KYC to stake your ETH? It's probably coming to the US

It should surprise no one if regulators start telling node validators to impose KYC and AML requirements on users staking Ether.< /p> Opinion

Over the past few years, the cryptocurrency industry has been a primary target for regulators in the United States.

Ripple's legal battle with the U.S. Securities and Exchange Commission (SEC), Nexo's lawsuit with eight state securities regulators, and Coinbase's Lend Program scrutiny of the year latest are just a few high-profile examples. This year, even Kim Kardashian had first-hand experience of regulatory scrutiny after agreeing to pay a $1.26 million fine for promoting the dodgy crypto project EthereumMax.

While Ethereum developers intended to pave the way for key network upgrades in the future, it seems that the recent merger has further complicated things between crypto projects and US regulators.

On September 15 – the same day the Ethereum merger took place – SEC Chairman Gary Gensler told a congressional hearing that proof-of-stake (PoS) digital assets could be considered as securities. Gensler said his reasoning was that holders can earn revenue by staking PoS coins, which could mean there is an “expectation of profit to be made from the efforts of others.” The latter is one of the essential elements of the Howey test, used by the SEC and other American authorities to determine whether an asset is an investment contract and has been subject to federal securities law since its adoption in 1946.

As you may already know, Ethereum has moved from Proof of Work (PoW) based mining to PoS, requiring validators to stake Ether (ETH) to add new blocks to the network. In other words, this means that Ether could fall under the Securities Act of 1933, which would require the...