Photo: Adobe Stock What's at Stake in 'Proof of Stake'?
Ethereum's effectuation of the "Merge" was a technological tour-de-force with significant environmental upsides in reducing energy consumption and perhaps facilitating continued future innovation in the blockchain space. But unsettled fundamental legal questions remain.
November 21, 2022 at 11:00 AM
17 minute read
Cryptocurrency
The Ethereum blockchain in mid-September 2022 completed what was popularly dubbed the "Merge," in which the blockchain was converted from operating on a "proof of work" model to a "proof of stake" model. While there were notable technological, operational and environmental considerations associated with this transition, it also may have important legal implications as well. Questions have been raised about whether this transition to a "proof of stake" structure could affect whether tokens will be regarded as "securities" under the federal securities laws, and what the proper tax treatment should be for persons who earn tokens through "staking" rather than as "proof of work" miners.
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