Friday Newsletter

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10 May 2024

Ethereum co-founder Joseph Lubin believes the United States Securities and Exchange Commission is intentionally hindering innovation and threatening the nation’s financial future.

Lubin addressed this issue at FT Live’s Crypto and Digital Asset summit in London, explaining Consensys’s decision to sue the SEC after receiving a Wells notice from the regulator.

“The SEC seems to have reclassified Ether as a security without clear communication. They are pursuing a strategic enforcement approach instead of transparent dialogue and defined rulemaking,” Lubin stated.

Consensys, known for developing the MetaMask wallet, believes these enforcement actions aim to instill fear and disrupt the crypto industry. Lubin also mentioned that this approach could push companies offshore.

Consensys’s legal action against the SEC aims to gain more clarity from U.S. courts, especially since the Commodity Futures Trading Commission previously classified Ether (ETH) as a commodity.

Lubin pointed out the SEC’s decision on the approval of Ether spot exchange-traded funds (ETFs) as a possible motive for the renewed enforcement actions against Ethereum.

“We suspect the SEC is generating activity to defend its position if it denies the Ether spot ETFs,” Lubin noted.

The CEO also mentioned the substantial capital influx after the approval of spot Bitcoin ETFs, expressing concerns about the impact on the crypto ecosystem.

Lubin speculated that the rise of decentralized finance (DeFi) could challenge the traditional banking industry and pose a threat to their dominance.

A favorable outcome for Consensys in its legal battle against the SEC could have significant effects on the U.S. cryptocurrency and technology sectors.

Lubin criticized the SEC’s assertion that Coinbase and MetaMask wallets could be acting as broker-dealers, calling it an unreasonable claim. He added that requiring every MetaMask user to register as a broker-dealer would be a daunting notion.

Lubin warned that the SEC’s actions could affect the broader technology industry in the U.S., impacting innovation and progress.