The United States is going to take action to regulate ETH. This time, the United States wants to define ETH as a security. Is it bullish or bearish?
What will it mean if the United States really defines ETH as a security?
Ethereum infrastructure development company ConsenSys posted on social media, "If the U.S. Securities and Exchange Commission (SEC) successfully defines Ethereum as a security, then companies and developers will see years of work go to waste and billions of dollars of economic value destroyed, which may lead to large-scale unemployment of American workers."
In addition, it stated in the article "ConsenSys Sues the U.S. SEC to Protect the U.S. Ethereum Community", "Ethereum is a global computing platform, not an investment plan. Ether is not a security, but a commodity, which has been confirmed many times by the U.S. Commodity Futures Trading Commission (CFTC). Applications that allow people to trade using Ethereum are not securities brokers and therefore cannot be regulated by the U.S. SEC. The illegal expansion of the U.S. SEC's power threatens the United States' position as the leader of the next generation of the Internet."
ConsenSys counterattacks the SEC one by one, why Ethereum is not a security
Ethereum has been scrutinized by the SEC (U.S. Securities and Exchange Commission), which hinted that it will list Ethereum as a security.
The move has sparked controversy, especially since the SEC had made it clear in 2018 that Ethereum did not meet the standards of a security.
In light of these events, blockchain software company ConsenSys has strongly opposed the SEC's decision to classify Ethereum as a security. Here are four reasons:
First, the SEC's historical stance on Ethereum
In 2018, William Hinman, then director of the SEC's Division of Finance, gave an important speech in which he made it clear that Ethereum was not considered a security.
Second, the CFTC's classification of commodities
The CFTC, another US regulator, has always recognized that Ethereum is a commodity. Recently, in a civil enforcement action involving Crypto asset exchange KuCoin, the CFTC explicitly classified Ethereum as a commodity.
Third, it is decentralization and open protocols
The essence of Ethereum's architecture is decentralization. Unlike securities, Ethereum runs on a platform and all information is public.
Fourth, it is irrelevant to the shift in consensus mechanisms
Ethereum's recent transition from proof-of-work (PoW) to proof-of-stake (PoS) consensus mechanisms was listed by the SEC as a potential reason for reclassifying Ethereum.
In short, the SEC's reclassification of Ethereum as a security does not stand up to scrutiny. Especially considering the SEC's historical regulatory approach, the classification of other regulators, the decentralized nature of Ethereum, and the irrelevance of its internal consensus mechanism to securities laws.
What should we do? Is it bullish or bearish?
If this news lands, it will be a long-lasting big bearish.
Reasons for bearishness:
Strengthening regulation: If ETH is defined as a security, it will be subject to stricter securities regulations. This may restrict the free trading of ETH, increase compliance costs and transaction complexity.
Increased market uncertainty: Such decisions may trigger market concerns about future regulatory policies, leading to a decline in investor confidence and possible capital outflows.
Hindered innovation: Strict securities regulation may hinder the pace of innovation and development in the Ethereum ecosystem, as developers may need to spend more time and resources to meet regulatory requirements.
Trading restrictions: After being identified as a security, ETH may only be traded on specific, regulated trading platforms, which will limit its market liquidity and accessibility.
In short, the compliance of the currency circle will definitely come. For the currency circle, don't worry about gains and losses and create anxiety.
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