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Ether withdrawals to begin on April 12 as SEC Chair Gensler restates that ETH is a security

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(Kitco News) - The Ethereum (ETH) network is all set to undergo its Shanghai-Capella hard fork, also known as Shapella, after the update was successfully integrated into the Goerli testnet, the final test run before the mainnet launch.

Shappella will enable the withdrawal of staked Ether from the Beacon Chain, some of which has been locked on the network since the Beacon Chain was first launched in December 2020.

The integration with Goerli took place on Tuesday, but it didn’t go entirely as planned, according to Ethereum core developer Tim Beiko, who noted that while deposits were being processed, the process was hampered due to the failure of several testnet validators to upgrade their client software before the Goerli fork.

Beiko attributed the failure to upgrade to the fact that Goerli ETH “is worthless,” and expects mainnet validators to make the proper adjustments ahead of the mainnet integration.

During an execution layer meeting on Thursday, Ethereum developers discussed the upcoming hard fork and determined that the upgrade will take place at 10:27 am UTC on April 12, at epoch number 6209536.

Data provided by Etherscan shows that there are currently 17,683,927 Ether staked on the Beacon Chain worth approximately $29,692,728,381.

Aside from the launch of staking withdrawals, the Shapella upgrade will also include three additional improvements designed to optimize gas costs for certain activities.

The Shapella hard fork was previously launched on the Sepolia and Zhejiang testnets, and all three testnets have successfully processed Ether withdrawals from their own validator sets.

The great Ether debate

As the ability to withdraw staked Ether approaches, Securities and Exchange Commission chair Gary Gensler has once again reiterated that tokens that use staking protocols could be considered securities under U.S. law.

According to a report from The Block, Gensler made the comment after being asked for his reaction to last week's statement by Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam that Ether is a commodity.

“The investing public is investing anticipating a return, anticipating something on these tokens, whether they're proof-of-stake tokens, where they're also looking to get returns on those proof-of-stake tokens and getting 2%, 4%, 18% returns," Gensler said. "Whatever they're promoting and putting into a protocol, and locking up their tokens in a protocol, a protocol that's often a small group of entrepreneurs and developers are developing, I would just suggest that each of these token operators ... seek to come into compliance, and the same with the intermediaries.”

These comments fall in line with previous statements made by the SEC head that tokens and intermediaries that allow users to “stake” their coins may pass one of the qualifications of the Howey test, which is used to determine whether an asset is a security.

Smart accounts come to Ethereum with the launch of ERC-4337

As for now, the debate continues as both the SEC and CFTC lay claim to Ether and the ability to regulate it.

In December, a lawsuit was filed by the CFTC against former FTX CEO Sam Bankman-Fried, FTX and Alameda Research, claiming violations of the Commodity Exchange Act and demanding a jury trial. Contained within the Dec. 13 court filing from the CFTC is a statement that reads, “Certain digital assets are “commodities,” including bitcoin (BTC), ether (ETH), tether (USDT) and others, as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9).”

In February, the SEC made its first enforcement action against a staking provider when it charged the Kraken cryptocurrency exchange with the unregistered offer and sale of securities for its staking-as-a-service platform. Kraken has agreed to permanently discontinue staking services for U.S. residents and pay $30 million in disgorgement, prejudgment interest, and civil penalties.

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