SEC doesn’t want Ethereum to transform banking landscape, says Joseph Lubin

Ethereum co-founder Joseph Lubin believes the Securities and Exchange Commission (SEC) is intentionally hindering innovation which threatens the existing financial landscape in the United States.

Speaking at FT Live’s Crypto and Digital Asset summit in London, Lubin unpacked Consensys’s decision to sue the SEC after receiving a Wells notice from the U.S. securities regulator.

“The SEC appears to have reclassified Ether as a security without telling anybody that that’s the case. They are going about a strategic series of enforcement actions rather than open discourse and clear rulemaking,” Lubin said.

The CEO of Consensys — makers of the MetaMask wallet — said the enforcement actions intend to create fear, uncertainty and doubt for the cryptocurrency industry “in an attempt to paralyze” and force the company offshore.

Lubin said their counteraction against the SEC is aimed at getting more clarity from U.S. courts, considering that the Commodity Futures Trading Commission (CFTC) had previously classified Ether ( ETH ) as a commodity.

Timing is suspicious

The Consensys CEO also highlighted the upcoming deadline for the SEC to issue a decision over the approval of Ether spot exchange-traded funds (ETFs) as a driving force behind the regulator’s renewed enforcement action against Ethereum.

“We believe that there’s a flurry of activity designed to enable them to say that their action wasn’t capricious in the very likely event that they deny the Ether spot ETFs,” Lubin explained.

Lubin said that the SEC had noticed how much capital had flowed into the ecosystem following the approval of spot Bitcoin ETFs:

“I think they're concerned that so much attention and capital will flow to our ecosystem, considering it is improving enormously in terms of scalability and usability.”

Lubin also speculated that the prospect of the banking industry's customers moving assets into digital forms using decentralized finance constructs could scare many banks and other financial institutions.

“The SEC probably doesn’t want to see a wave of innovation that that will really transform the landscape," he said.

Why Consensys needs to win the case

The importance of a positive outcome against the SEC could also have wide-reaching implications for the cryptocurrency and technology landscape in the U.S.

Lubin said that the SEC’s claims that Coinbase and MetaMask’s wallets are acting as broker-dealers are setting a dangerous precedent. He added that the thought of a piece of software acting as a broker-dealer was a “preposterous notion.”

“We’re at odds over whether we should register MetaMask as a broker-dealer. Should ever MetaMask user have to register their wallet as a broker-dealer, it’s chilling,” Lubin added.

The Consensys CEO concluded that the entire technology industry in the U.S. could be impacted by the actions of the securities regulator.