Could Michael Saylor’s ‘Ethereum is a security’ remark pose a problem?

Sahana Kiran
Source – Unsplash

While Bitcoin [BTC] continues to emerge as a highly decentralized project, the level of decentralization of other projects has often been questionable. Microstrategy’s CEO Michael Saylor recently took a big jab at the Ethereum [ETH] network over the same.

Appearing in an interview, Saylor outrightly called Ethereum a security. He said,

“I think Ethereum is a security, I think it’s pretty obvious, [….] it was issued by an ICO, there’s a management team, there was a pre-mine, there’s a hard fork, there are continual hard forks, there’s a difficulty bomb that keeps getting pushed back.”

This certainly caused a commotion in the market. An array of individuals came forward and called out Saylor for his recent comment. A plethora of tweets suggesting that the Microstrategy CEO was trying to pump his bags while putting other networks down, surfaced.

As of 28th June, Microstrategy entailed a whopping 129,699 Bitcoins.

Some even suggested that Saylor wasn’t well versed with securities laws and regulations.

As seen above, Saylor takes a dig at Ethereum for its network updates. However, Bitcoin has also undergone upgrades over the years. The Taproot soft fork that occurred in November 2021, was its most recent one.

Furthermore, he concluded by suggesting that all proof-of-stake networks were securities. However, he added, “it’s above my pay grade, the regulators will decide whether or not they allow them to continue or nor they don’t allow them to continue.”

Could ‘The Merge’ bring regulatory trouble to Ethereum?

The crypto-verse has been dealing with immense scrutiny from the government. Ripple in particular faces the wrath of the Securities and Exchange Commission [SEC] for selling XRP. As Ripple tries to fend off the whole “unregistered securities” association, the SEC has eyes on other assets as well.

Several members of the XRP Army accused the SEC of turning a blind eye against Ethereum.

However, with the upcoming Merge that would transform ETH into a Proof-of-Stake network, the community expressed fear. Elaborating on the same, Saylor further said,

“The head of the SEC has said on six different occasions that if you generate staking off a crypto asset, that makes it a security. You can’t generate yield and not be a security. “

The SEC extensively probes the market before accusing a network. Therefore, Saylor’s comments might be taken into consideration if the SEC decides to view Ethereum as a security.

More recently, even Solana [SOL] was accused of being a security. The volatile market conditions and the persistent bear market could agitate regulators in taking a keener look into the market.