Ethereum’s transition to proof-of-stake can make it a security


As Ethereum struggles to break above crucial price levels despite the merger, Securities and Exchange Commission (SEC) Chairman Gary Gensler’s latest comment has sparked fresh debate.

According to Gensler, a crucial test used by courts to decide whether an asset is a security could be met by cryptocurrencies and intermediaries that allow investors to “stake” their coins, reported the the wall street journal.

SEC Chairman continues to push security discourse forward

“From a coin perspective…this is another clue that according to the Howey test, the investing public anticipates profits based on the efforts of others,” he told reporters after a hearing at the Congress.

In Ethereum, staking includes depositing 32 ETH to activate the validator software. After the proof-of-stake (PoS) transition, the Shanghai upgrade – scheduled for six to 12 months post-merger – is an essential phase as it releases staked ETH.

Staked ETH and freshly mined ETH immediately after the merger will all remain locked to the Beacon Chain and cannot be withdrawn until the Shanghai upgrade is activated.

Gensler believes that “[Staking] looks a lot – with some labeling changes – on loan.

Crypto firms including Coinbase, Circle, Gemini, Nexo, and Celsius were previously flagged by federal regulators for their yield products, sparking discussion of “unregistered securities.”

However, crypto industry proponents have criticized the SEC, pointing to its “regulation by enforcement” strategy and lack of regulatory guidance.

Merger Excitement Fails to Shine Ethereum

The regulatory debate over “staking” is not the only discussion on the Ethereum Merge event. The highly anticipated redesign also failed to trigger its price action. As of this writing, Ethereum has lost nearly 9% of its value over the past day.

While maintaining a 24-hour range between $1,454 and $1,641 on CoinGeckothe second-largest crypto remains down 70% from its high of around $4,870.

At current price levels, only 52% of ETH holders remain in profit according to current market data analyzed by Intheblock. With this, only 1% of holders break even while 47% run out of money. Despite the weak price action, the exchange and on-chain signals are leaning towards a bull market at press time.

Source: in the block

Meanwhile, the global cryptocurrency market capitalization has also fallen by nearly $1 trillion, as Bitcoin trades below the crucial $20,000 level.

Miners turn to Ethereum Classic and other alts

The PoS transition has also forced miners to turn to other options like Ravencoin and Ethereum Classic. According to CryptoCompare, since the start of the Merge day, Ethereum Classic’s hash rate has increased by 240%, while Ravencoin has increased by 51%.

CoinMarketCap’s PoW rankings have now ranked Dogecoin under Bitcoin as the biggest crypto in the category.

Source: CoinMarketCap

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