The Ethereum Merge has officially marked the network transition to a proof-of-stake (PoS) mechanism, now SEC should determine whether an asset is a security
On Sept. 15 at 06:42:42 UTC at block 15,537,393, crypto enthusiasts saw the merging of the Ethereum mainnet execution layer and the Beacon Chain’s consensus layer. The Merge will cut Ethereum energy consumption by a massive 99.95% compared to the proof-of-work system. However, now the blockchain will face enhanced scrutiny from SEC.
Securities and Exchange Commission (SEC) Chairman Gary Gensler said that cryptocurrencies and intermediaries that allow holders to “stake” their coins might pass the Howey test to determine whether an asset is a security. Namely, the staking process is very similar to traditional lending, making digital assets securities under SEC jurisdiction.
Issuers of securities are required to file extensive disclosures with the SEC. The SEC has repeatedly stated that firms offering crypto-lending products need to register with the agency and penalized BlockFi Lending with a $100 million fine for failing to do so this year. Ether’s new consensus mechanism may trigger securities laws as well.
The joy of the long-awaited event gave ETH price a slight pump, reaching $1,643 per token. However, in a few hours, the cryptocurrency declined to late August levels. It is currently trading at around $1,472.
The Merge is a result of several years of hard work from the Ethereum Foundation. Besides sustainability improvement, the Merge will greatly facilitate the broad use of Ethereum’s computing power and blockchain-based apps. Now when the stage is complete, the “Surge,” “Verge,” “Purge” and “Splurge” is next on the Ethereum technical roadmap.