Ethereum, the second-largest cryptocurrency after bitcoin, underwent a major upgrade this week, which some believe could wreak havoc with the price of ethereum.
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Ethereum price crashed this week after surging ahead of its long-awaited upgrade as the crypto market braces for a potential “black swan” event.
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Now, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has warned that Ethereum’s upgrade could mean the cryptocurrency becomes regulated as a security, exacerbating a decline. Ethereum prices.
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Ethereum’s transition to proof-of-stake, allowing Ethereum holders to lock up their coins to receive a return, may lead the United States Securities and Exchange Commission (SEC) to take a closer look at Ethereum’s regulation as a security, said SEC Chairman Gary Gensler said that following a Senate Banking Committee hearing, it was reported by the the wall street journal.
The upgrade, completed on Thursday after years of preparation, means the Ethereum network is secure and transactions are confirmed by Ethereum holders “gambling” their coins instead of relying on so-called miners. Ethereum’s transition to proof-of-stake could reduce carbon emissions from the blockchain network by 99%, according to the Ethereum Foundation.
“From the perspective of the coin…this is another clue that, according to the Howey test, the investing public anticipates profits based on the efforts of others,” Gensler reportedly said, adding that he was not referring to any specific cryptocurrency.
According to Howey’s test, a security is defined as “an investment of money in a common enterprise with a reasonable expectation of profit from the efforts of others”. Transferable securities are then subject to disclosure and registration obligations.
In a swipe at Coinbase and other crypto exchanges, Gensler said any crypto trading platform that offers staking services to users is “a lot like – with a few labeling changes – lending.”
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Gensler also reiterated his view that almost all cryptocurrencies are securities, once again calling on crypto companies to register with the SEC.
“Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Offerings and sales of these thousands of crypto security tokens are covered by securities laws, which require these transactions to be recorded or made under an available exemption. “, Gensler said in prepared remarks. “As such, I have instructed SEC staff to work directly with entrepreneurs to have their tokens registered and regulated, where applicable, as securities.”
Last week, the White House Office of Science and Technology warned that bitcoin, which uses the energy-intensive proof-of-work consensus mechanism, could be banned in the United States due to its extremely high carbon footprint. .
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SEC Chairman Issued Game-Changing Ethereum Warning – Triggering Major Price Collapse
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