Stu Clelland
Gary Gensler, the chair of the US Securities and Exchange Commission, has once more advocated for the regulation of many big cryptocurrencies’ so-called proof-of-stake tokens as securities.
The term “proof-of-stake” refers to the algorithm used to power blockchains, such as the second-largest cryptocurrency Ethereum, in which coin owners can profit by permitting some of their tokens to be used in executing transactions. According to Gensler, developers of the protocols that support these coins frequently advertise their projects on social media, drawing in investors who hope to profit from their investment.
Operators should comply
During a Wednesday open meeting of the SEC, Gensler said, “I would suggest that each of these token operators, clearly consulting with the proper talent, seek to come into compliance.
Because the designation entails investor protection requirements that many claim are incompatible with the asset class, crypto firms are attempting to avoid it. But the governing landscape is becoming more scrutinized.
The main US-based cryptocurrency exchange Kraken was recently hit with a $30 million fine by the SEC for providing staking products that let users generate passive income. Letitia James, the attorney general of New York, asserted that Ether is a security in a lawsuit she filed last week against KuCoin, one of the few instances in which the legal status of the Ethereum token has been clearly stated.
I adore the Commodity Futures Trading Commission
Gensler made the remark in response to a query concerning the apparent discrepancy between Gensler’s viewpoint and that of Rostin Behnam, chairman of the Commodity Futures Trading Commission, who recently asserted that he believed ether to be a commodity. Gensler said on Wednesday, “I’m not going to comment on any one token. “I adore the Commodity Futures Trading Commission,” the speaker said.
When the blockchain upgraded to using “proof-of-stake” instead of “proof-of-work” for ordering transactions during last year’s Ethereum “Merge,” Gensler voiced similar worries. As with this time, he was careful to emphasize that he wasn’t referring to any particular digital coin.
The proof-of-work protocol, utilized by the Bitcoin blockchain, verifies transaction data using specialized, power-hungry computers. Proof-of-stake typically uses a lot less energy.
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This article was written for Business 2 Community by Stu Clelland.
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