Last week, the world’s second-largest blockchain, Ethereum, successfully transitioned to Proof of Stake after a painstaking eight-year development process. But on Monday, investors woke up to the token’s price at its lowest point since July. Here's why
Is Ether a security? The question has been debated since the very beginning of Ethereum, with the blockchain’s developers hoping to avoid passing the and thus saving Ethereum from much stricter regulatory oversight. For years, Ethereum leaders have argued that the token is sufficiently decentralized, and regulators have mostly stayed away.
But last Thursday, SEC Chair Gary Gensler said that a token using Proof of Stake might contribute toward it passing the Howey Test. “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,” Mr. Gensler told reporters after a congressional hearing,to the Wall Street Journal.
Some crypto-focused lawyers, however, say that there’s a long road from Gensler’s comments to Ether being classified as a security.“The arguments about a token turning into security are actually not that strong,” says Collins Belton, a prominent crypto lawyer and managing partner of legal firm Brookwood. “The primary differences between Proof of Stake and Proof of Work are the software you use and the hardware required.
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