They want to recognize Ethereum as a security
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They want to recognize the Ethereum cryptocurrency as a security. Fortune and CoinDesk write about the investigation launched by the US Securities and Exchange Commission. According to media reports, several American companies have received subpoenas. They were asked to talk about their relationship with The Ethereum Foundation – this organization manages the blockchain of the same name. The US regulator has consistently fought against cryptocurrencies, but its position on Ethereum has always been ambiguous.
What are the disputes related to? And what will happen to the market if cryptocurrency is recognized as a security? Philipp Vasiliev, portfolio manager of the Hardcore Capital Labs fund, answered these questions to Kommersant FM: “The Securities Commission insists that, unlike Bitcoin, Ethereum is not on a Proof-of-Work model, but on a Proof-of -State-models. It implies that you can deposit coins for a while, give them to the validator and receive interest income.
Also, the network itself may be deflationary. This means that Ethereum may at some point reduce the number of coins in circulation, which indirectly resembles mechanisms such as share buybacks in securities markets. And the second, probably important case – unlike Bitcoin, Ethereum still has a founder, he can, as it were, influence decisions in this network. If there is some team that is interested in increasing the value of its coin, then this can also be classified as a security.
When the SEC filed a lawsuit against exchanges for listing some security-like tokens, it did not file a lawsuit against Ethereum. At first she did not recognize it, but now she has agreed – the kind of selective enforcement that can be sued. Ethereum is quite decentralized. It is based on a huge number of applications that are interested in something of their own. It is still impossible to say that anyone can make decisions in this network unanimously.
If Ethereum is recognized as a security, it will be a blow below the belt, because it will cut off a lot of private investors, primarily from the United States. This will be the beginning of the end. I think this will definitely be the start of a witch hunt. But I probably wouldn’t think that far yet, because practice is still on the side of the fact that most coins are still goods.”
In January, the Securities Commission approved bitcoin exchange-traded funds. They allow investors to invest in currencies through traditional market instruments. The regulator was also expected to approve Ethereum ETFs. But now, as Bloomberg notes, these prospects are in big question. However, Yuri Brisov, a partner at the law firm Digital & Analogue Partners, believes that such conclusions cannot be drawn. And the regulator is just trying to put an end to the disputes before approving the ETF, emphasizes Kommersant FM’s interlocutor:
“Of course, now that Ethereum-related ETFs and commissions are appearing, this issue needs to be resolved. Therefore, it is quite logical that they began checking. Having understood the technical features of Ethereum and convinced of its decentralization and the fact that, by and large, no one controls Ethereum, this is where they will finish the investigation.
It is a violation of the Exchange and Securities Acts of 1933 and 1934 to offer a security to a general audience both in America and outside the United States without proper registration. Accordingly, unregistered securities should be removed from the market. The persons who carried out the issue will have to bear responsibility and pay fines. But I think hardly anyone understands how to do this technically, given the decentralization of Ethereum, the integration of the coin into NFTs, smart contracts, and ecosystem solutions. Removing this cryptocurrency from the market is an impossible task.”
The American regulator will finally decide whether or not to approve exchange-traded funds in Ethereum at the end of May.
Everything is clear with us – Telegram channel “Kommersant FM”.
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