In response to a comment on June 6, former Twitter CEO Jack Dorsey said that Ethereum (ETH), the world’s second-largest cryptocurrency exchange, is a security under US law. This controversially indicates that holders of ETH should, as required by law, follow the Securities and Exchange Commission’s (SEC) standards.
Dorsey Claims Ethereum Is A Security
Dorsey, a well-known Bitcoin advocate and the CEO of Square Inc, a financial services business that owns Cash App, has been outspoken about the underlying technology of Bitcoin. Dorsey believes Bitcoin has the potential to revolutionize the way money is exchanged. Against this backdrop, Bitcoin, as a network and payment solution, has the potential to contribute to a more egalitarian financial system. Square has already made a Bitcoin investment. Cash App, on the other hand, continues to conduct billions of BTC transactions. According to the SEC and the Commodity Futures Trading Commission (CFTC), BTC, the native currency of the Bitcoin(BTC) network, is a commodity, not an investment contract.
Their jurisdictions, however, can overlap due to their vast scopes. Nonetheless, their support for Bitcoin as a commodity can help increase acceptance and liquidity. Dorsey’s statement comes as a regulatory storm threatens to drag ETH into the mix for a variety of reasons. During a congressional hearing in early February, the SEC’s head, Gary Gensler, stated that tokens like Ethereum are promoted as investments, making profits only from the labor of others. As a result, the agency believes it is an investment contract or security subject to federal securities legislation. Nonetheless, he noted, the commission was monitoring the crypto markets, including Bitcoin and Ethereum, to ensure they were efficient and fair.
ETH Remains Sensitive To Regulatory Developments
The SEC has taken enforcement charges against many entities that mint Ethereum tokens. The SEC has also accused prominent influencers of pushing coins that they allege are registered securities. Despite this, the SEC has yet to publish an official declaration on the cryptocurrency’s classification. After considering all relevant criteria, the commission may decide not to regulate ETH as a security.