The US Securities and Exchange Commission has stirred controversy again in the crypto world after this make a bold claim That the US government has jurisdiction over all transactions of the Ethereum (ETH) network.
In a civil suit against crypto influencer Ian Ballina, the Securities and Exchange Commission stated, “U.S.-based investors in the Ballina pool are irrevocably obligated to the transaction when they send their ETH contributions to the Ballina pool from within the United States. At that point, Their ETH contributions are validated by a network of nodes on the Ethereum blockchain, which are more densely populated in the United States than in any other country. As a result, these transactions took place in the United States.”
according to EtherscanCurrently, 45.85% of all Ethereum contracts are powered by the United States.
SEC Claims May Harm Ethereum Network
Ethereum’s decentralization has come into question since the merger, which was a huge hit by all accounts, as the Ethereum network was switched from a Proof of Work (PoS) to a Proof of Stake (PoS) consensus mechanism, thus reducing its power consumption by 99.9%.
Recently, the Chairman of the US Securities and Exchange Commission, Gary Gensler, stated that cryptocurrency issuers and brokers that allow their holders to “participate” in their coins may meet key criteria used by courts to determine whether an asset is a security. As Ethereum completes its PoS transition, the SEC may consider Ether as a security.
Gensler has been criticized for his approach to crypto companies and their assets. It was recently highlighted that since its inception in 2017, the SEC’s crypto-asset and cyber unit has filed nearly 200 lawsuits, with at least 80 fraud investigations numbered among them. Gensler also famously called the cryptocurrency market the “wild west,” underlining the greater need for regulation.
If the SEC were to justify its claim of jurisdiction over the activity of the decentralized Ethereum network, it would constitute a significant escalation of the role of the SEC in supervising Ethereum, thus thwarting the primary purpose of the decentralized system.