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Ether’s New ‘Staking’ Model Could Draw SEC Attention

WASHINGTON—Ethereum’s big software update on Thursday may have turned the second-largest cryptocurrency into a security in the eyes of a top U.S. regulator. 

Securities and Exchange Commission Chairman Gary Gensler said Thursday that cryptocurrencies and intermediaries that allow holders to “stake” their coins might pass a key test used by courts to determine whether an asset is a security. Known as the Howey test, it examines whether an asset is bought by investors hoping to earn a return based on the efforts of others.