Regulatory Scrutiny Threatens Ethereum’s Rise, Will It Succumb Under Pressure?
October 05 2022 - 1:00PM
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Ethereum has been seeing increased regulatory scrutiny in recent
months. This comes following the network’s move to a proof of stake
mechanism and the introduction of staking to the others. As
sanctions have been levied against protocols such as Tornado Cash,
it is becoming increasingly possible that regulatory bodies may
turn their focus to Ethereum. Now, it seems the parameters for
determining whose purview ETH falls under are being hashed out.
Ethereum Might Be A Security Previously, the Securities and
Exchanges Commission boss Gary Gensler had said that the top two
cryptocurrencies, Bitcoin and Ethereum, did not qualify as
securities. But this was when both of these networks were still
firmly operating under a proof of work mechanism. Related Reading:
Why The Shiba Inu Price Could See Some Major Upside This Week With
Ethereum’s move to proof of stake, the SEC is beginning to
backtrack on the previous comments that Ethereum did not qualify as
a security. It reasons that since there is now the availability of
staking on the network, investors are currently “anticipating
profits based on the efforts of others.” This gives it pause to say
that the digital asset might now qualify as a security. It also
follows the SEC boss’ view that most cryptocurrencies are currently
operating as securities. Meanwhile, the impact of Ethereum being
classified as a security by the regulatory body has a lot of
implications. The most prominent of these is that there are more
ETH nodes running in the United States than in any other country,
which would mean that a large majority of transactions would fall
under the SEC’s purview. Ethereum struggles to hold above $1,300 |
Source: ETHUSD on TradingView.com However, since these assets are
yet to be classified as securities, there have been other
speculations of what they could be classified as. The CFTC has
previously been called to regulate the crypto industry, and
Chairman Rostin Behnam has said that digital tokens are commodities
and that the CFTC should be able to regulate them. Will ETH Survive
The Scrutiny? Ethereum being regulated by either of these watchdogs
can go a number of ways. Presently, it is expected that regulators
will soon come out with a final classification for the digital
asset and then put measures in place to regulate it as such.
However, the price is likely to suffer for this. Related Reading:
Ethereum Marks Three Consecutive Red Weekly Closes, Will Uptober
Change Its Trajectory? The sanctions against the crypto mixer
Tornado Cash already have ETH investors at the edge of their seats.
Adding more regulation for ETH could tank the price of the
cryptocurrency. ETH is already struggling to hold above $1,000, and
any regulatory action will likely send its price to sub-$1,000.
Such a move against Ethereum would also greatly impact the rest of
the decentralized finance (DeFi) and NFT market, triggering rapid
declines in values across the space. In the end, the winner would
be assets like Bitcoin, which are truly decentralized and would
serve as a safe haven for crypto investors. Featured image
from BeInCrypto, chart from TradingView.com Follow Best Owie on
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