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Ethereum ETFs: Consensys Tells SEC ETH Safer Than BTC, but is There Ulterior Motive?

Last Updated 5 mins ago
Teuta Franjkovic
Last Updated 5 mins ago
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • ConsenSys argues Ethereum’s PoS offers superior security and fraud protection compared to approved Bitcoin ETFs.
  • Ethereum highlights its eco-friendly credentials as an advantage over Bitcoin’s energy-intensive Proof-of-Work system.
  • ConsenSys emphasizes Ethereum’s ability to function as an ETF even if classified as a security.

ConsenSys has made a formal appeal  to the United States Securities and Exchange Commission (SEC), urging it to evaluate Ethereum’s sophisticated security features carefully.

The company is advocating for the SEC’s endorsement of Ethereum’s safety protocols. This move comes in response to the SEC’s concerns about Ethereum’s Proof of Stake (PoS) system and its implications for the approval of Ethereum-based Exchange-Traded Funds (ETFs).

Ethereum to SEC: Our Proof-of-Stake is Stronger, Approve Our ETFs!

In its letter , Consensys confronts the issues highlighted by the Commission about Ethereum‘s consensus mechanism, specifically addressing the risks of fraud and manipulation.

Consensys argues  that the SEC’s concerns are unfounded, especially considering that the SEC has already approved Bitcoin-based ETFs for trading.

They assert Ethereum’s PoS contains anti-fraud and anti-manipulation safeguards that are not only more advanced but also significantly stronger than the protections provided by Bitcoin’s proof-of-work (PoW) model. This, Consensys says, makes Ethereum’s system more resistant to interference.

The comment letter  gave reasons for the SEC to grant approval. Consensys emphasized that Ethereum’s shift to a Proof of Stake (PoS) system facilitates verifiable transaction finality. This ensures that once blocks are added to the chain, they are confirmed irrevocably. The work is also quicker than in Proof of Work (PoW) systems.

The PoS mechanism distinguishes roles among block validators to avoid centralized control, enhancing the network’s defense against manipulation and bolstering overall security.

Additionally, the letter touched on discussions  regarding Ethereum’s regulatory classification. Specifically, it referenced BlackRock CEO Larry Fink’s viewpoint that the launch of an Ether-based spot Exchange-Traded Fund (ETF) could proceed, even if Ethereum were to be categorized as a security, highlighting the industry’s adaptability to regulatory frameworks.

Ethereum Touts Eco-Friendly Credentials in Bid for SEC ETF Approval

The Web3 software company highlights that Ethereum’s Byzantine fault tolerance (BFT) surpasses that of Bitcoin. It points out that Ethereum’s system of penalizing validators who break protocol rules by slashing their stakes acts as a powerful deterrent against malicious actions.

Furthermore, Ethereum’s Proof of Stake (PoS) model is more energy-efficient  and environmentally friendly than Bitcoin’s Proof of Work (PoW). Consensys urged the SEC to acknowledge the sophisticated safeguards built into Ethereum’s architecture.

These safeguards not only align with but also surpass the robust security and resilience features of Bitcoin-based Exchange Traded Products (ETPs) that the SEC has already approved.

Also, parts of the crypto community want to know  if there is a particular motive behind the letter. It says the letter overlooked a crucial aspect – Ethereum’s Proof of Stake (PoS) system does not grant governance power based on coin holdings. Instead, the full nodes dictate the rules, a fact that many regulators seem to misunderstand.

Despite the SEC’s ongoing delays in approving the Ethereum ETF, stakeholders are optimistic about a decision materializing in the near future. Meanwhile, Ethereum maintains its momentum as the second-largest cryptocurrency, boasting a current price of $3,502.43.

 

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