US financial regulators are reportedly set to meet next week to discuss whether ether should be regulated as a security under federal law, but Ethereum co-founder Joseph Lubin is not concerned.
Lubin, who now runs blockchain development studio ConsenSs, told financial publication TheStreet that he is “extremely comfortable” with the legal due diligence Ethereum’s founders conducted at the project’s outset to ensure it remained in compliance with applicable regulations.
“We spent a tremendous amount of time with lawyers in the US and in other countries, and are extremely comfortable that it is not a security; it never was a security,” said Lubin, “we are absolutely unconcerned about the current discussions.”
“I think we already have a regulatory scheme; securities laws in this country govern securities. If you fail the Howey test, you’re not a security,” Lubin added, referencing the framework commonly used to determine whether an asset is a security.
As CCN reported, officials from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are examining whether a number of cryptocurrencies should be classified as securities, even if they were not initially distributed through the initial coin offerings (ICOs) that have generally been the subject of recent SEC probes. A meeting on the topic is scheduled to take place on May 7.
Regulators will reportedly assess whether Ethereum’s creators retain significant influence over ether’s price movements, which people familiar with the matter said would be analogous to a company’s managers having influence on the firm’s stock price.
They will also consider whether ether, currently the second-largest cryptocurrency by market cap, is sufficiently used for its stated purpose — to run applications on the network — or is essentially a speculative asset purchased in the hope that its value will grow in the future.
Lubin said that — despite claims from former CFTC Chairman Gary Gensler — he believes regulators will determine that ether is not a security.
“This is a way of accessing a shared computer resource, so I’m not sure Ether needs to be regulated in any way,” Lubin said. “We are comfortable that many regulators that matter understand what Ethereum is.”