Ethereum has captured the attention of the SEC and CFTC as the US regulators inspect the cryptocurrency in order to determine if it is a security and should be regulated as such.
SEC & CFTC examining whether Ethereum is a security
After Bitcoin, Ethereum is the most popular and valued cryptocurrency in the world which has come under the scrutiny of US regulators who are working out the decision if this digital currency among others should be regulated as securities under the federal law.
Reportedly, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are investigating into the popular cryptocurrencies to determine if they classify as a security or not.
Ether, the native currency of the Ethereum blockchain is currently the focal point of the inquiry which was sold through a presale in 2014. In the smart contract of ethereum, for every transaction, a cost incurs that is measured in gas. The price of the gas is paid in ether by the requester which is basically the currency that runs everything in Ethereum.
People familiar with the matter reported that some regulators are also showing major concern about the way ETH was first distributed which was one of the first ICOs that raised over 31,000 BTC. Regulators are considering it as a securities sale as the investors bought the coin on the speculation of a rise in value in future.
The regulators are basically inspecting the nature of ethereum in the way that whether its creators exercise influence over ETH in the same way as the stock prices of a company largely depend upon its managers and the strategies and investments adopted by them.
The scrutiny hit the prices of Ethereum yesterday which currently ranks at the second spot with a market cap of about $67 billion.
Ethereum co-founder: Ether is not a security, no need for regulation
Joseph Lubin, the co-founder of Ethereum in response to the regulators considering Ether a security stated that it had been ensured that Ethereum is not a security right from the time they developed the technology and the platform:
“We spent a tremendous amount of time with lawyers in the U.S. and in other countries, and are extremely comfortable that it is not a security; it never was a security.”
He further stated: “This is a way of accessing a shared compute resource, so I’m not sure Ether needs to be regulated in any way.”
Last week, a former regulator claimed ETH to be a non-compliant security in whose response the Ethereum Foundation commented that it owns less than 1 percent of the total supply of ETH and doesn’t control its demand or supply.
Reportedly, the matter will be further discussed for possible measures on May 7 that will include a regulatory body along with SEC and CFTC officials.
Though yesterday ETH price took a dip, it is yet again in the green and right now sits at $680 price level.
Do you think Ethereum will lose the fight for being classified as security and then regulation with the US regulators? Let us know your views in the comment section below!
A computer science engineer, I have been adamantly following the blockchain and cryptocurrency industry for the past 2 years. A crypto enthusiast and hardcore blockchain follower. Reach out to him at [email protected]