JPMorgan: Potential Decrease in Risks of Ether Being Regarded as Securities Due to Lido’s Gradual Decline in Market Share
A recent report from JPMorgan suggests a decrease in the concentration of staked ETH, particularly related to the stake held by the platform Lido, which has been a centralization concern.
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Diminishing Influence of Lido
Securities Position of ETH?
Ethereum’s Constantinople Upgrade and Market Position
The report indicates that Lido’s share of staked ETH has decreased from approximately one-third a year ago to about one-fourth currently.
(A Chainnews investigation revealed that Lido’s share of the staking market is 29.6%, while ether.fi has significantly increased to 2.9%.)
This decline is seen as a positive change in reducing Ethereum’s centralization, which is crucial for the future regulatory treatment of ETH. The diminishing influence of Lido may help alleviate concerns about a controlling entity affecting Ethereum’s autonomy.
According to a Chainnews investigation, the chart below shows that Lido’s inflow of ETH has been surpassed by other protocols offering vertical integration and staking rewards in the past three months. The outflow of ETH from Lido has also increased significantly.
The discussion of ETH’s securities position is closely linked to the regulatory environment, especially after the insights provided by the Hinman document released in June of last year. These documents reveal the Securities and Exchange Commission’s (SEC) stance on cryptocurrencies, emphasizing the importance of decentralization. The SEC has previously stated that tokens operating on fully decentralized networks may not be considered securities because they lack the central controlling group defined by the Howey test.
(Ripple Lawsuit: Hinman Documents Released, JPMorgan Analyzes ETH’s Potential Inclusion in a New Category)
In these discussions, Ethereum has also implemented the Constantinople upgrade to address scalability issues that previously hindered its performance. According to JPMorgan, this upgrade not only improves Ethereum’s functionality but also allows it to regain market share and enhance its position against other L1 blockchains.
(ETHTaipei | Ethereum’s Next Steps for the Constantinople Upgrade: PBS, Verkle Trees to Address Centralization Concerns for Validators)
As Ethereum continues to evolve, reducing centralization and improving scalability, the prospects of ETH escaping the securities definition become clearer. This will be an important milestone in Ethereum’s journey, potentially transforming its regulatory landscape and strengthening its market position. JPMorgan’s analysis is optimistic about the future of Ethereum, and ongoing decentralization efforts may greatly alleviate concerns related to regulatory classification in the past.
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Further Reading:
JPMorgan: Bitcoin Still in Overbought Territory, Potential Correction to $42K
JPMorgan Raises Coinbase Target Price to $150, Highlights Gold Investors Not Shifting to Bitcoin
