After a long delay, on Thursday, September 15, the Ethereum network was finally transformed into proof-of-stake (PoS) from proof-of-work (PoW). This transition is expected to improve the network’s stability and reduce energy usage by 99.95%.
While ETH holders are happy with the merger, US regulators, the Securities Exchange and Commission (SEC) are now viewing ETH as a security. Just after the merger was completed, SEC Chairman Gary Gensler claimed that all cryptocurrencies and platforms that give their holders the opportunity to stake their holdings must pass the Howe test used by the judiciary to determine whether whether the property is safe. The Howe test attempts to test whether market participants expect any return from third parties.
As per the law that was passed in the 1930s, the one who issues securities, the assets that involve stocks and bonds, should submit a disclosure to the SEC. Also the exchange platforms along with brokers who allow the trading of securities must adhere to the rules meant to protect investors.
Ethereum to Register Under the SEC
If the rules are not followed, the exchanges and brokers will face strict liabilities.
Staking is a way through which the crypto networks verify the transactions which allow investors to hold on to their currencies for a time so that they get some returns. The networks include Solana, Cardano, and now Ethereum too.
Even in the past, the SEC has urged that platforms that allow crypto-lending products be required to register with them and were forced to pay $100 million when BlockFi went against the lending claim. to be done.
The agriculture committee has recently proposed a crypto bill that especially mentions that Bitcoin and Ethereum are digital commodities and not securities. Exchanges such as Coinbase and FTX will have to register with the Commodity Futures Trading Commission so that the commission can track the trading and defend investors from any kind of abuse.
On the other hand, consumer protection from the judiciary claims that the CFTC does not have the good experience and resources to understand small inventors. Now, the SEC is expected to either draft a disclosure frame or offer incentives for organizations that strive to reduce energy consumption.
