A law professor at Georgetown University in Washington warned crypto investors. Accordingly, it is possible that a very popular altcoin project is the new target of the SEC. The law professor says the SEC may recognize the altcoin in question as a “security.”
“This altcoin could be the new target of the SEC”
According to law professor Adam Levitin, it is possible for the SEC to recognize ETH as a security. The reason for this is basically the changes that are expected to be experienced with the Merge upgrade. As we have reported at Kriptokoin.com, Ethereum will release the Merge upgrade in September. Even Merge’s news contributed to the altcoin market’s upward movement over the past week. Using the Proof-of-Work model with Merge, the Ethereum network will switch to Proof-of-Stake. Thus, it will be much more energy efficient, deflationary and faster. There will also be a decrease in the high transaction fees, which are constantly criticized. However, due to the tight regulatory environment in the US, investors should be cautious. If the SEC recognizes ETH as a security, a drop in price is likely to occur.
Is Ethereum a security?
SEC Chairman Gary Gensler is very sanction-oriented when it comes to altcoin projects. It does this because of the criticisms brought to the SEC recently that it cannot control crypto. Accordingly, the easiest way for the SEC to gain control is to recognize tokens as securities. If this happens, most tokens with the Proof-of-Stake consensus mechanism will be adversely affected. Law Professor Levitin thinks so too. According to him, altcoin projects using the PoS model can be recognized as securities. The professor reinforces this prediction on historical grounds. He cites a test used by legal institutions in the USA in 1946. Accordingly, the Howey Test defines securities as “an investment contract where profit is expected.”
With Ethereum Merge, Ether will take its place among the altcoin projects that can be staked. Thus, Ether and other PoS networks will fit the above definition. That is, the SEC can declare PoS tokens as securities, citing this definition. Ethereum currently provides 4.2% annual stake income. This satisfies the network’s requirements. Users who stake their ETH also confirm blocks so the network continues to work. In terms of staking, Ethereum 2.0 seems to meet the definition of an “expedient investment contract”. Gary Gensler already sees cryptocurrencies as securities. Gensler, who participated in a television program in June, said that he does not only see Bitcoin as a security.
How about ETH price?
Ethereum price has gained over 30% in the past 2 weeks. However, it hit some resistance over the weekend. It was then withdrawn on Monday morning. According to CoinMarketCap data, ETH was changing hands at $1,543 at the time of writing. The leading altcoin has dropped 2.84% in the last 24 hours. However, the coin is still well below its high. Accordingly, Ether is trading 69% lower than its all-time high. Additionally, it is possible for more price volatility to emerge in the market this week. This is because macroeconomic events such as the Fed’s interest rate decision will take place.
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