Per the letter, Cipher attempted to register an “investment company” under the Investment Company Act of 1940, implying that Bitcoin is a security.
The United States Securities and Exchange Commission (SEC) has yet again officially stated that Bitcoin (BTC) is not a security.
In a letter to Cipher Technologies Bitcoin Fund dated Oct. 1 the SEC declined the investment company’s registration statement on the grounds (among others) that Bitcoin is not a security.
Not a security
The SEC staff, on the other hand, has argued Cipher’s reasoning under the Howey test and its framework for analyzing digital assets published in April. The letter states:
“Among other things, we do not believe that current purchasers of Bitcoin are relying on the essential managerial and entrepreneurial efforts of others to produce a profit. Accordingly, because Cipher intends to invest substantially all of its assets in Bitcoin as currently structured, it does not meet the definition of an ‘investment company’ under the Investment Company Act and it has inappropriately filed on Form N-2.”
If Bitcoin was a security, issues would occur
Furthermore, the SEC also noted that if Bitcoin was a security, “it would then raise substantial other issues.” More precisely, the cryptocurrency in question would be “an unregistered, publicly-offered security, and, among other things, it potentially would render the proposed fund an underwriter of bitcoin.”
Lastly, the securities regulator also noted that Cipher did not adequately comply with legal and investor protection norms. The letter concludes by saying that the SEC “staff will not conduct additional review of Cipher in its present form.”
As Cointelegraph reported a week ago, debates are still ongoing on whether XRP, the third-largest cryptocurrency by market capitalization, is a security.
South Korea’s Crypto Youth | Cointelegraph Documentary
In the last few decades, South Korea has been among the fastest developing countries in the world. It is currently the planet’s third-largest crypto economy, after the United States and Japan.
Cointelegraph traveled to Korea to meet a new generation of crypto entrepreneurs who are building the future of blockchain. Among the people we talked to were representatives of established firms – such as crypto investment funds Hashed and Kakao’s blockchain subsidiary GroundX – but also common Korean investors who still see Bitcoin as a path toward a better life.
Despite strict regulation on initial coin offerings and cryptocurrency exchanges, South Korean authorities are also helping the crypto industry and implementing blockchain technology in the public sector. For instance, the city of Busan, Korea’s second-largest city, is creating a local digital currency that will be used in people’s everyday life.
Even though it is fertile ground for crypto entrepreneurship, the Korean market is very competitive: as popular Korean blogger Spunky told Cointelegraph, the overwhelming majority of crypto startups are bound to fail. Only the most daring entrepreneurs offering the best use cases will emerge.
Given the size of Korea’s crypto economy, it is only natural that Cointelegraph opened a new representative office in Seoul. Check out the video from the launch party!