Jack Dorsey, the former CEO of Twitter and a Bitcoin supporter, ignited a fierce debate on social media by stating that Ethereum (ETH) could be seen as a security.
Dorsey’s comment was met with backlash and ridicule by Udi Wertheimer, a Bitcoin Ordinals developer, who called Dorsey a “clown.”
Dorsey replied by asking Wertheimer to teach him why ETH was not a security.
Wertheimer then shared an old video of Gary Gensler, the Chair of the US Securities Exchange Commission (SEC), saying that ETH was sufficiently decentralized and not a security.
Gabor Gurbacs, a strategy adviser to Tether and VanEck, suggested that Ethereum’s recent switch to proof-of-stake might have changed the SEC’s view on securities laws. This online spat comes amid recent SEC lawsuits against crypto exchanges Binance and Coinbase. The SEC accuses them of offering crypto assets such as Cardano (ADA), Solana (SOL), Polygon (MATIC), Binance Coin (BNB), and others without registering them as securities.
Dorsey, further stirring the pot, endorsed a screenshot of a 2015 post by Coinbase CEO Brian Armstrong, in which Armstrong dismissed altcoins as a distraction and focused on Bitcoin.
Dorsey also retweeted a video of Jack Mallers, the CEO of Bitcoin Lightning app Strike, criticizing Armstrong for prioritizing altcoins over Bitcoin and the Lightning Network. Interestingly, it is worth noting that while Dorsey was the head of Twitter in 2021, the company sold 140 Ethereum-based nonfungible tokens (NFTs). However, Dorsey himself did not invest in ether at the time. In August 2021, he downplayed Ethereum’s potential to disrupt big tech, further showing his preference for Bitcoin.
SEC’s assessment of Ethereum’s regulatory status Dorsey’s remarks and the resulting controversy are important when the SEC is actively considering the classification of ethereum and other cryptocurrencies.
During a congressional hearing in early February, SEC Chair Gary Gensler admitted that tokens like Ethereum are often sold as investments, which could fall under federal securities law. However, the SEC’s position is unclear. Gensler did not confirm whether ETH should be considered a security or a commodity during a House Financial Services Committee hearing in mid-April. While the SEC has taken action against companies that create tokens on the Ethereum platform and has charged prominent influencers with promoting unregistered securities, an official statement on Ethereum’s classification is still pending.
The commission is carefully evaluating all relevant factors before making a final decision on ETH’s regulatory status, which could potentially affect the entire crypto industry.