Gary Gensler noted, “We’ve even seen centralization in the crypto market, which was founded on the idea of decentralization.”
Gary Gensler, the SEC Chairman, revealed his opinions on the increasing centralization in the crypto ecosystem.
Gensler remarked that even though many technological changes may try to enforce decentralization, things do not stay that way for long.
He referred to the crypto industry, claiming it is built on the very notion of decentralization. However, the market has become increasingly centralized due to a number of intermediary platforms.
“As it relates to the intermediaries, the so-called crypto exchanges or lending platforms and the like, they’re highly centralized.”
Gensler expressed his views at a time when Ethereum's transition to a PoS mechanism has led to widespread concerns about centralization.
Last month, Santiment claimed that merely two addresses control 46% of Ethereum’s PoS nodes. Similarly, only four firms: Lido, Coinbase, Kraken, and Binance hold 61.25% of the staked Ethereum assets, thus making the ecosystem more centralized.
According to Slava Demchuk, the CEO of PureFi,
“Large companies will have a majority share of the network, making it more centralized. It means that entities with more ETH will have more control.”
It is worth noting that in 2018, Gensler acknowledged Ethereum’s decentralized structure. Following the Ethereum Merge, the SEC’s Chair has started considering it as a security, noting that PoS tokens are subject to securities laws. Currently, the CFTC and SEC are in a dispute over whether Ethereum should be treated as a security.
Interestingly, both agencies have the same opinion on Bitcoin. Unlike Ethereum, the SEC and CFTC consider it a commodity (like gold) instead of a security.
