Consensys, a leading blockchain and web3 software development company, has responded to the United States Securities and Exchange Commission’s (SEC) request for information regarding Ethereum’s proof-of-stake (PoS) consensus mechanism in consideration of spot ether exchange-traded fund (ETF) applications.
Consensys, in a comment letter forwarded to the SEC, responded to raised apprehensions regarding potential fraud and manipulation linked with Ethereum’s PoS mechanism, firmly stating that such concerns lack validity. The company underscored Ethereum’s advanced security attributes in contrast to Bitcoin’s proof-of-work (PoW) consensus mechanism, which serves as the foundation for authorized bitcoin-based ETFs.
According to Consensys, Ethereum’s PoS implementation not only meets but exceeds the security standards of Bitcoin’s PoW mechanism. The company highlighted Ethereum’s faster block finality, segregation of duties between proposers and attesters to prevent large stakeholder control, higher cost to attack, penalties for validators violating protocol rules, and environmental friendliness compared to Bitcoin.
Consensys also underscored Ethereum’s active developer community, larger than Bitcoin’s, and its fully public and transparent blockchain. The company urged the SEC to recognize the advanced safeguards inherent in Ethereum’s design, which surpass the security and resilience standards of approved Bitcoin-based ETPs.
“While spot bitcoin ETFs have proven to be exceptionally popular, the approval of a spot ether ETF in May remains uncertain,” Consensys noted. Bloomberg ETF analysts estimated the chances of a spot Ethereum ETF gaining approval in May to be approximately 30%.
Consensys remains optimistic about Ethereum’s prospects and encourages the SEC to consider Ethereum’s superior qualities when evaluating spot ether ETF applications.