William Hinman, a director of the U.S. Securities and Exchange Commission (SEC) known for his statements in favor of greater clarity for the crypto ecosystem and other ICOs and fintech, announced his intentions to leave his post in the upcoming months.
Since 2017, Hinman has served as a director of the SEC’s Division of Corporation Finance, an office responsible for giving investors material information to help them come with good financial decisions. His office also provides interpretative assistance to companies with respect to SEC rules. It also makes recommendations to the Commission in different regulatory areas.
William Hinman Paved The Way for a Better Crypto / Fintech Ecosystem
In addition, Hinman participated in creating the SEC’s Strategic Hub for Innovation and Financial Technology, better known as the FinHUB, a program aimed at promoting fintech developments in the country, offering advice on regulatory matters and clarifying somewhat confusing criteria regarding digital assets.
This is Hinman’s best-known area of work when it comes to the world of cryptocurrency. In the heat of conflicting opinions within the SEC on blockchain technologies and cryptocurrency ETFs and ICOs, Hinman gave Ethereum a thumbs up, declaring that, in his view, it was not a security.
For Hinman, Ethereum’s decentralization made it incompatible with the Howey Test’s requirements —a longstanding test used by regulators and the United States justice system to determine whether or not a particular offer constitutes a security.
During his famous speech “Digital Asset Transactions: When Howey Met Gary,” Hinman explained that Ethereum and Bitcoin could not be securities, even though Ethereum went through a funding round. Decentralization was the key:
“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. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.
The Need For Clarity Remains
So far, it remains unclear what the minimum decentralization level is for a project not to be considered a security. Regulatory uncertainty remains a conversational topic to the point that several projects – like Ripple – have considered moving outside the United States in search of greater regulatory clarity.
The SEC has been key for many drawbacks in the crypto industry. The rejection of every single Bitcoin ETF, the halts of major projects like Facebook’s Libra, the Telegram Open Network and KIK’s token KIN are one of the most important blows received by the crypto ecosystem.
The official SEC press release does not elaborate on the reasons behind the resignation. William Hinman thanked Commissioner Jay Clayton and his team for their “professionalism, expertise, and commitment to public service.”
When William Hinman effectively leaves his post, Shelley Parratt, who serves as the deputy director of Hinman’s corporation finance division, will temporarily replace him.