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- The Securities and Exchange Commision thinks that PoS crypto assets could pass The Howey Test.
- The statement comes after the implementation of the Merge yesterday.
- The Merge will significantly reduce the carbon emissions from the blockchain.
New Matter at Hand for SEC
The Merge has officially entered the world, and we cannot keep calm, neither does SEC. Just after a day the most anticipated update in the history of Ethereum was implemented on the blockchain, the notorious regulator stepped in. Gary Gensler, the chair of Securities and Exchange Commission says that Proof of Stake cryptocurrencies could pass The Howey Test.
For the ones not familiar with The Howey Test, it was introduced in 1946 during “SEC vs W.J. Howey Co.” The ruling established a set of guidelines that to this date determines that an investment by the public is in fact an “investment contract.” According to the rule a contract should be an investment of money, should be in a common enterprise, with an expectation of profit, and must be derived from a people’s efforts.
The regulatory watchdog is involved in a case against Ripple Labs, claiming that XRP token serves as a security without being registered in the SEC. Republicans are increasing in number and many believe that Gary Gensler is overstepping his authority.
In the latest update with the SEC V. Ripple case, Chamber of Digital Commerce (CDC) has stepped in to overview the matter. They filed an amicus brief and argued that “They do not have a view on the matter but they are interested in ensuring that the legal framework for the virtual assets underpinning investment contract remains intact.
Amicus Curiae is a legal document from the party which is not associated with the case but provides legit information to the court to make sure a fair rulong is concluded.
If what Gary Gensler says is true, then it is possible that Proof-of-Stake crypto assets are treated as a security in future. The Merge shifted Ethereum’s PoW algorithm to PoS mechanism which will reduce the carbon emissions by over 99%. Just some hours before the event, a couple of creative thinkers from Andreessen Horowitz launched Proof of Merge NFTs.
Proof-of-Work based digital assets take energy consumption to an extreme which contributes to the greenhouse effect. According to a report by Cambridge University, Bitcoin alone consumes 130 TeraWatts/hour, which translates to 0.6% electricity consumption worldwide.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
