As the Ethereum merge fades into the background, and even the potential disruption caused by the ETHPoW has seemed to fizzle out, several questions have come back to forefront; how should crypto be regulated? Which regulatory agency should have the authority to decide this, and how will said regulation come about? In testimony delivered only hours after the successful completion of the merge on September 15, 2022, the chair of the Securities and Exchange Commission (SEC)— Gary Gensler—delivered comments that immediately created waves in the crypto community. Chairman Gensler stated that under the Howey test—which determines whether an asset qualifies as an “investment contract” and is therefore subject to federal securities law—PoS cryptocurrencies could qualify as securities. The fact that the Howey test was passed into law by the Supreme Court in 1946 – and that financial markets do not in any way resemble those when the law was written – continues to raise eyebrows when it is continually cited as a leading test for determining regulatory jurisdiction.
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