News
Ethereum and blockchain technologies are under threat from regulators in Washington
The “economic miracle” of Texas is a consolidated fact and the latest data from Texas Labor Commission bears it out: In the first quarter of this year, the state enjoyed the largest increase in nonfarm employment anywhere in the country, reported record levels of jobs and recorded its 36th consecutive month of positive annual growth.
Texas has capitalized on this momentum and emerged as a decisive leader in so-called Web3 innovation. In other words, this is the decentralization of blockchain technologies and token-based economy. Blockchain is the mechanism that records digital transactions across computers.
This is no coincidence: Texas lawmakers have intentionally crafted pro-crypto policies that, in turn, have attracted a robust ecosystem of developers and miners. And the state’s deregulated energy market allows access to low-cost energy supplemented by a healthy mix of renewable energy.
These are just a few of the reasons we moved our company, Consensys, from New York to North Texas last year. We were confident that Texas would be the optimal location for our flagship offerings, built on Ethereum, the world’s second largest blockchain, and powered by ether, the underlying digital asset.
More specifically, we concluded that Texas’ unique alchemy of business-savvy leaders, encouragement of innovation, and a stable regulatory environment would allow Consensys to help lead the next phase of the Internet’s development. The hallmarks of this next phase – transparency, security and accessibility, all controlled by the user, not a big tech company – are undeniably innovative. That’s why companies around the world are already building software applications to run on Ethereum. And why the world’s largest asset managers are working on asset tokenization using Ethereum.
Yet all this potential is under imminent attack by Washington’s unelected regulators. Without legal authority, the Securities and Exchange Commission is arbitrarily reclassifying ether from a commodity to a security so that it can impose the type of registration and other requirements associated with securities (such as bonds, stocks and other investments) under its jurisdiction .
But ether is clearly and logically not a stock. On multiple occasions, the SEC itself has made this point, as has its sister agency Commodity Futures Trading Fee – and our entire business model was built against the backdrop of this clear and prior regulatory consensus.
THE The SEC’s regulatory escalation it undermines the fundamental principles of the separation of powers, according to which it is the job of Congress to legislate and assign jurisdiction over blockchains like Ethereum. Texas knows all too well the risks inherent in federal regulatory overreach, and the SEC’s proposed power grab in this case is illegal, unjustified, and arbitrary. Additionally, it has a direct and material impact on Texas by dismantling a growing industry that supports high-skilled jobs in Texas and represents the cutting edge of technology, how we store our data, and the future of our digital interactions.
More broadly, if the SEC were to prevail, it would spell the end of the Ethereum blockchain in the United States, rendering ether functionally inaccessible and unusable. Software developers in Texas and across the country who want to create applications interoperable with Ethereum would have to register as securities brokers with the SEC itself, a draconian step that would essentially outlaw all current software development in the United States related to Ethereum as well . such as daily ether transactions which are essential for on-chain transactions.
We hope that the state of Texas, no stranger to aggressively fighting federal overregulation, will join us in stopping the SEC in its tracks. We recently took an important step in filing a lawsuit against the SEC, asking a federal court to order the SEC to end its illegal campaign.
We urge Texans who value innovation and economic independence to follow suit, support this unfortunate but all-too-necessary effort, and preserve the state’s hard-earned leadership position at the forefront of Web3 innovation.
Joseph Lubin is co-founder of Ethereum and founder and CEO of Consensys.
We welcome your thoughts in a letter to the editor. Consult the guidelines and send your letter here. If you have problems with the form, you can email it to letters@dallasnews.com