[NEWS] JP Morgan analyst says Ethereum likely can avoid securities classification

On the 3rd, JP Morgan analysts stated in a report that "Ethereum (ETH) is likely to avoid being classified as a security in the future."

The reason given is that the share of staked Ethereum by the largest staking protocol "Lido" has fallen from about one-third a year ago to about one-quarter today. This has led to the decentralization of the Ethereum network, "reducing the possibility that it will be considered a security."

In October last year, JP Morgan analysts expressed concern that platforms like Lido, although decentralized, pose risks to Ethereum as they "involve a high degree of centralization."

The analysts also pointed out that "network decentralization plays a role" in classifying digital tokens as securities, as highlighted by the so-called "Hinman documents" published by the SEC (U.S. Securities and Exchange Commission) in June last year.

The Hinman Papers are a compilation of speeches by William Hinman, who was then Director of the SEC's Division of Corporation Finance, and became important evidence in the trial over the securities issue of XRP.

At the time, Hinman pointed out that "tokens that operate on a sufficiently decentralized network may not meet the criteria to be considered securities" because the Howey Test requires no "controlling entity."

After the Hinman Papers were released last year, JP Morgan analysts said that US lawmakers could create a new "other category" to accommodate Ethereum, avoiding classification as a security while still ensuring investor protection.

SEC Chairman Gary Gensler has continued to refuse to comment on whether Ethereum is considered a security. The SEC is currently seeking public comments to rule on several applications for an Ethereum spot ETF.

Reference:Report
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