Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), has suggested that cryptocurrencies using the Proof-of-Stake (PoS) protocol should be classified as securities under US law.
Pos is a technology used in blockchains such as Ethereum, Cardano, Solana, Tezos and Algorand to confirm transactions without the participation of miners. Instead, it relies on validators to 'stack' the coins.
Gensler noted that the token stacking results and the minimal number of people who "manage" these tokens prove that these digital assets can be considered securities and therefore must comply with US law.
"Investors are putting money into PoS tokens in the hope of getting a return of 2%, 4% or 18%. Despite what the protocol promotes, it is often handled by a small number of entrepreneurs and developers - I strongly recommend that all token operators and intermediaries follow the rules," said Gensler.
Rostin Behnam, chairman of the US Commodity Futures Trading Commission (CFTC) has expressed that he and his agency consider Ethereum to be a commodity.
In early February, the SEC took action against stacking as a service, banning it on cryptocurrency exchange Kraken. The regulator said the platform had improperly registered its stacking programme and claimed that investors had attempted to earn up to 21% per annum through it. As part of the SEC's settlement agreement with Kraken, the SEC was to immediately stop providing stacking services to US citizens and pay a $30 million fine. However, this was not the end of the US crackdown on steering services.
Back in March, New York State Attorney General Letitia James filed a lawsuit against cryptocurrency exchange KuCoin, claiming that the platform violated securities laws by offering tokens, such as Ethereum, that meet the definition of a security without proper registration. The state prosecutor's office said the suit is one of the first to make the argument in court that Ethereum is a security.
