Ethereum: ETH’s PoS Shift may fuel ‘Security’ claims

Sahana Kiran
Source – Unsplash

Just yesterday, the entire crypto industry witnessed the transition of Ethereum into Proof-of-Stake [PoS] from Proof-of-Work [PoW]. This highly sought-after shift was carried out seamlessly without any major glitches. While some were extremely happy about this upgrade, a few others called out the network for revamping its ecosystem. Bitcoin maximalists were banking on the same and took a dig at Ethereum’s ethos. In addition to this, the real fear loomed when rumors pertaining to Ether being categorized as a security took the front stage.

Ripple has been in a never-ending battle with the Securities and Exchange Commission [SEC]. While the SEC outrightly accused XRP of being a security, Ripple had to deal with the repercussions. Now, Gary Gensler, the chairman of the SEC indirectly took a jab at Ethereum.

As per The Wall Street Journal, Gensler suggested that PoS cryptocurrencies may fall under the security category. The fact that these cryptocurrencies and intermediate enable holders to stake their crypto wouldn’t sit well with the Howey test, Gensler noted.

Gensler reportedly added,

“From the coin’s perspective […] that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others.”

Furthermore, Gensler did not specify ETH or any other cryptocurrency while making the statement. It should also be noted that both the SEC as well as the Commodity Futures Trading Commission [CFTC] viewed ETH as a commodity as opposed to security.

Ethereum: Staking pools have now taken the front stage

Back during its PoW days, mining pools were ruling the Ethereum ecosystem. Now, in a drastic change of events, staking pools are at the center of the network. Following Ethereum’s shift to PoS, crypto exchanges were seen garnering more importance in the network.

With 30 percent, Lido ranked first in Ethereum stake nodes. Coinbase followed suit with 14 percent. Kraken stood in third and Binance in fourth place with 8.3 and 6.5 percent respectively.

In addition to this, ETH dipped by nearly 9 percent over the last 24 hours pushing its price down to $1,473 at press time. This came as a surprise to many.