This week for the crypto sector was as hot as ever. The crypto space saw concerns arising after Ethereum’s decentralization given the steady rise in staking by liquidity stakers. And self-limiting proposals like remedies also took-off. Ethereum ETFs have also entered the mainstream discussion since the ARK 21Shares and VanEck’s filings.
U.S. regulator, Securities and Exchange Commission was also in the highlights of this week, primarily due to the challenges it is expected to face in the future. Blockchain services provider LBRY appealed in the court for the case it lost against SEC. While Congressman Tom Emmer proposed to restrict the regulator’s fundings until it comes up with clear crypto regulations.
Ethereum Community is Concerned About Decentralization
Liquid staking protocols do not follow any staking limit per se and this could be a cause of concern for the community. Ethereum Beacon chain community health consultant, Superphiz, suggested self-limiting to ETH stakers to curb the growing centralization.
He recently informed that prominent stakers including Rocket Pool, StakeWise, Stader Labs, and Diva Staking agreed to the self-limit rule. However, the centralization concern is still looming over Ethereum since the biggest ETH staker is at alarming staking capacity.
Lido Finance, the biggest Etheruem staking protocol, is currently holding nearly 33% of all the staked ETH. This concern becomes more dreadful due to the protocol’s community not being in favor of applying the self-limiting rule.
Ethereum Joins the ETF Filings Frenzy
Cryptocurrency exchange-traded funds have turned into serious investment vehicles, especially the much awaited spot Bitcoin ETFs. It isn’t surprising that the community wants Ethereum to be part of the action as well.
ARK 21Shares and VanEck reported to file for spot Ethereum ETFs with the Securities and Exchange Commission (SEC).
James Seyffart, an ETF analyst at Bloomberg, emphasized the significance of 19b-4 filings compared to previous S-1 filings. He pointed out that these 19b-4 filings are expected to give the race for Ethereum (ETH) ETFs a head start, similar to what was observed with spot Bitcoin filings. This suggests that the regulatory process and filings are crucial factors in the competition to launch ETFs for different cryptocurrencies.
LBRY Challenges US SEC; Files Appeal in the Court
Blockchain-based company LBRY, which lost a legal battle against the SEC in July 2023 over the sale of unregistered securities, is now appealing the court’s decision. They filed an appeal notice with the United States Court of Appeals for the First Circuit on September 7, 2023. The court had ordered LBRY to pay a civil penalty and cease offering “unregistered crypto asset securities.”
LBRY’s decision to appeal coincides with recent wins by crypto entities like Ripple and Grayscale in cases against the SEC. LBRY hopes for a similar outcome as Ripple’s case, but legal experts note that each lawsuit is unique, and the fate of LBRY remains uncertain until further updates.
Congressman Proposes Against SEC’s Fundings
U.S. Representative Tom Emmer has criticized the SEC and its Chair, Gary Gensler, for their actions in the crypto space, calling it an “abuse of power.” Emmer has proposed restricting the agency’s finances until clear crypto regulations are established, citing concerns about misuse of taxpayer funds. He aims to prevent the SEC from using funds for enforcement actions on digital assets and companies. Emmer, a pro-crypto Republican, believes Gensler has exceeded his authority.
Emmer’s proposal includes adding an amendment to oversee the SEC’s funding, ensuring restrictions on the agency and its Chair until comprehensive regulations are in place. This aligns with the growing debate among lawmakers, with some advocating for clearer crypto regulations and others supporting the SEC’s actions.
Additionally, key figures in the blockchain industry, including Kristin Smith and Sheila Warren, have supported this legislation. Emmer’s stance mirrors that of SEC Commissioner Hester Pierce (“Crypto Mom”), while Democratic Congressman Ritchie Torres urges Gensler to follow recent court rulings in crypto-related cases. The political landscape’s potential impact on crypto regulation remains a subject of interest, with discussions surrounding the 2024 elections and their potential influence on the industry.