge at the event to establish the United States as the undisputed "crypto capital of the world".
Latest Developments: Regulatory movement is accelerating in Washington with key committee markups scheduled for major digital asset legislation.
- The Senate Agriculture Committee is set to mark up its portion of the market structure bill on Thursday, January 29th at 10:30 AM.
- The Senate Banking Committee has postponed its markup, requiring further mediation on issues like stablecoin rewards and ethics.
- Witt expressed confidence that despite these delays, the legislation will eventually be reconciled and brought to the Senate floor.
Reading Between the Lines: Stablecoins are acting as a "gateway drug" for global business leaders who are beginning to grasp the technology's potential—and its threat.
- Witt observed a cycle where traditional players move from a lack of understanding to fear, and finally to incorporating crypto into their own product offerings.
- While some Senate Republicans worry about stablecoins causing deposit flight from community banks, Witt believes a "smooth glide path" into these future technologies is possible with patience and cooperation.
- “Consumers win when there’s choice,” he said, while also acknowledging concerns from Senate Republicans about community banks and financial stability. The administration, he suggested, sees convergence between crypto and traditional finance as inevitable but wants the transition to be smooth rather than destabilizing to all parties.
- U.S. regulators intend to lead the global regulatory conversation, even if the domestic legislative process results in imperfect "directionally accurate" rules.
What Comes Next: Once the primary market structure bill passes, the administration plans to pivot toward a major crypto tax package.
- Witt suggested there is still a window of opportunity to pass additional digital asset legislation this year before midterms dominate the congressional calendar.
- The administration is also monitoring "developing situations" regarding digital assets potentially seized in national security actions abroad, such as in Venezuela.
- Finally, Witt declined to specifically comment on speculation that Venezuelan enforcement actions may have involved seized digital assets, citing national security sensitivities and an evolving situation, but did add, “There’s a number of folks in the national security apparatus engaged,” in regards to how the Maduro regime was financed.
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