Ethereum price surges on major SEC cryptocurrency ruling

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The world's second most valuable cryptocurrency has been boosted by a major ruling by the Securities and Exchange Commission (SEC), which declared that ethereum is not a security.

The announcement by SEC director of corporate finance, William Hinman, caused the price of ethereum to rise by 10 per cent, bucking a recent downward trend of other major cryptocurrencies like bitcoin.

Mr Hinman described ethereum as "sufficiently decentralised," meaning no central authority could manipulate in an unfair way to gain a financial advantage.

“As a network becomes truly decentralized, the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful,” Mr Hinman said at the Yahoo Finance All Market Summit: Crypto.

“As with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. ”

Cryptocurrency experts said the decision was generally positive for the industry and could lead to more positive regulation for other alternative digital currencies like Ripple.

“This is the latest in a series of events which demonstrate how cryptos are pervading mainstream thinking," Iqbal Gandham, UK managing director of the trading platform eToro, told The Independent.

“We know that institutional investors are waiting for regulatory clarity to move from the sidelines to the centre of the playing field. Remarks like this suggest it might not be long to wait until we get there.”

Oliver Isaacs, a blockchain investor and adviser, added: "I think the news is certainly positive and the markets have reacted accordingly – Hinman’s speech is essentially saying that even if something is issued as a security, it can over time morph into something that isn't.

"This is significant for a lot of coins out there that may be securities at present, but are working towards becoming a working [cryptocurrency]."