The war between Ethereum and the SEC never ends. The Securities and Exchange Commission is currently trying to establish its authority over the crypto-currency industry. The SEC asserts that almost all crypto-currencies are securities. Therefore, it asserts jurisdiction over crypto tokens and exchanges.
Recently, SEC Chairman Gary Gensler revealed that Ethereum could also be considered a security after the merger. Now, the SEC is drawing fire from the crypto community by claiming that the United States has jurisdiction over all of Ethereum. It implies that the SEC has authority over every Ethereum transaction.
Holy crap! SEC trying to claim jurisdiction over all #ethereum transactions since about 45% of the nodes are in the USA. Thus all transactions globally should be considered of US origin! YIKES!!! Scary precedent.
– Lark Davis (@TheCryptoLark) September 19, 2022
Lark Davis, a major cryptographic influencer, believes that this statement sets a dangerous precedent.
The battle between the SEC and Ethereum
The SEC has long tried to claim jurisdiction over the second largest crypto-currency. Earlier, SEC Chairman Gary Gensler revealed that he considers bitcoin the only crypto-currency that is a commodity. The SEC does not have regulatory authority over commodities. They fall under the jurisdiction of the Commodity Futures Trading Commission or CFTC.
Recently, Gensler changed its position on Ethereum and called it a commodity as well. However, after the merger, the SEC believes it has jurisdiction over Ethereum. The merger changed Ethereum’s consensus mechanism from Proof-of-work to Proof-of-stake. Gensler revealed that crypto-currencies depending on the Proof-of-stake model can pass the Supreme Court’s Howey test.
Now, the SEC says that all Ethereum and its transactions will be subject to US laws. The SEC has filed a civil complaint against Ian Ballina for failing to register a crypto-currency as a security before the ICO launch. In the complaint, the commission asserts that since Ethereum’s validation nodes are mostly located in the United States, it has jurisdiction over all of Ethereum.
More than 45 percent of the nodes are currently located in the United States.
SEC Receives Negative Feedback
The SEC continues to draw the wrath of the crypto community. The commission is already drawing fire from the community over its lawsuit against XRP and its decision on the Bitcoin ETF.
Lark Davis, a prominent crypto influencer, believes that the SEC’s claims are bizarre. He also believes that it sets a dangerous precedent. The United States also has the most miners in bitcoin.