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Joseph Lubin, co-founder of Ethereum (CRYPTO: ETH) and CEO of Consensys, has openly criticized the Securities and Exchange Commission (SEC) for what he perceives as deliberate obstacles placed in the path of innovation within the U.S. financial sector.
What Happened: Speaking at FT Live’s Crypto and Digital Asset Summit in London, Lubin expressed concerns over the SEC's approach to Ethereum (CRYPTO: ETH) and its classification as a security.
Lubin’s comments come in the wake of Consensys receiving a Wells notice from the SEC, prompting the company to initiate legal action against the regulator.
"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," he stated.
The motivation behind these enforcement actions, according to Lubin, is to sow fear, uncertainty, and doubt within the cryptocurrency industry, potentially driving businesses like his overseas.
This aggressive stance by the SEC seems linked to the regulator’s concerns over the growing influence and capital within the crypto ecosystem, particularly following the approval of spot Bitcoin ETFs.
Lubin also pointed out the timing of the SEC's actions, which coincides with the pending decision on Ether spot exchange-traded funds (ETFs).
He suggested that this flurry of activity from the SEC might be an attempt to justify their likely denial of the Ether spot 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 explained.
Further elaborating on the SEC's potential fears, Lubin speculated that the transition of banking customers to digital assets through decentralized finance could significantly disrupt traditional banking models.
This, he believes, is a transformation the SEC is likely hesitant to see unfold.
The implications of the SEC's actions are profound, not just for Consensys but for the broader technology landscape in the U.S. Lubin criticized the notion put forth by the SEC that applications like Coinbase (NASDAQ:COIN) and MetaMask's wallets are acting as broker-dealers, which he described as a "preposterous notion."
He emphasized the chilling effect such regulatory demands could have, questioning the feasibility of requiring every MetaMask user to register their wallet as a broker-dealer.
As this legal battle unfolds, the outcome could set important precedents for the regulation of digital assets in the United States.
What’s Next: This topic is slated for further discussion at Benzinga’s upcoming Future of Digital Assets event on Nov. 19, where industry leaders will convene to debate the future of regulations and innovation in the digital asset space.
Read Next: House Challenges SEC Over Crypto Custody Rules, Biden Vows Blockade
Image: Shutterstock
