Regulatory Scrutiny Threatens Ethereum’s Rise, Will It Succumb Under Pressure?

Recent months have seen increased regulation of Ethereum. This comes following the network’s move to a proof of stake mechanism and the introduction of staking to the others. It is possible for regulatory agencies to turn their attention towards Ethereum as sanctions were imposed against Tornado Cash and other protocols. The parameters of determining which jurisdiction ETH falls within are currently being worked out.

Ethereum could be a security

Gary Gensler of Securities and Exchanges Commission had stated previously that Bitcoin and Ethereum were not securities. This was in the era when these two networks still operated under proof-of-work mechanisms.

With Ethereum’s move to proof of stake, the SEC is beginning to backtrack on the previous comments that Ethereum did not qualify as a security. It reasons that since there is now the availability of staking on the network, investors are currently “anticipating profits based on the efforts of others.” This gives it pause to say that the digital asset might now qualify as a security. It also follows the SEC boss’ view that most cryptocurrencies are currently operating as securities.

The impact of Ethereum being classified by the regulator as a security has many implications. The most prominent of these is that there are more ETH nodes running in the United States than in any other country, which would mean that a large majority of transactions would fall under the SEC’s purview.

Ethereum price chart from

 Source: ETHUSD on| Source: ETHUSD on

There are many speculations about what these assets could be, as they have yet to be classed as securities. The CFTC is currently attempting to regulate the cryptocurrency industry. Chairman Rostin Behrnam said digital tokens were commodities, and the CFTC should regulate them.

Can ETH Survive the Scrutiny

These watchdogs could regulate Ethereum in a variety of ways. It is anticipated that regulators soon will issue a final classification of the digital asset, and then take measures to regulate it. This could mean that the price of this digital asset will be affected.

ETH investors already feel the pinch from the Sanctions against Tornado Cash the crypto mixer. ETH may see a drop in price if more regulations are implemented. ETH’s price is currently below $1,000. Any regulatory actions will most likely cause it to drop to less than $1000.

This move against Ethereum could also have a significant impact on the NFT and other decentralized finance markets, leading to rapid falls in the value of all the assets. Assets like Bitcoin would win the day, as they are decentralized, and could serve crypto investors well. 

Featured Image from BeInCrypto. Chart by

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

Get more Crypto News at CFX Magazine