JPM - JPMorgan Says Ethereum Could Avoid 'Security' Designation
2024-04-05 10:38:14 ET
Analysts at %JPMorganChase (NYSE: ) say %Ethereum (CRYPTO: ) could avoid being labeled a “security” and regulated like a stock in the U.S.
In a research report, JPMorgan notes that staking platform Lido’s share of staked Ethereum has fallen considerably in recent weeks, lowering concerns about concentration in the network.
Because of this change, there is less risk that Ethereum will be designated as a security, according to the analyst report.
“The share of Lido in staked ETH has decreased further from around one third a year ago to around a quarter at the moment,” says JPMorgan.
JPMorgan adds that regulators at the U.S. Securities and Exchange Commission (SEC) have acknowledged that “tokens on a sufficiently decentralized network are no longer securities as there is no controlling group…”
Whether Ethereum is classified as a security is an increasingly important question as the SEC decides whether to approve spot Ether exchange-traded funds (ETFs) for the U.S. market.
If designated a security, Ethereum would be subject to the same rules and regulations that govern stock trading in America.
If Ether avoids the security classification, it will provide more trading flexibility among investors. Alternatively, Ethereum could be classified as a “commodity” for regulatory purposes.
The SEC is expected to rule on whether to permit Ethereum spot ETFs by the end of May or early June of this year.
The price of Ethereum has risen 38% so far in 2024 and currently trades at $3,250 U.S.
JPMorgan’s stock is up 14% on the year and trading at $195.65 U.S. per share.