Coinbase CEO warns the SEC may consider Ethereum a security
- Coinbase CEO says he is hearing rumors the SEC may consider Ethereum a security after recent conversion to Proof-of-Stake.
- US financial regulator would like to get rid of protocols like Lido that support Ethereum staking for retail customers.
- Ethereum price nosedived close to its weekly low while Lido DAO token’s price remained unaffected, yielded 5.6% gains overnight.
Coinbase CEO Brian Armstrong told his 1.1 million followers that they’re hearing rumors that US financial regulator, the Securities and Exchange Commission (SEC), may consider Ethereum a security. After Ethereum’s recent conversion from Proof-of-Work to Proof-of-Stake, the SEC is likely to consider the digital asset a security.
Armstrong warned his Twitter followers that rumors imply that the US SEC might ban crypto protocols that support the staking of ETH’s token.
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Coinbase CEO shed light on rumors that the SEC could consider Ethereum a security
The CEO of Coinbase, one of the largest cryptocurrency exchanges by trade volume, shed light on the rumor that the SEC is considering getting rid of crypto protocols that support staking of Ethereum tokens for retail customers.
Brian Armstrong revealed that the SEC could consider a ban on projects like Lido Finance and this would stifle innovation in the US. Typically, cryptocurrency projects that are banned in the US get regulated elsewhere, like Samuel Bankman-Fried’s FTX exchange.
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
— Brian Armstrong (@brian_armstrong) February 8, 2023
Since Armstrong’s revelation, Lido DAO’s token LDO price continued to rally, with no negative impact.
LDO token price chart
Armstrong highlighted a key issue for Ethereum holders. The Coinbase CEO said that Ethereum’s conversion to Proof-of-Stake has stirred a debate on whether the token is a security.
The SEC brought a lawsuit against Ripple, on the grounds that the XRPLedger’s native token XRP is a security. The lawsuit has dragged on for two years with no resolution. The recent settlement of the SEC’s lawsuit against LBRY Inc. another crypto firm, highlighted the fact that the LBC token is not a security in its secondary-market transactions.
Attorney John Deaton and other XRP proponents expect the SEC to settle its case against Ripple and that the Judge would rule that the token is not a security. If the US financial regulator brings a lawsuit against Ethereum, and if the course of actions and market reaction is similar to what happened in Ripple’s case, there is a likelihood of a negative impact on the ETH price and its listing on crypto exchanges.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
