Consensys to SEC: Recognize the Advanced Safeguards Inherent in Ethereum’s Design

Consensys has told the U.S. Securities and Exchange Commission that Ethereum’s proof of stake implementation “meets and even exceeds the security of Bitcoin’s Proof of Work (PoW).” The blockchain software company said the commission should recognize the advanced safeguards inherent in Ethereum’s design which exceed the “security and resilience safeguards underlying bitcoin-based exchange-traded products.”

The Securities and Exchange Commission’s Concerns

Consensys, a blockchain software company, has urged the Security and Exchange Commission (SEC) to “recognize the advanced safeguards inherent in Ethereum’s design.” In its comment letter to the SEC regarding the approval of an Ethereum exchange-traded fund (ETF), Consensys asserts that Ethereum’s network proof of stake (PoS) implementation “meets and even exceeds the security of Bitcoin’s Proof of Work (PoW).”
On March 8, 2024, the SEC published a notice seeking public input on Nasdaq’s pending application for a rule change to allow trading of the Ishares Ethereum Trust. The regulator said it specifically seeks comments on six main questions including one relating to concerns over ether’s susceptibility to fraud and manipulation.

In response, Consensys’ comment letter dated March 29 highlights five key areas where Ethereum’s consensus model outperforms that of Bitcoin. For instance, the letter identifies the PoS model’s increased security and environmental benefits as one key area where it outperforms the PoW model. Faster block finality as well as the PoS model’s distributed and randomized validation are also listed as areas in which it performs better than PoW.
Meanwhile, in a direct message to the SEC, the blockchain software company said:

We urge the SEC to recognize the advanced safeguards inherent in Ethereum’s design, which not only meet but exceed the exemplary security and resilience safeguards underlying Bitcoin-based ETPs that have previously been approved by the SEC.

The company also characterized its comment letter as part of its mission of driving progress and providing relevant and useful information to the public. The comment letter also reiterated Consensys’ willingness and readiness to engage in “an ongoing, constructive dialogue with the SEC and its staff.”
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