representing that it was licensed to operate in New York. However, the OAG’s actions against Kucoin are not the only news to come out of the office.
In a statement released on March 9, James and the OAG declared that they consider ethereum, the second-largest cryptocurrency by market capitalization, to be a security. This announcement has sent shockwaves through the crypto community, as it could have significant implications for the regulation of cryptocurrencies in the United States.
According to the OAG, ethereum meets the definition of a security under the Howey Test, which was established by the Supreme Court in 1946. The test states that an investment contract is a security if it involves an investment of money in a common enterprise with the expectation of profits solely from the efforts of others.
The OAG argues that ethereum meets this definition because it was initially sold through an initial coin offering (ICO), which involved investors purchasing tokens with the expectation of profiting from the efforts of the ethereum development team. The OAG also notes that ethereum is not decentralized, as it relies on a group of developers to make decisions about its future development.
The OAG’s declaration that ethereum is a security could have significant implications for the regulation of cryptocurrencies in the United States. If other regulators follow suit, it could lead to increased scrutiny of ICOs and other cryptocurrency offerings, as well as increased regulation of cryptocurrency exchanges.
For now, the OAG’s actions against Kucoin and Coinex are the most immediate concern for the crypto community. The lawsuits against these exchanges are part of a broader crackdown on crypto platforms by the OAG, which has been investigating the industry for several years. As the crypto industry continues to grow and evolve, it is likely that regulators will continue to grapple with how to regulate this new and rapidly changing sector.
