SEC Chairman Gary Gensler implied that proof-of-stake tokens like Ethereum should be regulated as securities, contradicting view of Commodity Futures Trading Commission Chairman Rostin Behnam
Gary Gensler, the head of the U.S. Securities and Exchange Commission (SEC), has once again implied that proof-of-stake (PoS) tokens, which include Ethereum (ETH), should be regulated as securities, Bloomberg reports.
During an SEC meeting held on Wednesday, the head of the organization highlighted that the individuals behind these tokens frequently utilize social media platforms to promote their ventures, attracting investors who anticipate making profits. He suggested that these projects should seek professional guidance in order to ensure compliance.
Gensler’s statement was in response to a question about the different views between him and Commodity Futures Trading Commission Chairman Rostin Behnam, who recently stated that he considers Ether a commodity.
During an interview in February, Gensler suggested that Ethereum might fall under the classification of a security. He believes that cryptocurrencies, excluding Bitcoin, are securities since entrepreneurs utilize diverse methods to endorse their tokens and attract investors. This view contradicts with the view of the head of the SEC’s sister regulatory agency.
Unlike proof-of-work (PoW), which relies on computational power and energy consumption to solve complex mathematical problems, PoS relies on the amount of cryptocurrency held by participants (their “stake”) in order to determine their chances of creating a new block and validating transactions.
There are still heated debates about whether or not Ether can be considered a security after the second most popular blockchain network transitioned away from proof-of-work last year.
Crypto firms aim to avoid being regulated as securities due to stringent requirements that come with that label. However, regulatory scrutiny is increasing.
As reported by U.Today, New York Attorney Genera Letitia James slammed cryptocurrency exchange KuCoin with a lawsuit earlier this month for allegedly selling unregistered securities. In the lawsuit, James suggested that the Bitcoin competitor is an unregistered security since it was generally treated as a commodity. This is a rare instance of the token being given that legal status.
Gensler declined to comment on any specific token after repeatedly refusing to mention Ethereum in the past.