The SEC doesn’t want Ethereum to change the banking landscape, says Joseph Lubin.
Ethereum co-founder Joseph Lubin believes the Securities and Exchange Commission (SEC) is intentionally hindering innovation that threatens America’s existing financial landscape.
Speaking at FT Live’s Cryptocurrency and Digital Assets Summit in London, Lubin revealed Consensys’ decision to sue the SEC after receiving a Wells notice from the U.S. securities regulator.
“It appears that the SEC reclassified Ethereum as a security without informing anyone of the fact. They are taking a strategic series of enforcement actions rather than public discourse and clear rulemaking,” Lubin said.
Related: Consensys Files Lawsuit Against SEC and Commissioner Over Ether Regulation
The CEO of Consensys, maker of the MetaMask wallet, said the enforcement action was an attempt to drive the company overseas by creating fear, uncertainty and doubt in the cryptocurrency industry.
Rubin said their response to the SEC was aimed at getting more clarity from U.S. courts, considering that the Commodity Futures Trading Commission (CFTC) previously classified Ethereum (ETH) as a commodity.
The timing is questionable.
The Consensys CEO also highlighted the deadline for the SEC to make a decision on approving an Ether spot exchange-traded fund (ETF) as a driving force behind the regulator’s new enforcement actions against Ethereum.
“We believe there is a lot of activity designed to allow them to say that their behavior was not erratic in a situation where it is very likely that they will reject the Ether spot ETF,” Lubin explained.
Rubin said the SEC has noticed how much capital has flowed into the ecosystem following the approval of spot Bitcoin ETFs.
“Given that we are seeing tremendous improvements in scalability and usability, I think we are concerned that too much attention and capital will be brought into our ecosystem.”
Lubin also speculated that the prospect of banking industry customers using decentralized financial structures to move assets into digital format could scare away many banks and other financial institutions.
“The SEC probably doesn’t want to see a wave of innovation that will really change the environment,” he said.
Why Consensys Should Win the Case
The significance of a positive outcome for the SEC could also have far-reaching implications for the cryptocurrency and technology landscape in the United States.
Rubin said the SEC’s claims that Coinbase and Metamask’s wallets were acting as broker-dealers were setting a dangerous precedent. He added that the idea of software acting as a broker-dealer is “absurd.”
Related: The US SEC is expected to reject a spot Ether ETF in May.
“We are divided on whether MetaMask should be registered as a broker-dealer. “It would be really creepy if MetaMask users had to register their wallets as broker-dealers,” Lubin added.
The Consensys CEO concluded that the entire U.S. technology industry could be affected by the actions of securities regulators.
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