Joe Lubin, Ethereum co-founder, says it is highly unlikely that Ether will be classified as a security.
In September, SEC chair Gary Gensler suggested that the blockchain's transition to PoS may subject it to securities laws.
- Lubin
explained that if Ether is classified as a security, there will be
"tremendous outcry from not just the crypto community but different
politicians and certain regulators."
- The Ethereum co-founder
said the company engaged with the regulators five years ago to explain
that most tokens are not securities.
- We "helped them significantly understand lots of tokens are not securities, and then they went away," he says.
- However, now "Gary and team now think almost everything's a security," says Lubin.
- He
argued that Ethereum's multitude of use cases do not classify it as a
security because "There is no centralized set of promoters or builders
that is specifically trying to raise the value of Ether and enrich
investors," he explains.
- The focus is on stablecoins now, and the SEC is considering a ban on staking, which would hinder innovation.
- William
Hinman, the director of the SEC's Division of Corporate Finance, after
carefully examining Ether, said, "based on my understanding of the
present state of Ether, the Ethereum network and its decentralized
structure, current offers and sales of Ether are not securities transactions."
- In
most cases, a security begins as a security and remains a security;
investors buy/sell it in hopes that the value will increase over time
and they will get returns.
- Ether started as a security and evolved into a currency over time. Here is how:
- Ether
does not fit into the investment category because Ether is used as a
currency to pay third parties to verify transactions on the network.
- Since the token is being used to pay for services on the network, it is safe to conclude that it is not an investment.
