Security and Exchange Commission (SEC) chair, Gary Gensler, suggested that Ethereum following the Merge could be considered a security. Whether digital assets should be considered as securities is a highly debatable topic in the crypto industry, as a security is automatically subject to regulatory requirements. Although, Gary did not necessarily name the coin while making the comment, the comment was made on the same day as the completion of the Merge.
“From the coin’s perspective…that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others,” Gensler said on Thursday according to a report from the Wall Street Journal.
Ethereum successfully completed ‘the Merge’ on September 15, which was an Ethereum network upgrade, moving the cryptocurrency from a proof-of-work system (an energy intensive process) to a proof-of-stake system. The transition resulted in the coin becoming ‘greener’, reducing Ethereum’s energy consumption by 99 percent, however, the coin has considerably dropped in value since the Merge.
“[Staking services] look very similar—with some changes of labeling—to lending,” Gensler added.
The proof-of-stake system has drawn the attention of the SEC, staking the coin in exchange for profits, could label ether as a security.
Experts in the industry have voiced their opinions, following the comment, some share rising concerns while some agreed with the statement.
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