In a recent skirmish on social media, former Twitter CEO and Bitcoin advocate Jack Dorsey sparked a heated debate by claiming that Ethereum (ETH) could be considered a security.
Dorsey’s statement immediately drew attention and sparked a Twitter war with Udi Wertheimer, a Bitcoin Ordinals developer, who criticized Dorsey as a “clown.”
In response, Dorsey shot back, challenging Wertheimer to educate him by saying:
“ETH is not a security? Teach me, wizard.
Wertheimer responded by sharing an old video of Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), stating that ETH was properly decentralized and not classified as a security.
Adding to the speech, Gabor Gurbacs, strategy adviser to the issuer of stablecoin Tether and investment management firm VanEck, proposed that Ethereum’s recent transition to a proof-of-stake consensus mechanism could have triggered a reassessment of securities laws.
This online confrontation is taking place against recent SEC lawsuits against cryptocurrency exchanges Binance and Coinbase. The regulatory entity alleges that these platforms offered unregistered values to their users.
The timing of this clash has drawn more attention to the issue of regulatory oversight in the crypto market.
Further fueling the fire, Dorsey endorsed a screenshot of a 2015 post by Coinbase CEO Brian Armstrong in which Armstrong dismissed altcoins as a distraction and emphasized a focus on Bitcoin.
Dorsey continued his pro-Bitcoin stance by retweeting a video of Jack Mallers, CEO of Bitcoin Lightning app Strike, calling out Armstrong for prioritizing altcoins over the development of Bitcoin and the Lightning Network.
Interestingly, it’s worth noting that during Dorsey’s tenure as Twitter director in 2021, the company sold 140 Ethereum-based non-fungible tokens (NFTs). However, Dorsey himself refrained from investing in ether at the time. In August 2021, he downplayed Ethereum’s potential to disrupt big tech, further emphasizing his preference for Bitcoin.
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SEC Assessment of Ethereum’s Regulatory Status
Dorsey’s comments and the ensuing controversy are critical as the SEC actively considers the classification of ethereum and other cryptocurrencies.
During a congressional hearing in early February, SEC Chairman Gary Gensler acknowledged that tokens like Ethereum are often sold as investments, which could be subject to federal securities law. However, the SEC’s position remains unresolved. Gensler did not clarify whether ETH should be considered a security or a commodity during a House Financial Services Committee hearing in mid-April.
While the SEC has launched enforcement actions against companies that mint tokens on the Ethereum platform and has accused prominent influencers of promoting registered securities, an official statement on Ethereum’s classification is still pending.
The commission is carefully evaluating all relevant factors before making a final decision on the regulatory status of ETH, which could potentially affect the entire crypto industry.
