Lawsuit Proposes US Jurisdiction Over Ethereum
Does the US have jurisdiction over the Ethereum blockchain?
A Securities and Exchange Commission (SEC) lawsuit may suggest so, Bloomberg reported on Tuesday (September 20).
The suit — filed Monday (Sept. 19) in federal court in Austin — is against the founder of a cryptocurrency investment research firm over what the SEC said are undisclosed incentives related to an initial coin offering.
The filing also described the movement of ether tokens in connection with the case, saying the transactions originated in America and “were validated by a network of nodes on the Ethereum blockchain, which is clustered more closely in the United States than in any other country. As a result, these transactions take place in the United States.”
The SEC was not immediately available for comment Tuesday.
While the Bloomberg report acknowledged that the comment appears deep in the filing, it said the remark still “winks at the possibility” that there is a case for US jurisdiction over the Ethereum blockchain based on where most of the data processing takes place.
“The biggest issue here is the issues over the jurisdiction of blockchain activities more generally,” Elizabeth Morton, a research fellow at the RMIT Blockchain Innovation Hub, told Bloomberg. “Multiple jurisdictions with their own regulatory frameworks can make independent claims.”
The number of actors involved in regulating cryptocurrency can leave businesses uncertain about which rules apply, Stephen Gardner, general counsel at Zero Hash, a provider of B2B2C cryptocurrency infrastructure, told PYMNTS last week.
Read more: Deciphering the alphabet soup of crypto-regulation
“Without railings,” Gardner said, companies just want to know “which consumer laws apply — and when — and who’s going to enforce them. Often they overlap, and crypto firms have to be good at responding to each of the different regulatory bodies.”
One of the top three legal challenges facing the crypto-asset industry is “clearly defining which assets are securities, which assets are commodities,” he added.
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