Ethereum co-founder Joseph Lubin praised SEC Chair Gary Gensler as a “shining knight of decentralization.”
Speaking at ETHDenver (which ended on March 5,) Lubin spoke candidly about recent regulatory enforcement actions, holding Gensler as a catalyst for driving decentralization – much to the audience’s jeers.
Digital Asset Investor clipped and posted the relevant part of the Fireside Chat, which was posted on YouTube on March 14.
Ethereum co-founder says SEC is doing a great job
Using the recent example of SEC enforcement action against Kraken, Lubin said the exchange’s staking product was centralized – therefore, a security offering.
He added that claims of it being decentralized did not stand up when Kraken’s efforts generated the yield paid to stakers.
“If you advertise that you’re a very decentralized thing in such a way that it sounds like people are going to make money based on your effort, just that language can make it a security.”
Under securities laws, the Howey Test determines whether a contract, scheme, or transaction meets the definition of a security. It focuses on determining whether investors paid money in a common enterprise with the expectation of profits from the efforts of others.
Lubin said that Gensler and the SEC “are doing a great job of driving projects in our ecosystem to radically decentralize themselves” – instilling that point by calling Gensler a “shining knight of decentralization.”
On Feb. 9, Kraken settled with the SEC, paying a $30 million penalty, over allegations it was operating an unregistered security offering through its staking program.
The matter spooked staking providers; however, Coinbase has said it is ready to defend its staking program in court if necessary.
Not everyone agrees
A history of perceived unfair enforcement actions and recent regulatory rumblings has drawn heat from the crypto community.
For example, Ripple CEO Brad Garlinghouse rubbished claims that compliance can be achieved by simply registering. He said no such registration process exists, nor is there clarity on what constitutes a compliant, registered token.
“Chair Gensler continues to harp that firms simply need to come in and register, but the truth is there’s no infrastructure in place for a “registered token” to trade nor any clarity as to what these tokens are.“
SEC Commissioner Pierce echoed Garlinghouse’s sentiment, saying she is unsure whether registering a staking product is possible. In that, there remain several unresolved questions on how a staking program would be regulated, including whether the staking program would be registered or the individual tokens within the program.
Similarly, taking a blast at Gensler, @DecentFiJC said, “There’s a 0% chance he didn’t know about this,” in reference to the shady relationship between FTX and sister company Alameda.
It was alleged that Alameda had a $65 billion secret line of credit from FTX, funded by customers’ exchange deposits without their knowledge or consent.
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