Wall Street giant JP Morgan Chase & Co.’s analysts believe the release of the Hinman documents will push altcoins to try and become as decentralized as Ethereum (ETH) to avoid regulatory hurdles, according to a research report seen by CoinDesk.
The Hinman documents were released by Ripple on June 12 as part of its defense against the SEC lawsuit. They shed some light on why the regulator may have designated some cryptocurrencies as securities in its complaint against Coinbase and Binance.US but left others — like Ethereum — out of the list.
JP Morgan analysts led by managing director Nikolaos Panigirtzoglou studied the documents and wrote that their release bodes well for Ethereum and overall decentralization in the crypto industry.
The analysts added that the document’s content would likely “influence congressional efforts to regulate the crypto industry” in a way that will ensure that Ethereum cannot be considered a security.
As such, the lender believes altcoins will be forced to mimic Ethereum and its properties, which will likely amplify competition among them.
According to the lender:
“[The] more decentralized a cryptocurrency is, the higher its chance that it would avoid being designated as a security.”
‘Sufficiently decentralized’
In recent times, most regulators around the world have come to accept the idea that Bitcoin is most likely a commodity due to its nature and origin. The U.S. intends to put Bitcoin under the purview of the CFTC with other commodities.
However, there has been a distinct lack of clarity regarding altcoins and whether they should be considered securities — especially in the U.S. The SEC has staunchly argued that almost all cryptocurrencies are securities but had only truly pursued Ripple in a legal fight until recently.
The watchdog’s complaint against two major crypto exchanges earlier in June cemented its stance that some of the biggest cryptocurrencies — like Solana, Cardano and Polygon — are, in fact,…
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