In a press conference on March 15th, Chairman of the U.S. Securities and Exchange Commission (SEC) Gary Gensler stated that tokens utilizing staking protocols are securities under U.S. law and therefore fall under the jurisdiction of his agency.
Gensler explained that securities laws may be triggered in this case because investors are expecting profits when purchasing tokens under the Proof-of-Stake mechanism. He emphasized that any promotion of a protocol and locking up tokens within the protocol must comply with regulations, similar to intermediaries.
This statement comes after the SEC’s vote to push three new rules to tighten cybersecurity, consumer privacy rights, and system standards for the securities industry, including digital asset areas.
Since Ethereum’s transition to The Merge, Gensler believes that all Ethereum transactions fall under U.S. jurisdiction and views staking ETH as a security investment contract. However, he has repeatedly excluded this possibility for Bitcoin.
The securities argument has been frequently used by the agency in recent legal actions, including former CEO Sam Bankman-Fried and FTX’s FTT token, Do Kwon and Terraform Labs, hacker Mango Markets’ Avraham Eisenberg and MNGO token, Kraken’s staking service, lending service Genesis and Gemini exchange, Paxos and Binance’s BUSD stablecoin, investment platform Voyager, and Binance.US exchange.
Previously, the leader of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, had a “different” view, considering most stablecoins as commodities and Ethereum not a security.
On the other hand, New York Attorney General (NYAG) Letitia James accused Ethereum of being an unregistered security, and its creators, including Vitalik Buterin, have not complied with federal law in the lawsuit against KuCoin exchange on March 9th.
Despite the differing opinions between Gensler and Behnam, the NYAG lawsuit is the first time a regulatory agency has made an official statement about Ethereum in court.
This article was republished from azcoinnews.com
