Ethereum’s shift from proof of work to proof of stake may cause the Securities and Exchange Commission to take a closer look at regulating the cryptocurrency as a security, Chair Gary Gensler hinted on Thursday.
Gensler’s comments came hours after Ethereum’s big shift, known as The Merge, took place. The SEC chair mentioned the Howey test, a tool regulators use to determine whether an asset is a security, when he spoke with reporters after a Senate hearing.
“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, according to The Wall Street Journal. He noted he was not referring to a specific cryptocurrency.
Gensler appeared before the Senate Banking Committee for a regular SEC oversight hearing. He also said he believes a crypto exchange offering staking services to customers “looks very similar—with some changes of labeling—to lending.”
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