FTX Collapse Brings In Regulators - What Now For Ethereum?
Regulators are scrutinising the crypto space with even more of a keen eye after the FTX bankruptcy. How could this impact Ethereum?
The FTX debacle has brought crypto firmly under the regulatory microscope once more. If it wasn’t already the target of every regulator worth their salt across the globe, then it certainly is now.
As the crypto industry starts the long and arduous task of trying to pick up the pieces once again, a regulatory storm appears to be coming its way.
Very Careful Regulation
US Treasury Secretary Janet Yellen has responded to the news by stating (not for the first time) that the crypto market needs “very careful regulation”, as reported by Bloomberg.
When this regulation arrives, many crypto projects are likely to be labelled with a “security” tag. Gary Gensler, Chairman of the SEC, was quoted in a Squawk Box video with CNBC as saying that “investors need better protections in crypto”.
Is Ethereum A Security?
One cryptocurrency that hitherto has caused a lot of discussion as to whether it is a security is Ethereum. Twitter user ‘Crypto Tea’ thinks that FTX is to blame for putting “a fire under regulator’s *****”.
She quoted Senator Elizabeth Warren who said that the crypto industry “appears to be smoke and mirrors” and that “aggressive enforcement” was needed.
On the subject of Ethereum Crypto Tea tweeted that Ethereum’s switch to proof-of-stake had “put a huge target” on Ethereum’s back. She wrote that the issue of coins that were then locked by exchanges was “considered an investment” and that Vitalik’s hiring of developers and a marketing team was “considered a common enterprise”.
Crypto Tea referenced the fact that Gary Gensler has said that “Ethereum passes the Howey Test” and so should be “considered a security”, and expressed the view that Bitcoin wasn’t a security “because it is sufficiently decentralised”. She said: “If Ethereum is not a security, then neither is any other proof of stake crypto.”
Crypto Tea concluded that the SEC will call 99% of cryptocurrencies securities, so they will then have to register with the SEC, or not be able to sell to US citizens.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.