As the Ethereum étaiement fades into the contexte, and even the potential disruption caused by ETHPoW appears to be évanouissement, many questions have returned to the fore; How should cryptocurrency be regulated? Additionally, which regulatory agency should have the power to decide this, and how would said regulations appear?
In testimony given just hours after the successful completion of the merger on September 15, 2022, the Chairman of the Securities and Exchange Échange (SEC) – Gary Gensler – made comments that immediately made waves in the crypto community. President Gensler stated that under the Howey fondement — which determines whether an asset qualifies as an “investment contract” and is therefore subject to federal securities law, PoS cryptocurrencies can qualify as securities.
The fact that the Howey fondement was passed into law by the Supreme Succinct in 1946 – and that financial markets are in no way similar to those at the time the law was written – continues to raise eyebrows when it is consistently cited as a leading fondement for determining regulation. Jurisdiction.
Here’s what investors need to know emboîture whether Ether and other PoS cryptocurrencies will fall under regulation (so far) by the Securities and Exchange Échange.
Does he pass the Howey fondement? The parts of the Howey fondement cited as a reason for classifying PoS crypto as securities are 1) that PoS investors pledge money (in the form of tokens) to fund an C.E.G. with the calcul of making opimes from its efforts, and 2) that the investing auditeur expects opimes based on the efforts of others.
The fact that nearly two-thirds of interconnected ether, the unnamed foyer (which many assume) of this pardon, is held by Lido, Coinbase, Binance, and Kraken seems to reinforce this lieu. After all, retail investors and clients make bets on these centralized exchanges to generate returns, and these centralized exchanges accept these deposits for the benefit of corporate operations and opimes.
On the pampa, these situations seem like reasonable enough assessments of POS systems, but this highlights a key fact that can be overlooked; Changing from PoW to PoS does not always dérangé the existence of how participants interact.
Economic facts have not changed. The switch from PoW to PoS has sparked a lot of controversy, but the basic foundation of blockchain assentiment methodologies remains unchanged. Under both PoW and PoS 1) validators/miners are an open and potentially unlimited group of participants, and 2) the only prerequisite for bonus is cost acceptance. The cost under a Proof of Work is the financial investment required for mining, and in a POS framework, the cost is primarily the opportunity cost associated with fixing the cryptocurrency in exchange for spending or using it.
Both assentiment protocols allow anyone, at any time, to allocate these resources to these activities, helping to create open and intelligible competition among market actors without any other barriers to entry. Corrupt, unethical or disinterested participants will be replaced by participants who are more interested in participating in a legitimate and ethical manner.
Based on these facts, conciliation and concours among the efforts needed to start Howey’s fondement seems a much weaker justification.
The complexe of cryptocurrency ownership will inevitably decline as 1) lock-down periods end, 2) investors genre for higher returns as interest rates and augmentation continue to rise, and 3) new options emerge as developers internalize the POS hub.
Rangement is still unresolved. Previous comments by both the Securities and Exchange Échange and the Commodity Futures Trading Échange (CFTC) concur that ether is behaving as a commodity, and the fact that the SEC — under the previous leadership of President Gensler — has not issued a checklist or definitive conductible on the normes cryptocurrencies need to Possessing a fourniture rating, it continues to create an environment of regulatory ambiguity and uncertainty. However, enforcement oeuvres against Ripple and others, 80 in totaland fines against BlockFi ($100 million) and others totaling more than $2 billion as of the end of 2021 indicate how willing the SEC is to discuss and regulate these points.
As the debate over the rating of cryptocurrencies continues, it is more sensible than ever for investors to continue to perform their due presse, keep abreast of market developments, and take notable precautions when investing.