Undergo the most significant shift to Proof-of-Stake (PoS), SEC head Gary Gensler paid close attention to the event.
On Thursday, September 15, shortly after the Ethereum Merge event, SEC head Gary Gensler stated that crypto assets and intermediaries that allow users to "stake" must satisfy the Howey Test to establish if the asset is a security or not. The Howey test examines whether investors anticipate a return on the efforts of third parties.
Following the Congressional hearing on Thursday, the SEC chair told reporters, "From the coin's perspective...there's another indicator that under the Howey test, the investing public expects gains based on the work of others."
Gensler, on the other hand, stated that he was not referring to any cryptocurrency at this time. According to WSJ, the announcement coming shortly after the Merge upgrade could raise some concerns.
The SEC has been quite clear about bringing digital assets under securities regulations, particularly cryptocurrencies marketed with the promise of future rewards.
What’s Up With Crypto Staking?
Even before the Ethereum Merge, the Proof-of-Stake (PoS) model was widely used for crypto staking as a method of verifying blockchain transactions.
The SEC chair stated that if the crypto exchange provides stake services to its users, it appears to be quite similar to lending—with some labeling differences. Mr. Gensler has stated several times that businesses that provide crypto financing products must register with the government.
However, the agricultural committee's crypto bill from last month states that Bitcoin and Ethereum would be recognized as commodities. Earlier this month, a report came that the CFTC would be looking after cryptocurrency exchanges operating in the nation, and Mr. Gensler was ok with it. However, in order to fully regulate the crypto market, the CFTC would require more infrastructure and capabilities.
Read also: How Ethereum is doing after the merger?
