Why Ethereum (ETH) Won’t Be Classified As A Security Any Time Soon


Is Ethereum (ETH) a security? That’s the question one may ask in relation to the ongoing talk of a scrutiny by the US SEC. The regulatory body has stated that they would be looking keenly at the cryptocurrency to establish whether it is or otherwise.

The issue of some crypto assets being securities has been a hot topic of late, with Ethereum and Ripple (XRP), high profile cryptocurrencies threatened by the possibility of being classified as securities.

It had been expected that the US Securities and Exchange Commission (SEC) would be meeting sometime early this week. However, that didn’t materialize on May 7, 2018, as had been widely expected.

There may be serious concerns about Ethereum’s coin offering in 2014 that raised about $18.3 million or 31,000 BTC, and whether investors bought tokens expecting to earn a profit in the future. However, the fear that the second largest cryptocurrency by market behind Bitcoin may be termed as a security will be decided by the authorities, be it the regulators or the court system. But that may not be any time soon.

On May 2, 2018, SEC commissioner Hester Peirce spoke before the Medici Conference in Los Angeles and stated that:

“We must be careful not to let our lack of familiarity with new technology breed anxiety and therefore bad regulation.  There is a risk, when something truly innovative comes along, that regulators will focus only on the harms the innovation may bring and miss entirely the opportunity it presents to improve people’s lives.”

In what is believed to be a strategy to approach the matter with due diligence, the commissioner also cautioned that:

“New technology does often bring with it risks; it can take time and experience for developers to build in the proper safeguards.  For example, we have seen lots of cryptocurrency thefts. However, undue focus on potential harm can result in an agency’s leading with its enforcement powers and ultimately setting itself up as the industry’s adversary.”

The cryptocurrency landscape is growing rapidly, but the space is still not fully understood. As such the pitfalls facing these platforms could be many. However, the SEC won’t be the one rushing to pull the trigger on a technology that could bring profound transformation to humanity.

Ethereum moves on with Casper FFG update

Ethereum developers are determined to continue developing the platform towards solving issues that affect its scalability and hence usability.

That process is in place with the impending release of Casper FFG, plasma, and sharding. While the implementation of Sharding is the most eagerly awaited, the release of Casper sets in a new milestone for the cryptocurrency. Earlier this week, it was announced that a new version of Casper code had been published for review and scrutiny within the Ethereum developer community.

Once that has been dispensed with, it is hoped that Casper FFG (Friendly Finality Gadget) will be deployed on the Ethereum blockchain. This implementation moves Ethereum closer to the complete shift from Proof of work consensus which is mining intensive towards proof of stake.

These updates are important for Ethereum as it faces serious competition in the dApps and smart contract space from several other platforms. For instance, Zilliqa (ZIL) is threatening with its sharding technology. Ethereum (ETH) must, therefore, seek to have the improvements in place if it has to continue dominating the scene.

Ethereum prices

The market has been unstable for the third day running this week, coins failing to consolidate gains made in April or over the weekend. Ethereum is one of them, facing a lot of resistance as it seeks to break the $800 level once again. After trading to a high of $835 against the US dollar, ETH receded to $792 on 6th. It then fell as fears of a regulatory crackdown gripped the market.

By May 9, 2018, Ethereum (ETH) was trading at a high of $759, falling to a low of $718 before surging to close at $752. Currently trading at $766 against the US dollar, the crypto is +5.84% higher on its previous price, and +7.86% over the last 7 days.

Even though this is way below the recent high above $800, the short-term outlook suggests a positive rally could materialize within the week and if not, over the weekend and push the prices towards that key resistance level, testing the trend line above $800 and $835.

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