Joseph Lubin, the co-founder of Ethereum, blasted regulators for comparing the ether cryptocurrency to a security, claiming that it is more comparable to a commodity like oil.

At Paris Blockchain Week on Thursday, Lubin stated he was “quite certain” ether was not a security in an interview with CNBC.

Ether would be required to register with regulators and be subject to substantially tighter pre-clearance and reporting requirements if it were treated as such.

“Anyone can say anything, it doesn’t make it true,” Lubin told CNBC.

A lawsuit brought by the New York Attorney General Letitia James against the Seychelles-based cryptocurrency exchange Kucoin alleges the company failed to register as a securities and commodities broker-dealer and falsely identified itself as an exchange, raising concerns that ether may be regarded as a security.

As one of several tokens listed on Kucoin that the regulator deemed to be securities, the NYAG’s office mentioned ether in the lawsuit, describing it as a “speculative asset” that depends on the efforts of third parties to generate profits for its owners.

“It’s unfortunate that that sort of side swipe was made, but I don’t think it’s all that relevant,” James said.

In contrast to bitcoin, ether powers an ecosystem of applications that let users to transact, borrow money from, and purchase nonfungible tokens.

With a $212.8 billion market valuation, it is the second-largest token globally.

According to information from CoinGecko, the price of ether has dropped 2% during the past 24 hours on Thursday.

The U.S. Securities and Exchange Commission had previously said that because ether had switched to a new “proof of stake” verification scheme, it might be considered a security.

A blockchain’s validators in a proof of stake model lock up some of their tokens in exchange for maintaining the network’s security. They can earn yields that resemble interest by doing this.

According to some authorities, this model satisfies the Howey Test, which argues that an investment contract exists if funds are invested in a common venture and there is an expectation of benefits from others’ labors.

According to SEC Chair Gary Gensler, any cryptocurrency or middleman that permits users to “stake” their tokens may pass the Howey Test. Gensler made this statement to reporters in September.

Ether should be regarded as a commodity, according to Lubin. They purchase oil barrels in the hope of making a profit, he claimed.

Lubin responded, “I don’t think there’s any need to speculate on something that is exceedingly implausible,” when asked again if he thought ether might be a security.

Recently, the SEC has increased the pressure it applies to the crypto sector, cracking down on businesses and initiatives it believes are offering users unregistered securities.

The SEC issued a notice to cryptocurrency exchange Coinbase on Tuesday informing it that it had discovered possible violations of US securities law.

Participants in the cryptocurrency industry, according to Lubin, are “usually unhappy” with the regulators’ activities.

“I think some of us believe that many of the actions are right and reasonable,” he said, adding “more clarity” was needed. “We’ve seen focus on things that should see real scrutiny and we’ve seen misunderstandings.”

(Adapted from CNBC.com)

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