The US Securities and Exchange Commission's (SEC) recent actions toward Ethereum have drawn criticism, with some analysts comparing them to an attempt to reverse progress. In a March 21st newsletter, Fortune Crypto criticized the SEC's approach, calling it "foolish" and akin to "putting toothpaste back in the tube."
The crux of the issue lies in the SEC's apparent shift in its stance on Ethereum. The Commission has subpoenaed US companies for transaction records tied to the Ethereum Foundation, hinting at a potential classification of Ethereum as a security. This move has raised concerns within the cryptocurrency industry, given the vast ecosystem built upon Ethereum, including applications and layer two chains.
Further complicating the situation is Chairman Gary Gensler's past remarks suggesting Ethereum was not a security. This inconsistency and the SEC's silence during Ethereum's formative years have made many question the motivations behind the recent shift.
Experts point to the possibility of political influence. With Ethereum's transition to a proof-of-stake (PoS) model in late 2022, some speculate that the SEC's new argument hinges on PoS, framing it as a series of investment contracts. However, critics argue that this rationale needs to be stronger, considering the substantial investment already poured into the Ethereum network based on prior SEC signals.
The prevailing theory centers around political pressure. Observers suggest that Gensler faces pressure from progressive lawmakers wary of cryptocurrencies. These lawmakers, including Senator Elizabeth Warren, have advocated against approving Bitcoin spot ETFs, highlighting their ideological reservations towards cryptocurrencies.
While some of these concerns may hold merit, many see the attempt to exert control over Ethereum as a lost cause. The network's decentralized nature and significant growth render such efforts impractical.
The article highlights a proposed new staking method from Vitalik Buterin, Ethereum's co-founder, to address centralization concerns. This proposal suggests a path forward that prioritizes innovation and responsible regulation within cryptocurrency.
