This article originally appeared on Invezz.
The Merge, which marked the official transition of the Ethereum blockchain from a proof-of-work blockchain to a proof-of-stake blockchain, has been hailed as a technological marvel within the crypto space. Most importantly, the upgrade was rolled out with such precision that there were no hiccups in the entire rollout.
However, While a majority marvelled at Ethereum’s achievement, there were still some negative reactions from the likes of the chairman of the SEC, Gary Gensler who suggested that the new proof-of-stake Ethereum token (ETH) could be considered a security.
According to the founder of Nuon Finance and CEO of blockchain development house Laguna Labs, Stefan Rust, Gary Gensler’s reaction shows sheer ignorance or perhaps lack of understanding. Rust said:
“Gary Gensler, Chairman of the SEC was first to squash any enthusiasm for this momentous occasion by suggesting that Ethereum’s new Proof of Stake token could be considered a security. Ignoring, or perhaps not understanding, the enormous global community that operates this network and the interplay of staking and node operation, instead he focused on the potential to generate profit from staking ETH to argue it is a security.”
What Gensler’s accusations mean for Ethereum
While to some Gensler’s remarks do not hold water, if pursued by the SEC, the remarks could end up harming the greater Ethereum community. Ripple Labs has been battling a similar case where its cryptocurrency, the XRP, has been labelled as a security meaning it issued an unregulated security.
Although Ripple Labs is highly expected to win the case which has dragged on for about two years after the latest order by a US judge for the SEC to produce documents of former Division Director William Hinman’s speech, the case is expected to be concluded in December. In the speech Hinman is quoted saying:
“Based on my understanding of the present state of Ether, the Ethereum network, and its decentralized structure, current offers and sales of Ether are not securities transactions.”
Ripple Labs is expected to use Hinman’s words in showing that the SEC is applying double standards since it did not accuse Ethereum of issuing a security despite it being a decentralized network just like Ripple.
According to Stefan “much now rests on the definition of a security – for both sides. Should XRP come to be labelled a security, crypto will fall under the SEC’s jurisdiction and this would mean an unfathomable outlay in money, time and resources. And so we have a Mexican stand-off in which neither party dare blink”
Greatest technological innovation of our age
According to Stefan Rust, Ethereum Merge is one of the greatest technological innovations of our age. In his word, Stefan said:
“The reaction of some of the great and good in the traditional finance sector to last week’s Ethereum merge is testament to the stultified situation in which we now find ourselves in the developed world. Rather than welcome what is sure to be one of the greatest technological innovations of our age – an event that will see “the world’s computer“ cut its carbon emissions by 99% and become a truly viable solution for the future of the global Web3 economy – they tore it down”
While cryptocurrencies remain largely unregulated around the world the technology behind them remains an abundant prospect. But on the contrary, traditional finance and cryptocurrency have frequently taken adversarial positions against each other with the most recent being the position that Gensler is taking against Ethereum.
According to Stefan, these people were raised in a different age and are struggling to keep up with technology. Stefan said:
“These are people who were raised in a very different age, with very different ideas and who are struggling to keep up with the pace of innovation now facing them. They are keen to put old terms and rules on new technology that simply doesn’t serve it or them.”
Crypto adoption around the world
Stefan went ahead to point out that while most parts of the world especially the developing world are embracing blockchain and cryptocurrencies, a majority of western economies have decided to hold onto the traditional financial and political power “they have carefully built up over hundreds of years of domination, they are resisting change.”
According to Stefan, the west ought to embrace blockchain technology to avoid being left behind. He said:
“This is not, however, prudent. Those that resist change eventually get left behind, and if Gary Gensler, Christine Lagarde, et al. do not keep up and join in this change, this could have damaging effects on Western economies for decades to come.”
This article originally appeared on Invezz.