According to the Chairman of the regulator, the asset should pass the Howey test

SEC will check the model of ETH after the network’s transition to PoS

16.09.2022 - 06:45

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2 min

What’s new? The US Securities and Exchange Commission (SEC) Chair Gary Gensler has said that after the Ethereum network switches to the Proof-of-Stake (PoS) consensus algorithm, the regulator may begin treating ETH as security. According to The Wall Street Journal, Gensler believes 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, according to the SEC Chairman.

The Wall Street Journal’s material

What else did Gensler add? According to the SEC Chairman, if an intermediary, such as a cryptocurrency exchange, offers staking services to its customers, it “looks very similar—with some changes of labeling—to lending.”

“From the coin’s perspective…that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others,” Gensler explained.

Earlier, the SEC proposed a more flexible format for registering digital tokens as securities. According to Gensler, such a method would mitigate existing disclosure requirements. He added that the commission’s staff is working on an approach that would allow tokens in the status of securities and exchange-traded commodities to be traded on the same market.

To learn how the Ethereum upgrade will affect the cryptocurrency market, see GetBlock Magazine’s article.

Author:

Vasiliy Smirnov Vasiliy Smirnov

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