By George Ward
The debate over the classification of some digital assets has continued to gain traction, with Ethereum’s co-founder Joseph Lubin stating that he sees no reason why the currency will be deemed a security.
The founder of ConsenSys doesn’t categorize ETH as security; instead, he puts the asset in the same class as some commodities like oil.
Ethereum Is Not A Security – Lubin
Speaking in an interview during the Paris Blockchain Week, Joseph Lubin, a co-founder of Ethereum and owner of ConsenSys, stated that ETH is not a security. Lubin added that people could say anything about it, but this does not mean the asset is a security.
Furthermore, Lubin’s latest remarks follow a lawsuit filed by Letitia James, the New York Attorney General (NYAG), against the Seychelles-based crypto exchange, KuCoin. In the case, it was alleged that KuCoin failed to register as a securities or commodities broker but was operating as an exchange.
The office of the NYAG mentioned Ethereum among other crypto assets listed on KuCoin that the regulator deemed as securities. In addition, the regulator described them as “speculative assets.”
Reacting to the lawsuit, Lubin noted that the action by the NYAG is unfortunate and that the speculations about the regulator’s announcement are irrelevant to Ethereum’s status. The co-founder asserts that, unlike Bitcoin, Ether powers an entire ecosystem of several applications that allow users to trade, buy and sell other digital assets.
The SEC Perspective
On the other side, the United States Securities and Exchange Commission (SEC) has previously suggested that ETH possesses features of a security product. The security regulator made the statement after the Ethereum network transitioned from the proof-of-work (PoW) to the proof-of-stake (PoS) consensus algorithm in September 2022 in what the network termed the Merge.
Completing the Merge allows blockchain validators on the Ethereum mainnet to lock up part of their assets in exchange for safeguarding the protocol and earning interest-like yields. However, the Merge has led to the creation of a parallel protocol called the ETHPoW by the displaced miners who seek to continue using the old mechanism.
Lubin maintains that ETH should be listed as a commodity, arguing that individuals or entities buy barrels of crude oil in the hope that they make some profits. Hence, sees no reason why Ether will be deemed a security despite ongoing speculations.
Should Ether be classified as a security by the court, experts believe such a verdict will negatively impact exchanges that already listed the token. For a long time, Ether has been treated as a commodity by both state and federal regulatory agencies in the United States, including the Commodity Futures Trading Commission (CFTC).
Industry observers believe that designating ETH as security will have far-reaching consequences on the broader crypto market. They added that it would significantly change how the asset and others like it are transacted in the US.