Standard Chartered Bank report: Ethereum is more risky and more complicated than Bitcoin

Multinational banking and financial services giant Standard Chartered Bank released an Ethereum investor report. The company’s analysts are optimistic about Ethereum, valued it at US$26,000-35,000, and believe that Bitcoin may reach US$175,000.

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The report pointed out that Ethereum and Bitcoin have a lot in common, but the Ethereum blockchain has smart contracts, decentralized autonomous organizations (DAO), decentralized finance (DeFi), non-fungible tokens (NFT) assets and Use cases such as initial coin offering (ICO), and transfer of proof of equity have “obvious environmental advantages.”

Three researchers from Standard Chartered Bank stated that “although the potential return of ETH may be higher than that of BTC, the risk is also higher.”

Therefore, analysts believe that, structurally speaking, the valuation of Ethereum is 26,000-35,000 US dollars. However, the report also stated that Bitcoin needs to reach $175,000 before Ethereum reaches this price.

The report also discussed the “regulatory landscape” and “competitive landscape”. It mentioned the blockchain that competes with Ethereum in the fields of DeFi, NFT, and Dapps. The report emphasizes: “An independent ecosystem already exists and may continue to be profitable. The base field challenges Ethereum”.

In addition to NFT, DAO, DeFi, ICO and other applications, Standard Chartered’s report also highlighted the upcoming Ethereum 2.0 transition. Researchers from Standard Chartered Bank emphasized: “This transition has obvious environmental advantages. Because it eliminates the need to use too much computer power in’mining’. The transition from Proof of Work (PoW) to Proof of Stake (PoS) It is expected to be implemented gradually in the first half of 2022.”

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Standard Chartered Bank also discussed issues such as “sharding”, “from EVM to eWASM” and the overall supply of Ethereum. The report also pointed out that scaling the launch of Ethereum and ETH 2.0 is a difficult task.

The researchers said, “ETH 2.0 is very complicated, and a comprehensive upgrade to an already complicated platform. The fact that ETH 1.0 and ETH 2.0 are running in parallel for a long time adds to the complexity.”

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The bank’s report concluded that the regulatory issues related to Ethereum will be very different from Bitcoin. But regulators may pursue the same three broad goals: combat illegal activities, ensure financial stability, and protect investors.

A big unknown is whether ETH 2.0 will continue to be classified as a commodity or as a security. The U.S. Securities and Exchange Commission (SEC) initially stated that the Ethereum platform has been “fully decentralized,” allowing it to be classified as a commodity. But the transition to PoS may challenge this view.

If the SEC determines that ETH 2.0 is a security, it needs to comply with all accompanying regulations and may face retrospective financial penalties. This is a gray area, and both parties have disputes. In addition to this specific risk, the Ethereum network promotes a large number of services (dApp, DeFi, ICO), which may create a more complex regulatory environment in the future.


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