- ConsenSys has pushed the SEC to approve the creation of a spot Ethereum ETF.
- Ethereum’s PoS system, according to ConsenSys, provides better security than Bitcoin’s PoW mechanism.
- Ethereum has better security than Bitcoin ETFs that have already received approval, according to ConsenSys.
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A new chapter has been added to the ongoing tale of cryptocurrency exchange-traded funds (ETFs) in the US. The firm that created the well-known cryptocurrency wallet MetaMask, ConsenSys, has written to the Securities and Exchange Commission (SEC) requesting permission to launch a spot Ethereum ETF.
The Security Measures of Ethereum Under Scrutiny for ETF Adoption
This action is a reaction to the SEC’s earlier March request for public comments. The SEC is especially curious as to whether Ethereum’s novel Proof-of-Stake (PoS) security feature presents any difficulties that might affect an ETF’s ability to remain viable.
ConsenSys contends that the Proof-of-Work (PoW) mechanism of Bitcoin, which is the basis for Bitcoin ETFs that have already received approval, is not as secure as Ethereum’s PoS system. The letter describes how, in comparison to Bitcoin, launching a successful attack on the Ethereum network is much more costly and time-consuming.
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ConsenSys estimates that an attack on Ethereum would take almost six months to carry out and cost close to $34.39 billion (based on December 2023 Ether prices). On the other hand, an attack on the Bitcoin network, which is mainly dependent on electricity and processing power, might be much faster and cost anywhere from $5 billion to $20 billion.
Exploring the Benefits of Ethereum’s Proof of Stake System
ConsenSys highlights a number of additional benefits of Ethereum’s PoS system in addition to cost. Faster block finality (transaction confirmation), a decentralized and random validation procedure, and an integrated penalty system for validators who violate network policies are some of these.
ConsenSys claims that these characteristics, along with Ethereum’s open community structure and energy efficiency, produce a strong network that is less prone to fraud and manipulation.
The letter ends with a strong call for the SEC to acknowledge the sophisticated security features incorporated into Ethereum’s architecture. ConsenSys contends that these security measures surpass, not just match, those present in Bitcoin-based ETFs that have previously received commission approval.
ConsenSys’s push is the most recent in the ongoing discussion about cryptocurrency exchange-traded funds (ETFs) in the United States. Now that a number of Bitcoin ETFs have been approved, attention is turning to Ethereum and whether or not its unique proof-of-work system will be considered secure enough for an ETF product.
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