Ethereum, according to Gary Gensler, should be subjected to SEC analysis following the Merge
Ethereum, according to Gary Gensler, should be subjected to SEC analysis following the Merge
Ethereum

Ethereum, according to Gary Gensler, should be subjected to SEC analysis following the Merge

By George Michael Belardinelli - 16 Sep 2022

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On the sidelines of an oversight hearing, the SEC Chairman said that consideration is being given to controlling Ethereum after the move to Proof of Stake. 

Ethereum: the Merge is innovating it and the SEC wants to curb it

As early as 2013, co-founder Vitalik Buterin, foreshadowed that ETH would shed its skin, and at 02:43 AM last night, the long-awaited Merge that transformed Ethereum into a Proof of Stake forever began. 

The process took 15 minutes and encountered no problems whatsoever transforming the second largest cryptocurrency by capitalization ($190.5 billion) into a so-called green currency allowing it to save 99.9% energy

Justin Drake, researcher at the Ethereum Foundation, bluntly stated:

“I like to think of it as a kind of transition from petrol to electric.” 

The currency of Buterin and associates soon after the switch was valued at 1,600 US dollars while at the time of writing it stands at $1450.

The transition went smoothly on a day when more or less all cryptocurrencies took a downturn, this phenomenon also affected Bitcoin, which went below 20k at 19,840 euros at this time.

Industry experts are divided between those who praise the benefits of the Merge such as energy savings and a potentially deflationary currency and those who point the finger at the deal’s critical point of less decentralization. 

During a regular Securities and Exchange Commission (SEC) oversight hearing before the Senate Banking Committee, Securities and Exchange Commission Chairman Gary Gensler said that Ethereum could be subjected to meticulous and timely analysis by regulators after the Merge. 

The comments by Chairman Gensler came soon after ETH’s move from mining-based Proof of Work to Proof of Stake (participation) causing some physiological speculation about it. 

SEC Chairman’s Statements to the Wall Street Journal

The statements of the Chairman of the Securities and Exchange Commission reported by The Wall Street Journal, are the following:

“From a coin perspective … this is another clue that under the Howey test, the investing public is anticipating profits based on the efforts of others.”

The howey test is the tool that all regulators use to determine whether an asset is a security. 

One of the questions is whether with potential “coupons” as high as 10% this currency is comparable to a high bond yield. In fact, the president’s speech goes on to deal with the issue of staking, which he says seems to be “very similar,” with some differences, to the lending system. 

The question Gensler alludes to is whether there should be a question about staking being equated with lending, which should be regulated accordingly.

Exchanges that offer staking services to users seem “very similar” to lending, according to Gensler: 

“It looks very similar, with some labeling changes, to the loan.”

If the President’s and regulators’ doubts persist, it may be considered in the coming days to proceed with a commission of inquiry that will target the Proof of Stake system in its entirety with ETH as the standard bearer but would cover all crypto analogs. 

Decisions made as a result of that analysis (which could take up to a year) would lead to the determination of new regulations that would put limits on Proof of Stake by changing something green and working into something perhaps better but, then again, it may not necessarily work with equal success. 

Meanwhile, the Merge effect is affecting all crypto, which although facing a slightly negative day, did not suffer major shocks of such severe magnitude as what was feared, the transition went well and most analysts are confident about the future of the asset and Vitalik’s currency. 

According to Stephanie Luzon, financial education expert at German fintech Vivid:

“The Merge is the most ambitious upgrade of the Ethereum blockchain in recent years, as well as a fundamental transition point in the history of cryptocurrencies and the entire ecosystem that revolves around it, including decentralized finance (DeFi).”

 

George Michael Belardinelli

A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality

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