- The SEC approved nine spot ETH ETF applications last Tuesday.
- Following the approvals, the SEC confirmed ETH is not a security.
- Khaled Elawadi disagrees with the SEC’s ETH classification.
The U.S. SEC gave the green light to nine spot ETH ETF applications last Tuesday, leading most crypto users to believe that the regulator classifies ETH as a non-security token. The event sparked a debate between two prominent crypto personalities, Khaled Elawadi, a renowned crypto analyst, and David Schwartz, Ripple’s CTO.
Following the SEC’s spot ETH ETF approval, as shared by Coinbase founder Brian Armstrong, Elawadi argued the regulator was wrong, stating that Ethereum became 100% security after the Merge. According to him, Ethereum is a staking program where investors lock up funds for a predetermined period, artificially creating profits through a high programmed burn rate, decreasing supply while creating a number-go-up ponzi scheme.
Elawadi further explained that the post-Merge Ethereum protocol allows investors to enter an investment agreement with an expectation of profit, claiming that the protocol’s design enables supply manipulation unlike Bitcoin halving.
Schwartz refuted Elawadi’s claims, arguing that there are no counterparties in the alleged Ethereum investment contracts. According to Schwartz, Elawadi is wrong for linking ETH’s security status with the situation of other protocols, despite their fundamental differences.
According to Schwartz, Elawadi’s logic in accusing Ethereum of manipulating the market is wrong and unfounded. Schwartz expanded his argument by clarifying that even FTX, found to be involved in fraudulent activities, cannot be accused of market manipulation.
Armstrong acknowledged Coinbase’s association with the approved ETH ETFs, sharing his enthusiasm over the crypto exchange’s partnership with eight of the nine approved products. According to Coinbase, the Ethereum ecosystem has over 15 million monthly active addresses and 300% growth in smart contracts. The exchange noted that increased acceptance of ETH ETFs could help boost Ether’s utility and contribute to the ecosystem’s overall development.
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