In an interview with Forkast on November 18 at the Hong Kong FinTech Week, Ethereum co-founder Joseph Lubin admitted that Ethereum and Bitcoin (BTC) had a first-mover advantage over recent competitors and back then there were no regulations. He admired the new security law but admitted that it makes it very hard for new cryptocurrencies to challenge the head start that Ethereum and BTC have. He also admitted that Ethereum’s developers were selling their cryptocurrencies when the market wasn’t regulated and so they didn’t have to worry about the compliance of any sorts. However, he asserted that the new security law was a need of the time and emerging cryptocurrencies need to comply with it. While many Cryptos are trying to avoid the law by registering their Crypto as a security, he said that it was not possible because cryptos are not utilities and therefore, they must be registered.
Among the companies that are trying to register their cryptocurrencies as securities, Telegram is the most popular. It’s been accused by the United States regulators of trying to register its Grams tokens as securities. However, Telegram has decided to file against the accusation in the New York Southern District Court.
Joe Lubin’s statement regarding registration of cryptocurrencies as securities is a total negation of the US Securities and Exchange Commission’s stance back in March. The US Securities and Exchange Commission (SEC) had decided to use the Howey test as its gold standard benchmark for determining if a cryptocurrency is a security or not, as SEC Chairman Jay Clayton had stated. A few months back, digital asset think-tank Coin center, as well as some political representatives, formally requested the SEC to clarify how they decide if a cryptocurrency can be registered as a security or not. After several calls, the Chairman of the SEC decided to answer these concerns. He called the Howey test as SEC’s “litmus test” for deciding securities within the blockchain industry. He clearly stated that it was possible for digital assets to be registered as securities, but every cryptocurrency needs to through the test separately. Ethereum was deemed as too decentralized to be registered as a security.
Whether cryptos should be registered as securities or not, governments all around the world are becoming aware of the underlying blockchain technology and therefore, they are working on regulating cryptocurrencies in a sustainable manner. Entrepreneurial Activity in the industry is growing every day and startups are flooding in the blockchain space which signals good signs for crypto in the future as well as the development of better-decentralized systems.