Ethereum, the world’s second-biggest blockchain, is switching to a new security model that at least one legal expert claims could raise an issue with profound repercussions for the cryptocurrency market. Why it matters: If ether (ETH), the coin that runs Ethereum, is found to be a “security” by the Securities and Exchange Commission, it’s hard to imagine how the blockchain even functions in the United States. First of all, the places where people buy and sell ether (the exchanges) would need to de-list it, so in the immediate term it would be hard to say where people could even acquire the ether they need to use Ethereum. Lots of lesser blockchains would be on notice with the same concern, though as every attorney will tell you: every case has to be assessed on its own “facts and circumstances.” The question was raised last week, when Georgetown University law professor Adam Levitin tweeted that any token in a “proof of stake system” is likely to be a security. Proof-of-stake is a security model for blockchains, defining the process by which all transactions on it are verified.
Full story : The regulatory risk in Ethereum’s new security model.