Here’s what happened in crypto today

In a significant development for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has provided updated guidance, shedding light on when certain crypto activities may fall outside the purview of federal securities laws. This clarification comes as crypto exchange Bitget has successfully resumed Bitcoin withdrawals following a substantial security breach, and Ethereum co-founder Vitalik Buterin has suggested that the upcoming Hegotā upgrade could mark a pivotal moment, potentially being the last "normal" fork before a more profound evolution of the Ethereum network.

The SEC’s new Frequently Asked Questions (FAQs) build upon its March interpretation of the Howey test, a long-standing legal precedent used to determine whether a transaction qualifies as an investment contract and thus a security. The updated guidance specifically addresses the application of this test to digital assets, encompassing crucial aspects such as token buybacks, network development initiatives, and the nature of staking receipt tokens. The agency has indicated that token buybacks may not necessarily constitute the "managerial efforts" associated with an investment contract, particularly in scenarios where a crypto network is already operational and lacks a singular, central governing entity. Similarly, efforts dedicated to maintaining or enhancing a functioning network may also be deemed outside the scope of the Howey test’s requirements. Furthermore, the guidance clarifies that staking receipt tokens will not be automatically classified as securities.

It is important to note that this SEC guidance is non-binding in nature and does not alter existing securities law. However, it offers valuable insight for cryptocurrency projects, providing greater detail on how SEC staff intends to apply current securities regulations to digital assets. This move by the SEC follows a similar initiative from the Commodity Futures Trading Commission (CFTC), which also released its own guidance on digital assets. These developments occur in the wake of the U.S. Senate’s failure to advance the CLARITY Act, legislation that aimed to establish a statutory framework for dividing oversight of digital assets between the SEC and CFTC. In the interim, both regulatory bodies are proceeding under their existing authorities while legislative efforts remain stalled.

In a separate, yet equally significant event, the cryptocurrency exchange Bitget has announced the resumption of Bitcoin withdrawals. This decision comes after the platform experienced a significant security incident that resulted in the loss of approximately $388 million in assets. The perpetrator of the hack has reportedly been actively moving the stolen cryptocurrency through the THORChain protocol. Bitget officially communicated the resumption of Bitcoin withdrawals on Monday, following the suspension of all withdrawals after the security breach that occurred last week. The exchange indicated that withdrawals for additional assets and on various networks are expected to be reinstated in the coming days.

The breach, which took place on September 24th, compromised a portion of Bitget’s hot and warm wallet infrastructure. The exchange has assured its users that its cold wallets, which hold the majority of assets offline, remained secure throughout the incident. Bitget subsequently revised its initial estimate of the stolen amount, increasing it from $351.6 million to $387.5 million after accounting for additional transfers made on the Zcash and Tron networks. The CEO of Bitget, Gracy Chen, explained during a recent ask-me-anything session that Bitcoin withdrawals on the Bitcoin network and the BNB Smart Chain were prioritized for restoration due to the completion of the withdrawal pipeline for these networks. She further stated that withdrawals for Ether (ETH) and Tether’s USDt (USDT) would follow as security checks progress.

On the technological frontier of the crypto space, Ethereum co-founder Vitalik Buterin has posited that the upcoming Hegotā upgrade could represent a significant turning point for the Ethereum network, potentially being its last "normal" fork. Buterin articulated that future development on Ethereum is likely to shift towards more sophisticated technologies. These advanced technologies include recursive STARKs (Scalable Transparent ARguments of Knowledge), automated formal verification for smart contracts, optimized consensus mechanisms, and quantum-safe cryptography, which is designed to protect against future threats from quantum computing.

In a recent post on Sunday, Buterin projected that Hegotā, slated for implementation in 2027, is likely to be the final upgrade whose features and underlying technology would still be recognizable to an individual familiar with Ethereum as it existed in 2015. He highlighted the PeerDAS (Data Availability Sampling) protocol, a key component of Hegotā, as a harbinger of this transition. PeerDAS enables network nodes to verify the availability of data by sampling portions of it, rather than requiring the complete download of all data. Buterin described this as the beginning of Ethereum’s evolution "from being just a blockchain to being something much more powerful."

Buterin further characterized this transformative shift as Ethereum’s metamorphosis into a "cryptographic world computer." This evolution moves beyond the traditional model where nodes solely download and re-execute transactions. Instead, it envisions an architecture that integrates blockchains with advanced cryptographic verification techniques, enhanced privacy features, and decentralized off-chain components. This fundamental shift has the potential to profoundly alter how decentralized applications are developed on Ethereum. It suggests a future where a greater portion of computational tasks are executed off-chain, while the Ethereum base layer focuses on verifying the results of these computations, facilitating transaction settlements, and preserving access to shared on-chain state. This strategic repositioning aims to enhance scalability, security, and the overall capabilities of the Ethereum network, paving the way for a more robust and versatile decentralized ecosystem.