A grey cloud hanging over the heads of cryptocurrency investors lifted Thursday after the Securities and Exchange Commission (SEC) ruled that Ethereum is not a security.

The price of Ethereum shot up 10% to $514 in response to the decision, revealed on Thursday in prepared remarks from SEC Director of Corporate Finance William Hinman at the Yahoo Finance All Market Summit: Crypto.

“Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions,” Hinman said.

Ethereum wasn’t alone in its rise. In total, the market capitalization of all cryptocurrencies tracked by CoinMarketCap rose by $18 billion on Hinman’s comments. The value of Bitcoin also climbed 5% to $518, while Ripple jumped 6% to 56 cents.

Previously, investors had been put into a nervous state of mind following reports in May that regulators were debating whether the asset, the world’s second-largest cryptocurrency by market capitalization, could be considered an equity. And even ahead of that, the crypto space had been shaken by comments in April by SEC chief Jay Clayton that he believes “every ICO I’ve seen is a security.” Bitcoin buyers however were offered some reprieve, with Clayton noting that he did not consider Bitcoin an equity offering.

Hinman explained his Thursday rationale about Ethereum as such: Because the Ethereum network is “sufficiently decentralized,” no single party is expected to make managerial decisions about the enterprise. And since decision-making is spread out, no single party or person will receive key information that could be used to an unfair advantage—for example, to conduct insider trading.

“As a network becomes truly decentralized, the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful,” he said Thursday. “As with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. ”

Though he also emphasize that while Ethereum is not classified as a security now, the classification is “not static.”

Still, the price of Ethereum is down 31% for 2018 amid a broader slowdown in the cryptocurrency market. The value of Bitcoin too, has fallen to $6,600, down from $13,860 at the start of the year.

Source: Fortune

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