The Chairman of the Securities and Exchange Commission (SEC), Gary Gensler, has re-emphasized the urgency of defining Proof Of Stake (PoS) tokens as “securities”, and in the first place Ether (ETH ).
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Le président de la SEC qualifie de nouveau l’Ether (ETH) de « security »
Gary Gensler and the SEC take on Proof Of Stake again
Securities and Exchange Commission (SEC) Chairman Gary Gensler continues its crusade against Proof Of Stake (PoS) tokens. It ensures that they correspond to the definition of securities (“securities”, or financial title in French) defined in the Howey test.
In two words, the Howey test implies that an asset is an investment contract if it meets the following characteristics:
An investment of money; In a “joint” enterprise; An expectation of profit from investors; The investor has no role in the success of the business.
Although at first glance quite broad, this concept initially defined by the SEC is nevertheless a benchmark in judging an asset as an investment security. If a token verifies the 4 pillars of the Howey test, then it is supposed to come under the authority of the American regulator.
Concretely, the most complicated point to prove is expectation of profit from investors. It is on this aspect that the SEC has been struggling to pin Ripple and its XRP for several years.
According to Gensler, when asked by reporters on the sidelines of a committee vote on Wednesday, the principle of staking ensures returns expected by investors and therefore implies that all the tokens concerned must fall under the law.
The Chairman of the SEC clarified his point as follows:
“Whatever they promote and put into a protocol, which is often developed by a small group of entrepreneurs and developers, I would just suggest that each of these token issuers…seek compliance, and likewise for intermediaries »
In other words, in addition to the teams developing the projects and issuing the tokens, the SEC also targets platforms offering the purchase of these cryptocurrencies. They are invited to comply.
👉 To go further – What is proof of stake or proof-of-stake (PoS)?
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The race for regulation
According to our colleagues from The Block, the first to have relayed the information, Gary Gensler’s remarks were made after journalists asked him what he thought of the statements made last week by Rostin Behnam.
Indeed, the Chairman of the Commodity Futures Trading Commission (CFTC) has indeed stated that Ether (ETH) is a “commodity” and should therefore be regulated by its own agency. This type of security is opposed to a “securitiy” in the sense that it designates rather a raw material, a basic product.
The two regulators have long been disagree on who will have the honor of regulating the cryptocurrency market. Gensler said Bitcoin (BTC) can indeed be defined as a commodity, but the vast majority of altcoins, including Ether, qualify as a security.
Last week, Gary Gensler’s argument that Proof Of Stake tokens are “securitiies” received relatively unexpected support. In effect, the New York Attorney General’s Office (NYAG) has filed a lawsuit against the KuCoin exchange for participating in the listing and sale of some of these tokens.
To the extent that, the noose of American regulators seems to be tightening and it will be important to follow very closely the actions that will be taken in the coming weeks.
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