![]() These opinions and the information contained herein do not take into account an individual‘s specific circumstances, objectives, or needs. It contains the opinions of Sygnum Group, as at the date of issue. It does not constitute an offer or a recommendation to subscribe, purchase, sell or hold any security or financial instrument. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication. The SEC has not made a standalone official statement Ethereum blockchain is a security, but if the blockchain is classified as a security rather than a commodity, then this will create a legal precedent that would send a wave of panic throughout the entire cryptocurrency market.Ī move by the SEC to classify Ethereum as a security would mean that most digital assets except bitcoin could be considered a security and every project that is deployed on top of the Ethereum network could be claimed to be a security and coming within the jurisdiction of the SEC.īeing classified as a security will make Ethereum, and any application deployed on it, need to go through the lengthy process of registration with the SEC.Īlso, if it is deemed a security, then that would mean Ethereum has been trading as an unregistered security for many years, and this could lead to fines for the Ethereum Foundation, the multitude of exchanges that have been trading ether, and most Ethereum-based cryptocurrency tokens.This document is purely for educational purposes and has been issued by Sygnum Group. The second-greatest density of nodes is in Germany, with 19% of validator nodes.Įthereum controls the majority of decentralised finance within the cryptocurrency ecosystem and most of the smart contract applications. This is a challenge to Ethereum's determination to be seen as a fully global, decentralised blockchain that provides a public good and base layer for web3 applications.Īccording to Etherscan, 45.85% of all Ethereum validator nodes operate from within the US. The SEC stated that the ether sent to Balina in 2018 was “validated by a network of nodes on the Ethereum blockchain, which are clustered more densely in the United States than in any other country and as a result, those transactions took place in the United States.” Read more: 'Facebook killers': Top five web3 challengers ready to disrupt social media This profiting from staked ether has drawn the attention of Gensler and made crypto investors nervous about the future classification of Ethereum.Īlso, when the SEC filed a federal lawsuit on Monday against crypto influencer Ian Balina for his failure to register a cryptocurrency as a security in 2018, a sentence in the filing claimed the SEC had the right to sue Balina because they view the entire Ethereum network as falling under the US government’s jurisdiction. Watch:Three key reasons for the Ethereum Merge - The Crypto MileĪfter moving to a low energy use proof of stake method for validating transactions, investors can now stake their ether to secure the validation of transactions on the network, and also profit from staking rewards. However, bitcoin ( BTC-USD) faired better, holding above $19K with a fall of 13% in that past week to $19,413.Ĭomments from Gary Gensler, the head of the SEC, have rattled investor confidence in the world's second-largest cryptocurrency by market cap.Īccording to a report from the Wall Street Journal last Thursday Gensler referred to the process of Ethereum's staking rewards and said: "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." ![]() The world's second-largest blockchain was declared as coming under the jurisdiction of US government and Security Exchange Commission, SEC, due to the majority of validator nodes that secure the network being set up within the US.Īfter the news, ether ( ETH-USD) fell 20% to $1,364, as of the time of writing. Photo: Reuters/Evelyn HocksteinĮthereum has plummeted by over 20% despite last week's successful transition to proof of stake as the shadow of a major US regulator body falls over its rising ambitions. The SEC says that since the majority of Ethereum transactions are validated in the US, it should be regulated in the US.
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