ConsenSys: No chance for SEC to classify ETH as Security
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- ConsenSys founder Joseph Lubin believes that there is little chance of the SEC classifying Ethereum as a security after its transition to a proof-of-stake (PoS) model, as it is “sufficiently decentralized” and has “many use cases that don’t implicate it as a security.”
- US SEC Chairman Gary Gensler stated that proof-of-stake cryptocurrencies could be subject to securities laws, but Lubin is confident that ETH would not fall into this category.
- Kraken recently agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties and halt its staking program following the SEC’s charges of offering an unregistered sale of securities, while Ethereum’s transition to fully PoS through the Merge aims to reduce energy consumption and the blockchain’s carbon footprint.
ConsenSys founder and Ethereum co-founder Joseph Lubin states that there is little chance of the United States’ financial regulators calling cryptocurrency Ethereum (ETH) a security following the network’s transition to a proof-of-stake (PoS) model. He mentioned this in a recent interview with Cointelegraph.
“I think it’s as likely, and would have the same impact, as if Uber was made illegal… There would be a tremendous outcry from not just the crypto community but different politicians and certain regulators,” he stated.
In September, Ethereum Mainnet transitioned from proof-of-work (PoW) to fully proof-of-stake (PoS) consensus mechanism through the Merge which aimed to reduce Ethereum’s energy consumption by 99.95% which can lessen the carbon footprint of the blockchain. (Read more: What is the Ethereum Merge?)
Following this, Securities and Exchange Commission Chairman Gary Gensler stated that proof-of-stake cryptocurrencies could be subject to securities laws noting that it is “another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others.”
“They thought back then that everything was a security. We — I think — helped them significantly understand lots of tokens are not securities, and then they went away and Gary and team now think almost everything’s a security,” Lubin stated.
He also stated that so far, ETH continues to be “sufficiently decentralized” and has “many use cases that don’t implicate it as a security.”
“There is no centralized set of promoters or builders that is specifically trying to raise the value of Ether and enrich investors…There’s a court system in the United States of America that I think would be supportive of arguments that would be made that it is not,” he added.
Last month, Ethereum announced that it will have a key software upgrade called Shanghai, which will allow users to withdraw staked $ETH in the Beacon Chain from December 2020. (Read more: Ethereum Shanghai to Allow Staked ETH Withdrawal by 2023 Q1)
On the other hand, the US SEC reached a settlement agreement with cryptocurrency exchange Kraken with its charges of offering an unregistered sale of securities through its staking-as-a-service program. The exchange agreed to halt its staking program and to pay $30 million in disgorgement, prejudgment interest and civil penalties. (Read more: Crypto Staking No More: Kraken Settles with US SEC Over Staking Program)
This article is published on BitPinas: ConsenSys: No chance for SEC to classify ETH as Security
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