Bill Hinman, Outgoing Director of the Corporate Finance Division of the U.S. Securities and Exchange Commission, decided to focus one of his final speeches on the Commission’s achievements in regulating cryptocurrencies during his tenure.
In comments posted on the Securities and Exchange Commission (SEC) website on November 18, Hinman cited the SEC’s registration as being open to technologies like cryptocurrencies and blockchain without changing the existing legal framework.
“The ability to apply federal securities laws to new and emerging technologies such as digital assets without having to create an entirely new legal framework like in other countries is testament to the flexibility of our securities regime.” Said Hinman. “It has enabled us to consciously, thoughtfully and effectively keep pace with innovation, facilitate capital formation and protect investors.”
He specifically boasted of his role since joining the commission three years ago in determining whether tokens were securities using the “Howey Test”. The SEC has used this test since the 1940s to determine whether certain assets qualify as “investment contracts” and qualify as securities. The SEC’s DAO 2017 report stating that digital assets could be classified as securities is viewed by many as one of the most important regulatory moments for cryptocurrencies in the US.
Hinman also referred to the SEC’s launch of the Strategic Center for Innovation and Financial Technology FinHub, in 2018. The regulatory arm was created to enable collaboration with individuals in the FinTech niche, especially those who manage digital assets and distributed ledger technologies. In April of last year, Hinman and FinHub boss Valerie Szczepanik published a framework that market participants can use to determine whether digital assets qualify as an investment contract and are therefore securities.
According to Hinman, the establishment of this digital asset regulatory pathway has resulted in companies that previously made initial offers on unregistered coins or ICOs now registering them as securities and reporting on their business.
The SEC announced on October 27th that Hinman would leave the agency at the end of the year. The current deputy, Shelley Parratt will take over the position of Director of the Corporate Finance Division at this point.