Laguna Labs CEO Stefan Rust has called out U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler for his comment on Ethereum’s Merge, saying it is “disappointing.”
Earlier this week, Gensler compared Ether (ETH) to traditional securities. The shift to the proof-of-stake mechanism has required ETH holders to “stake” the tokens to verify transactions, and the holders can gain long-term interests. This makes ETH holders treat their tokens as security assets.
“From the coin’s perspective…that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others,” Gensler said.
According to Rust, Gensler’s comment showed that actors in traditional finance only focused on “staking profits” by seeing ETH as a form of security.
“Rather than welcome what is sure to be one of the greatest innovations of our age – an event that will see “the world’s computer“ cut its carbon emissions by 99% and become a truly viable solution for the future of the global Web3 economy – they tore it down,” Rust said.
Rust added that the attitude also displayed “typical” resistance to innovations in the traditional finance sector.
“It speaks much to the threat that is clearly perceived by these people from blockchain and cryptocurrency,” he said. “Or perhaps more than this, it speaks to the inability of these figures to understand the significance of this technology.”
Rust argued that using traditional finance terms to describe concepts in decentralized finance is an effort to keep up with the pace of technology. The Laguna Labs CEO said that this effort would not work and might complicate the process of regulating the crypto market.
Commenting on the situation, crypto market analyst Jamie Coutts said that “fear of the unknown” caused hesitation among traditional finance actors to fully embrace cryptocurrency. Coutts explained that many asset managers chose not to educate themselves in cryptocurrency. As a result, they advised against investing in cryptocurrency.
ETH, other tokens see value drops
After completing the Merge last week, ETH’s valuation continued to go down, reaching a 26 percent drop before this Monday. Analysts said that ETH’s price should reach the 20-day EMA level at $1,513. If it went down from that point, ETH’s value could go down to $1,000.
A number of crypto investors said they were wary of the staking as a result of the Merge due to the token being perceived as a security. Data also showed that people did not regularly use ETH to conduct payments, meaning that the token was relatively low in liquidity.
Good news from Europe. The latest draft of MiCA removed previous restrictions on non-EUR stablecoins. Liquidity is the best protection for users.— CZ 🔶 Binance (@cz_binance) September 21, 2022
Bitcoin (BTC), the largest crypto token in the world, also decreased in value by eight percent at the start of the week. Based on price analyses, the market needs to push the value of BTC to $20,100, or the token will continue its bear market and see a value below its support zone, which currently ranges from $18,626 to $17,622.
At the beginning of this week, other tokens also experienced a decrease in value. Solana went down by 8.6 percent, Cardano’s value dropped by 10.7 percent and BNB was down around seven percent.
The 75-basis point interest rate hike by the Federal Reserve on Wednesday is expected to bring crypto valuation down even further. Fed chairman Jerome Powell projected that the interest rate hike might reach 125 basis points by the end of 2022.