Financial analysts are pointing to a trend indicating increased decentralization within the Ethereum network, suggesting that it could play a pivotal role in its regulatory classification. According to JP Morgan, a significant decrease in the share of Ethereum staked through Lido, one of the largest staking projects in the industry, supports this narrative.
JP Morgan’s report, released on Wednesday, highlighted a notable decline in the portion of Ethereum staked via Lido, dropping from approximately one-third a year ago to around a quarter presently. This development is seen as a positive for the Ethereum network, potentially alleviating concerns surrounding network concentration. Consequently, there’s an elevated likelihood that Ethereum could evade classification as a security in the future.
Staking in the cryptocurrency realm involves users pledging their cryptocurrency to support the network’s operations. Ethereum, having transitioned to a proof-of-stake blockchain, necessitates staking for network maintenance, a departure from traditional mining.
Amid Ethereum’s shift to proof of stake, concerns had arisen regarding potential centralization, primarily due to major entities like Lido, Coinbase, Kraken, and Binance dominating staking activities.
JP Morgan referenced the Securities and Exchange Commission’s (SEC) acknowledgment that tokens on a sufficiently decentralized network may not be considered securities, especially in the absence of a controlling group. This stance holds significance as the SEC evaluates numerous applications for a U.S. spot Ethereum exchange-traded product, aiming to ensure compliance within the crypto space.
The current price of Ethereum sits at $3,418, as per CoinGecko data, reflecting a nearly 3% increase over the past 24 hours. This ongoing development underscores Ethereum’s dynamic landscape and its potential implications for regulatory frameworks within the cryptocurrency domain.
