While the crypto community celebrates the Ethereum blockchain’s transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) consensus mechanism, Securities and Exchange Commission (SEC) Chairman Gary Gensler sharpens his stance on PoS crypto being classified as securities.
PoS blockchains, which rewards inventors who pool their holdings, take on investment contract-like characteristics, and according to Gensler, “might pass a key test used by courts to determine whether an asset is a security.” The Howey test determines whether investors expect to benefit from the work of third parties.
“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,” Gensler said without referring to any specific cryptocurrency.
The SEC Chair had been defending his agency’s viewpoint on cryptocurrencies and its push to include climate risks in public company disclosures before a Senate Banking Committee panel.
Gensler has consistently argued that the vast majority of digital assets traded on crypto exchanges must be registered with the SEC.
The previously proposed crypto bill would give the Commodity Futures Trading Commission (CFTC), which regulates derivatives markets, the authority to regulate digital commodities.
And, most recently, Gary Gensler stated his support for giving the CFTC authority over certain cryptocurrencies such as Bitcoin.