Two of the biggest US regulators – SEC and CFTC – are once again locking horns over their jurisdictional rights on cryptocurrencies. On Wednesday, March 15, SEC Chair Gary Gensler once again stressed that all Proof-of-Stake tokens and digital assets should be treated as securities.
Gensler’s comments came just a week after the CFTC stressed that Ethereum should fall under the ‘commodities’ category. Besides, the derivatives market regulator said that since the Ether futures have been trading on the CFTC exchange, they must fall under their jurisdiction.
There’s a lot of regulatory confusion particularly over Ethereum as the network transitioned from a Proof-of-Work to a Proof-of-Stake blockchain last year in 2022. Proof-of-Stake is a process wherein crypto holders get financial rewards by letting them use some of their cryptocurrencies in validating transactions.
Gensler stated that promoters of the PoS projects attract investors by offering an expectation of earning returns. “I would suggest that each of these token operators, obviously consulting with the appropriate talent, seek to come into compliance,” he said.
SEC Chair on Ethereum
Gensler’s comments came in response to a question that asked that there was an obvious disconnect between the securities regulators and the CFTC, which wants to treat Ether as a commodity. Responding to it, the SEC chair said:
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This is not the first time that Gensler has been hinting at treating Ethereum as securities. Last year in September 2022, during the Ethereum Merge event, the SEC chair expressed similar concerns.
Not only the SEC but even the state regulators are going after crypto exchanges that offer ETH staking. The New York Attorney General Letitia James filed a lawsuit last week against the KuCoin exchange on charges of unregistered securities and commodities. Interestingly, the lawsuit also goes on to mention that Ether is a security, making it one of the very few rare cases giving legal status to Ethereum.
