Nikolaos Panigirtzoglou, a managing director at JPMorgan, believes that the release of the Hinman docs in the Ripple vs. SEC case will have an impact on crypto regulation. According to Panigirtzoglou, this document release is likely to initiate a competition among cryptocurrency projects to become more decentralized and resemble Ethereum, in order to avoid being classified as securities.
JPMorgan Managing Director Nikolaos Panigirtzoglou: Hinman Docs Might Ignite Decentralization Race
Nikolaos Panigirtzoglou, managing director at JPMorgan, has recently analyzed the potential influence of the Hinman docs on future crypto regulation. The Hinman docs consist of a series of internal discussions and emails held by the U.S. Securities and Exchange Commission (SEC) prior to Former SEC Official William Hinman’s speech in 2018.
To Panigirtzoglou, who also serves as a cross-asset market strategist at JPMorgan, this speech will impact how cryptocurrency regulation will eventually be implemented by the U.S. Congress, aiming to prevent Ethereum from being categorized as a security.
In 2018, senior leadership at the SEC did not consider ether as a security… SEC officials were hesitant about Hinman specifically mentioning ether in his speech, as it would create difficulties for the agency to take a different stance on ether in the future.
The Ethereum Dilemma
The JPMorgan strategist believes that one of Hinman’s statements, which suggests that “if the network on which the token or coin is to function is sufficiently decentralized, the assets may not represent an investment contract,” explains why the SEC has refrained from taking action against Ethereum while targeting its competitors this year.
Panigirtzoglou explains that Ethereum could fall into the same category as Bitcoin, regulated by the Commodity Futures Trading Commission (CFTC) as a commodity. However, he suggests that these “sufficiently decentralized” assets could also be placed in a category that involves more restrictions and investor protections than currently envisioned for commodities, but less stringent requirements than those for securities.
Regardless of the outcome, Panigirtzoglou commented that the release of the Hinman docs will act as a catalyst, promoting greater decentralization in the crypto space. It is likely to intensify the competition among major cryptocurrencies and their respective blockchains, pushing them to become more decentralized and resemble Ethereum, in order to avoid being classified as securities.
Ripple CEO Brad Garlinghouse has also criticized the SEC’s position on crypto enforcement after the release of the Hinman docs. Garlinghouse emphasized that despite the internal debate, the SEC has “weaponized the lack of regulatory clarity” and decided to charge Ripple for conducting an unregistered securities offering.
What are your thoughts on the potential impact of the Hinman docs on cryptocurrency regulation? Share your opinions in the comments section below.