Last week, Ethereum, the second most valuable crypto behind Bitcoin, successfully completed its The Merge update. A successful transition to proof-of-stake that has created new problems for the cryptocurrency. Indeed, many experts believe that Ethereum may have changed its economic and fiscal nature.
A war between Ethereum and the SEC
The majority of these experts belong to the Security Exchange Commission (SEC), which is the agency used to regulate financial markets in the United States. The SEC is currently trying to establish its authority over the cryptocurrency industry. It claims that almost all cryptos are securities. Therefore, it asserts jurisdiction over crypto tokens and exchanges.
Indeed, according to reports from the US media, Gary Gensler, the current SEC boss, reported just hours after the successful transition that his department was already analyzing a possible change in the rank and priority given to the crypto currency Ethereum.
Now, the SEC is drawing fire from the crypto community by adding another statement. It claims that the United States has jurisdiction over all of Ethereum. In other words, the SEC has authority over every Ethereum transaction.
How could this statement affect the crypto?
The SEC has long tried to claim jurisdiction over the second largest crypto. When Ethereum was still using the Proof of Work mechanism, ETH was one of only two cryptos along with Bitcoin recognized as a commodity asset by federal regulators. The reclassification of Ethereum as a “security” asset poses very high risks not only for the network and its users, but also for all industry players.
Through this change in rank, Ethereum investors as well as token issuers and managers could be subject to new taxation rules. Differences will be particularly evident in their reporting methods.
The changes will further affect the new validators responsible for maintaining network security and the various business entities whose primary role is to market staking services to individuals and institutions.
To be continued….