Is Ethereum as Decentralized as We Think? A Lawyer’s Perspective

The debate continues on whether Ethereum (ETH) is a security or a completely decentralized altcoin. While some support the idea that ETH is not sold as a security, others continue to oppose this view.

Among all this, John E. Deaton, a lawyer and one of Ripple‘s (XRP) prominent supporters, shared his views on the matter. Deaton brought to light an article written by Preston Bryne in 2018 in a tweet.

Ethereum Commentary

At the center of the article was whether ETH is a security or not. According to Bryne’s conclusion, Ethereum’s Initial Coin Offering (ICO) did not turn it into a financial instrument that should be considered a security. Bryne stated:

I do not think that the existing Ethereum tokens should be classified as securities.

However, he also noted that ETH was not completely decentralized at that time and that the project could be subject to regulatory review. Deaton said:

Until we can demonstrate that Ethereum is sold to a wider market, this suggests that Ethereum is not as decentralized as we hoped.

According to Deaton, Ethereum’s transition to Proof-of-Stake (PoS) is causing William Hinman’s conclusion about ETH’s decentralization status to become controversial. Hinman, a former director at the U.S. SEC in 2018, made a speech explaining how Bitcoin (BTC) and ETH are not securities. This speech and some emails were shared with the public as part of the evidence Ripple used to argue that XRP is not a security.

The Future of Ethereum

Regardless of price movements, Ethereum seemed to hold above $1,600. Looking at the 4-hour ETH/USD chart, the altcoin appeared to be breaking away from bearish control. Additionally, the Exponential Moving Averages (EMA) indicated that ETH’s price could still rise. This could be attributed to the 20-day EMA (blue) being above the 50-day EMA (yellow). As a general trading strategy, the positions of EMAs could imply that traders are bullish and that ETH could form another upward trend.

Furthermore, the On-Balance Volume (OBV) increased. As an indicator measuring the flow of negative and positive volume, OBV can shed light on market players’ buying and selling decisions for other investors. At the time of writing, ETH’s OBV was rising, suggesting a possible entry point around $1,641 for short-term gains.

Disclaimer: The information in this article is not investment advice. Investors should be aware that cryptocurrencies carry risks due to their high volatility and should conduct their own research before making trades.

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