The war between Ethereum and the SEC continues to exist. The Securities and Exchange Commission is currently trying to establish its authority over the cryptocurrency industry. The SEC claims that almost all cryptocurrencies are securities. Hence, it asserts its proficiency over crypto tokens and exchanges.
Recently, SEC Chairman Gary Gensler revealed that Ethereum could also be considered a post-merger security. Today, the SEC is drawing the ire of the crypto community by claiming that the United States has jurisdiction over all of Ethereum. It implies that the SEC has authority over every Ethereum transaction.
Holy crap! SEC trying to claim jurisdiction over all #ethereum transactions since about 45% of the nodes are in the USA. Thus all transactions globally should be considered of US origin! YIKES!!! Scary previous.
— Lark Davis (@TheCryptoLark) September 19, 2022
Lark Davis, a major crypto influencer, believes that this claim sets a dangerous precedent.
The battle between the SEC and Ethereum
The SEC has long tried to claim jurisdiction over the second-largest cryptocurrency. Earlier, SEC Chairman Gary Gensler revealed that he considers bitcoin to be the only cryptocurrency that is a commodity. The SEC has no regulatory authority over commodities. They fall under the jurisdiction of the Commodity Futures Trading Commission or CFTC.
Recently, Gensler changed his stance on Ethereum and referred to it as a commodity as well. However, after the merger, the SEC believes it has jurisdiction over Ethereum. The merger changed Ethereum’s consensus mechanism from Proof-of-work to Proof-of-stake. Gensler revealed that cryptocurrencies under the Proof-of-stake model can pass the Supreme Court’s Howey test.
Now, the SEC claims that all Ethereum and its transactions will be subject to US laws. The SEC has filed a civil lawsuit against Ian Ballina for failing to register a cryptocurrency as a security prior to the launch of the ICO. In the complaint, the commission claims that since Ethereum’s validating nodes are mostly located in the United States, it has jurisdiction over all of Ethereum.
More than 45% of nodes are currently in the United States.
SEC receives backlash
The SEC continues to incur the ire of the crypto community. The commission is already drawing ire from the community due to its lawsuit against XRP and its decision on the Bitcoin ETF.
Lark Davis, a prominent crypto influencer, finds the SEC’s claims bizarre. He also believes that it sets a dangerous precedent. It is also in the United States that bitcoin has the most miners.
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