The US Securities and Exchange Commission has again denied Bitcoin’s status as a security. Last Tuesday, the SEC sent a letter to Cipher Technologies Bitcoin Fund (“Cipher”) denying its attempt to register as an “investment company” on the grounds that Bitcoin is not a security. 

A security is a financial instrument that holds some sort of monetary value. If Bitcoin were a security, then that would mean Cipher Technologies would be setting up a Bitcoin investment fund, because investors in the fund could reasonably expect the fund to generate profits.

In its letter, the SEC firmly rejects the idea that Bitcoin is a security. “We do not believe that current purchasers of bitcoin are relying on the essential managerial and entrepreneurial efforts of others to produce a profit,” reads the letter, signed by Brent Fields, the associate director of the SEC’s Disclosure Review and Accounting Office.

The letter goes on to say that if Bitcoin were considered a security, Cipher would have to address a whole host of other regulatory issues. “For example, bitcoin would be an unregistered, publicly-offered security, and, among other things, it potentially would render the proposed fund an underwriter of bitcoin.”

In any case, the SEC also noted that Cipher hadn’t addressed legal and investor protection issues, “particularly with respect to valuation, custody and potential manipulation in the bitcoin market.” 

This isn’t the first time the SEC has said that Bitcoin is not a security; the SEC’s Jay Clayton said it wasn’t in a hearing last year. Worth a crack though, eh Cipher?