Bitcoin Does Not Classify as Security, Reiterates SECAuthor: Azeez MustaphaLast Updated: 08 October 2019 So much is yet to be understood about cryptocurrency. This misconception took its trail to Bitcoin being mistaken for security. The Securities and Exchange Commission has however thrown more light on this in response to a crypto company application for registration as a closed-end fund company.Cipher technologies Bitcoin Fund in its recent submission to SEC stated Bitcoin as a Security. SEC, however, disagrees with this point of view by stating that Bitcoin doesn’t rank as such and regarding it as security will spur up many unanswered questions.Security simply defined by Wikipedia is a tradable financial asset. The term usually alludes to any type of money related instrument, however its legitimate definition changes by purview. In certain nations and dialects, the expression “security” is normally utilized in everyday speech to mean any type of budgetary instrument, even though the hidden lawful and administrative system might not have such a wide definition. In some certain locality, the term explicitly bars money related instruments other than values and fixed earnings instruments. In some certain locality, it incorporates a few instruments that are near values and fixed earnings, e.g., equity warrants.Cipher tech quoted the investment company act of 1940. (Often referenced as the Investment Company Act, the 1940 Act or simply the ’40 Act, it is the primary source of regulation for mutual funds and closed-end funds, a venture industry now in a huge number of dollars. Besides, the ’40 Act impacts the operations of hedge funds, private equity funds and even holding companies).SEC’s Classification of Bitcoin However, based on the Howey Framework(2019) which classifies digital assets, SEC stated the following:*Bitcoin does not classify as security because its profit is independent of individual or company factors.*The fact that huge funds will be committed in investments in Bitcoin nullifies the N-2 form application*Accepting Bitcoin as security may trigger several unanswered questions and will be a compromise of standards.Cipher Tech application could not answer questions been raised in the view of the ongoing market volatility as regards investment safety.Therefore Cipher’s application has been rejected on such grounds and SEC isn’t rescinding its decision on this. The body, however, stated that it’s open to a review not in its stance but only if Cipher makes the necessary changes in its submission. SEC believes going public with this will serve as a guide for other companies who intend submitting such applications in the future.