Ethereum co-founder and Consensys CEO Joseph Lubin has accused the United States Securities and Exchange Commission (SEC) of intentionally stifling innovation in the cryptocurrency industry to protect the existing financial landscape.
Speaking at FT Live’s Crypto and Digital Asset Summit in London, Lubin shed light on his company’s decision to sue the SEC after receiving a Wells Notice from the regulator.
TLDR
- Ethereum co-founder Joe Lubin believes the SEC is intentionally hindering innovation in the crypto industry to protect the existing financial landscape.
- Lubin claims the SEC has reclassified Ethereum as a security without proper communication or rulemaking and is engaging in strategic enforcement actions rather than open discourse.
- Consensys’s counteraction against the SEC aims to obtain clarity from U.S. courts, as the CFTC had previously classified Ether as a commodity.
- Lubin suggests the SEC’s enforcement actions are timed to justify denying upcoming Ethereum spot ETFs and that the regulator is concerned about capital flowing into the rapidly improving Ethereum ecosystem.
- The Consensys CEO warns that the SEC’s claims against Coinbase and MetaMask could set a dangerous precedent for the entire tech industry in the U.S.
According to Lubin, the SEC appears to have reclassified Ethereum as a security without openly communicating this change to the public.
He argues that the regulator is pursuing a series of strategic enforcement actions rather than engaging in open discourse and establishing clear rules.
“The SEC appears to have reclassified Ether as a security without telling anybody that that’s the case. They are going about a strategic series of enforcement actions rather than open discourse and clear rulemaking,”
Lubin stated.
The Consensys CEO believes that these enforcement actions are intended to create fear, uncertainty, and doubt (FUD) within the cryptocurrency industry, in an attempt to paralyze companies like Consensys or force them offshore.
Lubin explained that Consensys’s counteraction against the SEC is aimed at obtaining more clarity from U.S. courts, considering that the Commodity Futures Trading Commission (CFTC) had previously classified Ether as a commodity.
Lubin also highlighted the suspicious timing of the SEC’s renewed enforcement action against Ethereum, suggesting that it may be linked to the upcoming deadline for the regulator to issue a decision on the approval of Ethereum spot exchange-traded funds (ETFs).
“We believe that there’s a flurry of activity designed to enable them to say that their action wasn’t capricious in the very likely event that they deny the Ether spot ETFs,” he said.
The Consensys CEO speculated that the SEC is concerned about the significant attention and capital that could flow into the Ethereum ecosystem, which has been rapidly improving in terms of scalability and usability.
He believes that the prospect of the banking industry’s customers moving assets into digital forms using decentralized finance (DeFi) constructs could scare many banks and other financial institutions.
“The SEC probably doesn’t want to see a wave of innovation that will really transform the landscape,”
Lubin added.
Lubin also expressed concern over the SEC’s claims that Coinbase and MetaMask’s wallets are acting as broker-dealers, calling it a “preposterous notion.”
He emphasized the importance of a positive outcome in Consensys’s legal battle against the SEC, as it could have far-reaching implications for the cryptocurrency and technology landscape in the United States.
“We’re at odds over whether we should register MetaMask as a broker-dealer. Should every MetaMask user have to register their wallet as a broker-dealer, it’s chilling,”
Lubin warned.
The Consensys CEO concluded that the entire technology industry in the U.S. could be impacted by the actions of the securities regulator. He argued that the SEC’s enforcement actions are setting a dangerous precedent that could hinder innovation and growth in the sector.
