After The Merge, Securities and Exchange Commission Chairman Gary Gensler warned that authorities may take a closer look at Ethereum.
Gary Gensler, chairman of the Securities and Exchange Commission, warned on Thursday that the cryptocurrency’s transition from proof of work to proof of stake might prompt the SEC to reevaluate its regulation as security.
Gensler’s remarks were made hours after The Merge, Ethereum’s major transformation had occurred. When speaking with reporters during a Senate hearing, the SEC chairman highlighted the Howey test, which regulators use to evaluate whether an asset is a security.
According to The Wall Street Journal, Gensler said, “From the standpoint of the coin, this is another indication that, under the Howey test, the investing public is expecting gains based on the labor of others.” He emphasized that he was not referring to a particular cryptocurrency.
Gensler spoke at a normal SEC oversight hearing before the Senate Banking Committee. In addition, he said that he thinks a cryptocurrency exchange that offers staking services to consumers “resembles lending, but with different labelling.”