Ethereum’s transition to Proof-of-Stake (PoS) seems to have caught the attention of the Securities and Exchange Commission (SEC) chair Gary Gensler, who said PoS cryptocurrencies might count as securities just hours after the Merge.

Ethereum switched over to PoS on Thursday, effectively allowing investors to ‘stake’ their coins, locking them for a certain amount of time on the blockchain in exchange for rewards. According to Gensler, this could label ether as a security under what’s known as the Howey test, given that it’s assumed to provide profits.

“From the coin’s perspective…that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others,” Gensler said to reporters after a hearing in congress (via Bloomberg).

The SEC chair says he wasn’t referring to ether in particular, or any cryptocurrency. However, the comment could signal further scrutiny for Ethereum and its team.

The Ethereum comments come shortly after the US Treasury called upon the SEC and the Commodity Futures Trading Commission (CFTC) to “aggressively” investigate crypto companies that aren’t following the law.

The Treasury further recommended ways to combat the use of crypto for crimes, including increased monitoring in the crypto sector.

The SEC is currently in an odd position with the crypto community — lawmakers and entrepreneurs have expressed their support for the CFTC to be the de facto crypto regulator instead of the SEC. 

Read more: Gary Gensler still backing the SEC to be the best crypto regulator

While Gensler acknowledged the CFTC does need heightened authority to enforce regulation, he reiterated that the SEC will continue to push for authority when it comes to overseeing cryptocurrencies the agency deems securities.

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