Can the US Government Sue More Transactions on the Ethereum Blockchain Than Ever Before?

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Transactions on the Ethereum blockchain are now claimed to be under the jurisdiction of the US government after the merger turned its consensus into a proof of stake (PoS) network.

The merger was a success, being the latest update of the Ethereum network that changed the face of the blockchain as a whole.

Today, the minting of new coins no longer comes from mining, but from the reward of staking ETH coins in crypto wallets to validate the network.

However, the network switch to PoS has created a new “seed of trouble” because ETH will fall into the category of securities tokens. The US SEC is again highlighting that, as most of the network nodes are in the US.

US SEC and Transactions on the Ethereum Blockchain

Based on the Watcher News report, the US Securities and Exchange Commission claims that post-merge transactions on the Ethereum blockchain are automatically entered into the US government's auspices.

“ETH contributors are validated by a network of nodes on the Ethereum blockchain, which is clustered more densely in the United States than in any other country. As a result, the transaction took place in the United States," a US SEC spokesman said.

It is known that there are currently 42.56 percent of the 7819 Ethereum nodes located in the US, which makes it the largest region of node presence, followed by Germany in second place, with 11.56 percent.

Indeed, the merge update has received two opposing responses. On the one hand, it has been worried that the network will be in the SEC's post-merger scope. On the other hand, we see that merge will increase the decentralization of the network.

Of course, the SEC's new statement brings bad mood for Ethereum, although according to some legal experts it has no legal significance.

Disrupted Deflationary Narrative

On the other hand, the bullish trend that had been building for Ether before the merge seemed to have stalled when miners sold their 30,000 ETH.

Despite concerns over the prospect of a Fed rate hike, ETH prices started to weaken ahead of the merge due to the large number of ETH coins miners were selling.

As a result, the price of ETH also tends to move down and slows down the reduction in the issuance of new ETH coins. This disrupts the deflationary narrative of ETH, even though Ether is still considered a post-merge inflation coin.

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