Ethereum co-founder Joseph Lubin has criticized the United States Securities and Exchange Commission (SEC) for stifling innovation, potentially threatening the existing financial landscape of the country.
Speaking at the FT Live’s Crypto and Digital Asset summit in London, Lubin discussed Consensys’s lawsuit against the SEC following a Wells notice from the regulator.
He expressed concerns about the SEC’s approach, stating, “The SEC appears to have reclassified Ether as a security without telling anybody that that’s the case.
“They are going about a strategic series of enforcement actions rather than open discourse and clear rulemaking.”
Lubin, CEO of Consensys — the company behind the MetaMask wallet — articulated that the SEC’s enforcement actions are creating a climate of fear, uncertainty, and doubt within the cryptocurrency industry.
He believes this is an attempt to paralyze it and potentially force the company to relocate offshore.
Highlighting a lack of regulatory clarity, Lubin pointed out that the Commodity Futures Trading Commission had previously categorized Ether as a commodity.
He emphasized the firm’s legal action against the SEC as a means to seek greater clarity from U.S. courts.
Moreover, Lubin discussed the upcoming deadline for the SEC to decide on the approval of Ether spot exchange-traded funds (ETFs), which he sees as another motivator behind the SEC’s recent actions against Ethereum.
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He suggested, “We believe that there’s a flurry of activity designed to enable them to say that their action wasn’t capricious in the very likely event that they deny the Ether spot ETFs.”
He also noted the significant capital influx into the ecosystem following the approval of spot Bitcoin ETFs and speculated that the SEC is wary of similar movements towards Ethereum, given its improvements in scalability and usability.
Furthermore, Lubin speculated on the broader implications of decentralized finance, suggesting that the banking industry might be intimidated by the potential shift of customers moving assets into digital formats.
“The SEC probably doesn’t want to see a wave of innovation that will really transform the landscape,” Lubin commented on the regulator’s stance.
Discussing the necessity of a favorable outcome in Consensys’s legal battle with the SEC, Lubin emphasized its importance for the cryptocurrency and technology sectors across the U.S.
He criticized the SEC’s claims that Coinbase and MetaMask’s wallets are functioning as broker-dealers, labeling it a “preposterous notion.”
The debate continues over whether to register MetaMask as a broker-dealer, and the implications this holds for every user of the wallet.
“We’re at odds over whether we should register MetaMask as a broker-dealer. Should every MetaMask user have to register their wallet as a broker-dealer, it’s chilling,” he concluded, highlighting the potential for far-reaching effects on the entire U.S. technology industry due to the SEC’s actions.
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