After the recent merge, where Ethereum moved from the proof of work to the proof of stake model, the SEC has been trying to claim jurisdictions over all its transactions. The commission says that Ethereum nodes are densely concentrated in the United States, which gives them this authority. However, experts claim otherwise and say that SEC cannot claim jurisdiction over Ethereum transactions. This is very important for Ethereum as a decentralized network shouldn’t have any specific jurisdiction.
The SEC cannot claim control over Ethereum transactions
The idea of the SEC trying to have jurisdiction over ETH transactions started with Ian Balina’s case. It involves Ian promoting and offering unregistered crypto asset securities called SPRK Tokens in 2018. Now, the SEC claims that many US investors participated in the investment pool, and it was validated by ETH nodes. And since the concentration of nodes in the US is higher, they claim the transaction happened in the country.
Now, the SEC could be considered right from their perspective. But for crypto projects, it means if their nodes are dense in the US, they could be answerable to the authorities there for transactions. As for Ethereum, 43% of its nodes are in the US, and the second country doesn’t even come close to 12%, which is Germany.
Ethereum’s move to the POS network is bringing regulatory issues as expected. We might soon see that the authorities are calling it security, and like Ripple, they might come under open fire.
Experts dispute SEC’s claims
A lot of crypto experts have been vocal about their opinions regarding the claims made by the SEC. Adams Cochran, an adjunct professor, and partner at Cinneamhain Ventures, said that the SEC tried to use this case to bring all crypto under their jurisdiction. He firmly believes that the SEC has crossed the line and needs to be pushed back.
Dylan from UTXO Management also said that the SEC’s claim would set a very dangerous precedent, and the implications would be ugly. The crypto community must fight this back while we still have time. We should remember the SEC will never stop pursuing power and control over cryptocurrencies.
What are your thoughts as experts say that the SEC cannot claim jurisdiction over Ethereum? And do you think this is a major overstep by the commission? Let us know in the comments below. And, if you found our content informative, do share it with your family and friends.