Twitter CEO says Ethereum is a security. Will this impact prices?
Jack Dorsey, the former CEO of Twitter, recently commented that Ethereum (ETH), the second-largest cryptocurrency exchange in the world, is considered a security under US laws. This implies that ETH holders should comply with the rules enforced by the Securities and Exchange Commission (SEC) as required by law, which is a controversial statement.
Dorsey Claims Ethereum Is A Security
Dorsey, a Bitcoin supporter and CEO of Square Inc., a financial services company that owns Cash App, has been vocal about the underlying technology of BTC. He believes that Bitcoin can revolutionize the way money is exchanged and can create a more equitable financial system.
Square is already invested in Bitcoin, while Cash App continues to process billions of dollars worth of BTC transactions. SEC officials and the Commodity Futures Trading Commission (CFTC) consider Bitcoin a commodity, not an investment contract. Their endorsement of Bitcoin as a commodity could further increase adoption and boost liquidity.
However, a regulatory storm in recent days threatens to draw ETH into the mix. The SEC’s chair, Gary Gensler, has stated that tokens like Ethereum are sold as investments, subsequently generating profits solely from the efforts of others. Therefore, in the agency’s perception, it may be an investment contract or security subject to federal securities law. All the same, the commission is reviewing the crypto markets, including those of Bitcoin and Ethereum, to ensure they are efficient and fair.
- Volcano Energy, a Bitcoin miner from El Salvador, launches with a $250M investment.
- Zion Social Network now accepts Bitcoin payments through the Lightning Network for secure messaging with instant transactions.
- Crypto prices bounce back after avoiding SEC scrutiny.
ETH Remains Sensitive To Regulatory Developments
The SEC has brought enforcement actions against several companies that mint tokens on the Ethereum platform. Leading influencers have also been accused by the SEC of promoting tokens they claim are registered securities. Despite this, the SEC has yet to issue an official statement on the classification of this cryptocurrency. At the end, the commission could choose not to regulate ETH as a security after it has reviewed all relevant factors.
ETH remains sensitive to regulatory actions, and bulls have since failed to break above 2023 highs of $2,100. Whether the dump of June 5 was an overreaction from the crypto market is yet to be seen.