According to John Deaton, the founder of CryptoLaw, who advocates for XRP cryptocurrency owners, the recent transition of the Ethereum network to the Proof-of-Stake (PoS) consensus algorithm may lead to Ethereum being recognized as a security by regulators.
In an interview with Real Vision Crypto, Deaton explained that while Ethereum was decentralized under the Proof-of-Work (PoW) consensus method, it has become more centralized and controlled by users with the most staked assets under PoS.
This increased centralization, Deaton argues, brings Ethereum closer to the definition of a security.
Deaton cited the recent lawsuit against the KuCoin crypto exchange by the New York Attorney General, who accused the exchange of violating securities laws by listing ether as a security.
Deaton argued that Ethereum’s move to PoS impacts key coin ownership features and incentives, specifically staking, which allows ETH holders to profit simply by participating in staking.
Deaton believes that the SEC may expand the definition of securities to include stablecoins and wrapped tokens, and has previously called on the crypto community to support a class action lawsuit against recognizing ether as a security.