The war between Ethereum and SEC does not cease to exist. The Securities and Exchange Commission is currently trying to establish its authority over the crypto industry. The SEC claims that almost all cryptocurrencies are securities. Therefore, it asserts jurisdiction over crypto tokens and exchanges.
Recently, SEC chair Gary Gensler revealed that Ethereum could also be considered security after the merge. Now, the SEC is taking heat from the crypto community as it claims that the US has jurisdiction over all of Ethereum. It is implying that the SEC has authority over every Ethereum transaction.
Lark Davis, a major crypto influencer, believes this claim sets a dangerous precedent.
The Battle Between SEC and Ethereum
The SEC has long tried to claim its jurisdiction over the second largest cryptocurrency. Earlier, SEC chair Gary Gensler revealed that he considers Bitcoin to be the only cryptocurrency that is a commodity. The SEC does not have regulatory authority over commodities. They fall under the jurisdiction of the Commodity Futures Trading Commission or CFTC.
Recently, Gensler changed his stance on Ethereum and called it a commodity as well. However, after the merge, the SEC believes that it has jurisdiction over Ethereum. The merge shifted Ethereum’s consensus mechanism from Proof-of-work to Proof-of-stake. Gensler revealed that cryptocurrencies depending upon the Proof-of-stake model can pass the Supreme Court’s Howey test.
Now, the SEC claims that all of Ethereum and its transactions will be under US laws. The SEC filed a civil complaint against Ian Ballina for not registering a cryptocurrency as a security before the release of the ICO. In the complaint, the commission claims that since Ethereum’s validator nodes are mostly situated in the United States, it has jurisdiction over all of Ethereum.
United States has currently over 45% of nodes in the United States.
SEC Receives Backlash
SEC continues to draw backlash from the crypto community. The commission is already taking a lot of heat from the community due to its lawsuit vs XRP and its decision on Bitcoin ETF.
Lark Davis, a major crypto influencer, believes that the SEC’s claims are bizarre. It also believes that it is setting a dangerous precedent. Bitcoin also has the most miners in the US.
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