Uncertainty about the regulation of the asset by the SEC may have influenced the fall

Ethereum lost almost 20% of its market capitalization after switching to PoS

03.10.2022 - 12:30


2 min

What’s new? According to Finbold, since Ethereum switched from Proof-of-Work (PoW) consensus algorithm to Proof-of-Stake (PoS), the network’s capitalization has dropped by almost 20%, from $195,89 billion to $159 billion (CoinMarketCap data as of October 3, 12:20 UTC). The transition to PoS took place on September 15. In addition, following the upgrade, Ethereum faced regulatory uncertainty based on its possible classification as a security by the US government.

News on the Finbold website

What other data has been released? On September 16, the US Securities and Exchange Commission (SEC) Chair Gary Gensler said that the regulator may begin treating ETH as security after Ethereum switches to PoS. He said that the asset should pass the so-called Howey test, which will determine whether the token is a security. Such a test should reveal whether investors expect income from third-party work. In the case of Ethereum, that could be evidenced by the presence of a staking feature.

In addition, in late September, Lachlan Feeney, the CEO of blockchain development agency Labrys, said that the Ethereum network could face censorship as a result of the transition to the new consensus algorithm. According to him, 45% of validators using Flashbots’ software are forced to comply with US sanctions.

At the time of writing, 1 ETH is worth $1299, which is about 18% lower than the $1590 mark seen on September 15 during the transition to PoS.

To find out what Vitalik Buterin thinks is most important for Ethereum after The Merge, see GetBlock Magazine’s article.

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