With help from Derek Robertson

As the SEC looks to expand its oversight of blockchain networksA new filing in federal court in Texas has sparked the crypto world this week.

Deep inside complaint Filed Monday in the Western District of Texas alleging an unregistered offering of crypto-securities, the agency claims that because nodes running the Ethereum blockchain network are “clustered more densely in the United States than in any other country,” transactions on the network “took place in the United States.” state”.

Some believe this argument lays the groundwork for a broad assertion of jurisdiction over any activity occurring on Ethereum and other global blockchain networks with a significant US presence. While the industry debates the importance of the filing, many crypto watchers are skeptical that the SEC’s arguments will hold up to a judge.

But there is a more pressing problem.

Based on information available from open source data tools, Ethereum nodes are nonow more densely packed in the US than in any other country.

By far, the US hosts more Ethereum nodes than any other country, according to data from EtherScan and Ethernodes.orgtwo analytics platforms that track the web.

As of Wednesday afternoon, the platforms respectively reported that the U.S. hosts about 46 percent or 44 percent of the nodes, with Germany second in both data sets. EtherScan attributes around 18 percent of the nodes to Germany, while Ethernodes estimates the figure to be around 12 percent.

But Germany has a much smaller population (~84 million people) and land area (~130,000 square miles) than the United States, with about 330 million people spread over 3.8 million square miles. So, however you define density, the data suggests that nodes are more densely clustered in Germany than in the US, both per capita and per square mile.

The SEC did not immediately respond to a request for comment on their definition of node density, but if the regulator does provide more details on its rationale, I will report it in a future release.

Since the SEC also has a more straightforward claim to jurisdiction in this particular case — American investors allegedly bought the token — the node density argument is unlikely to get a full court hearing this time around.

But questions about how to apply jurisdiction to economic activity that occurs in decentralized computer networks do not go away. And US law enforcement agencies have a long tradition of making bold, creative claims to jurisdiction over activities that mostly take place overseas. Sometimes judges accept these arguments and sometimes they don’t.

At some point, questions about where the blockchain activity takes place from a legal perspective will likely be litigated.

“As far as I can tell, there haven’t been any cases where the location of the node has been the only jurisdictional sticking point,” said Peter Van Valkenburgh, director of research at the Coin Center, a pro-crypto advocacy group. “If there was one, it would be a big fight.”

When this happens, it may be a battle for the number of nodes rather than their density.

The dust is starting to settle after the successful Ethereum merger, and it emboldens environmental activists who oppose the power-hungry “proof-of-work” mining that powers most cryptocurrencies (including Ethereum, until last week).

This morning, a group of environmentalists, including New York Assemblywoman Anna Keles, gathered virtually to urge Gov. Cathy Hochul to sign a bill passed by the State Assembly in June that would impose a moratorium on proof-of-work mining. Keles, who likened the merger to “rebuilding a spaceship mid-flight,” called not only for the governor to sign the moratorium, but also for the crypto industry to switch en masse to a greener proof-of-stake method. .

If the industry does sign on, it may end up being for less than altruistic reasons: Following last week’s successful merger, the Blockchain Association’s head of policy tweeted that it could also be “an important risk reduction event” to potentially classify Ethereum as a security, opening it up to further regulation. — Derek Robertson

While the US continues (cautiously) with its own potential stablecoin, traders in Europe will now be allowed to use US dollar-backed funds on the continent’s markets.

POLITICO’s Bjarke Smith-Mayer obtained a copy of the final EU draft bill on the crypto-asset market (paywall), which removes what would otherwise be a restriction on trading dollar-backed stablecoins. Bjarke writes that “while there are several euro-based stablecoins, most are pegged to the dollar and widely used in the European market,” and notes that there will still be a restriction on their use for purchasebut not for trading in other currencies.

This purchase restriction is intended to prevent (presumably non-European) tech giants from introducing a dollar-backed coin as a regular currency, as Facebook tried and failed to do Like the EU’s efforts to isolate yourself As American dominance of the tech world becomes more visible, the last-minute change in the law is a reminder of just how big the challenge remains. — Derek Robertson

Indonesia obliges him crypto exchanges to be managed by the citizens of the country themselves.

Futuristic translation tools may have unexpected, even deadlyconsequences.

Users are already undermining content restrictions for the AI ​​Stable Diffusion image generator.

There’s an update to Meta’s VR headset makes his videos of the simulated world is more real.

Take a closer look at video card wars inadvertently fueled by cryptomining.

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Konstantin Kakaes ([email protected]); and Heidi Vogt ([email protected]). Follow us @DigitalFuture on Twitter.

Ben Schreckinger covers technology, finance and politics for POLITICO; he is a cryptocurrency investor.

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https://www.politico.com/newsletters/digital-future-daily/2022/09/21/node-country-for-old-regulators-00058087

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