Ethereum’s upgrade to proof-of-stake (PoS) may have placed the cryptocurrency back in the crosshairs of the Securities and Exchange Commission (SEC).

Speaking to reporters after the Senate Banking Committee on Thursday, SEC chairman Gary Gensler reportedly said that cryptocurrencies and intermediaries that allow holders to “stake” their crypto may define it as a security under the Howey test, according to The Wall Street Journal. 

“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,” WSJ reported Gensler as saying. 

The comments came on the same day as Ethereum’s transition to PoS, meaning the network will no longer rely on energy-intensive proof-of-work (PoW) mining and instead, allows validators to verify transactions and create new blocks in a process that involves staking.

Gensler said that allowing holders to stake coins results in “the investing public anticipating profits based on the efforts of others.”

Gensler went on to say that intermediaries offering staking services to its customers “looks very similar — with some changes of labeling — to lending.”

The SEC has previously said they didn’t see Ether (ETH) as a security, with both the Commodity Futures Trading Commission (CFTC) and the SEC agreeing that it acted more like a commodity.

The SEC has been keeping a close watch on the crypto space, particularly those that it alleges are securities. The regulator has been embroiled in a case against Ripple Labs concerning the launch of the XRP token.

The SEC has also pushed firms offering crypto lending products to register with them, including a $100 million penalty directed at BlockFi in February for its failure to register high-yield interest accounts that the SEC considers securities.

Gabor Gurbacs, director of digital assets strategy at American investment firm VanEck, tweeted to his 49,300 followers that he had been saying for over six years “that POW to POS transitions can draw regulatory attention.”

To be clear, I am not saying that ETH is necessarily a security because of its proof model, but regulators do talk about staking in the context of dividends which if one feature of what securities laws call a “common enterprise”. There are other factors in the Howey test too.

— Gabor Gurbacs (@gaborgurbacs) September 15, 2022

Gurbacs went on to clarify that regulators refer to rewards from staking as dividends, which is a feature of the Howey test.

Related: Crypto developers should work with the SEC to find common ground

The Howey Test refers to a Supreme Court case in 1946 where the court established whether a transaction qualifies as an investment contract. If it does, then it would be considered a security and is covered by the Securities Act of 1933.