Over the past year, ethereum has vaulted in value. The value of the second-largest cryptocurrency in circulation is around $72 billion, challenging bitcoin in the past year.

Needless to say, ethereum has established itself as a key pillar of the crypto market. Its position is now under threat, amid rumblings that US regulators could classify ethereum—or its initial offering of ether tokens to users in 2014—as a security.

While the US commodities regulator has claimed bitcoin for itself, such a move by the SEC would make ethereum the same as a stock, with all the strict requirements on registration, disclosure, and accreditation of investors that entails. Ethereum, like nearly all cryptocurrencies, didn’t follow any of these rules when it was initially issued.

In a further twist, ethereum itself has become a favored platform for outfits issuing their own customized crypto tokens, which in the past year have collectively raised more than $10 billion with little to no regulatory oversight, according to data provider Coinschedule. If the US Securities and Exchange Commission decides that ethereum is a security, it could jeopardize the funds users have pumped into the platform, and land a number of key actors, including issuers and exchanges, in hot water.

Gary Gensler, a former chairman of the Commodities Futures Trade Commission (CFTC), has argued that ethereum meets the so-called Howey Test, a legal precedent that guides whether an asset is classified as a security or not. The Howey Test considers an instrument to be a security if it displays certain features, like whether profits depend on the actions of a third party or whether the instrument represents an investment in a common enterprise. Read more from qz.com…

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