Consensys, the parent company of self-custody wallet MetaMask, has urged the Securities and Exchange Commission to approve a spot Ethereum ETF, emphasizing Ethereum’s security features.
The Securities and Exchange Commission is reportedly looking into ETH’s status as a security, a move that has dampened market sentiment, with many anticipating a delay in an ETF approval.
Consensys Submits Comment Letter
To bolster the case for a spot Ethereum ETF, Consensys has submitted a comment letter to the Securities and Exchange Commission, pointing out the robust security measures inherent in Ethereum’s design. The letter, also published as a blog post on the Consensys website, provided details about the distributed verification procedure implemented by Ethereum. It also addresses the commission’s inquiry and concerns regarding Ethereum’s Proof-of-Stake consensus mechanism and its susceptibility to fraud and manipulation.
Consensys claimed in its letter that Ethereum’s Proof-of-Stake consensus mechanism goes beyond Bitcoin’s Proof-of-Work security, which has already received SEC approval for exchange-traded products (ETPs). The letter also pointed out Ethereum’s built-in anti-fraud and anti-manipulation mechanisms. These can help provide relatively stronger resistance to tampering compared to Bitcoin’s Proof-of-Work model.
Consensys also noted that Ethereum comes with a more rapid block finality without any reversal in a very short period. This is because of Ethereum’s use of a randomized and distributed validation procedure. This prevents huge stakeholder control, preventing malicious actors from exercising influence. It also cites research demonstrating the significantly higher cost of trying to compromise Ethereum’s network than Bitcoin, highlighting less energy consumption by Ethereum’s Proof-of-Stake.
“The SEC recently asked for comments on the potential approval of ether ETF applications, seeking information on whether Ethereum’s Proof of Stake (PoS) raises “unique concerns” of fraud and manipulation that the agency should consider. We filed a comment letter in response explaining why such concerns are wholly without merit. In fact, Ethereum’s PoS implementation meets and even exceeds the security of Bitcoin’s Proof of Work (PoW), which underlies bitcoin-based ETFs that have already been approved for trading by the SEC.”
A Proactive Stance
Coinbase’s proactive stance in advocating for a spot Ethereum ETF highlights its commitment to advancing blockchain technology adoption. Consensys hopes to pave the way for broader accessibility to decentralized finance (DeFi) and Web3 applications by engaging in constructive dialogue with regulatory bodies such as the Securities and Exchange Commission. While the commission evaluates comments provided by Consensys and other stakeholders, the outcome of its deliberations will have a significant impact on the larger crypto markets. Collaborative efforts between regulatory authorities and important industry players are crucial to fostering innovation and ensuring investor protection.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
