A statement made by U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler in the wake of Ethereum’s (ETH) merge hints that federal regulators may reportedly consider the top altcoin as a security.
According to a new report by The Wall Street Journal, Gensler said that the Howey test should determine if a crypto asset would qualify as a security.
The Howey test was created by the Supreme Court to determine if an asset is a security based on whether or not investors expect to earn profits derived from the efforts of others.
Though Gensler did not specifically refer to Ethereum in his comments, he made the statement after the leading smart contract platform completed its much-anticipated upgrade, which transformed it into a proof-of-stake network, essentially making mining ETH obsolete.
“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 made the statement after attending a Congressional hearing where he testified that a large portion of existing crypto assets can be deemed as securities.
In his testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Gensler says that since the majority of digital assets qualify as securities, many crypto intermediaries transacting digital coins have to register with the SEC as they fall under the regulatory body’s jurisdiction.
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