Will Solana Fork in Response to SEC Pressure? Developer Sheds Light on Hard Fork Discussion

Discussions are currently underway regarding forking Ethereum Layer-1 competitor Solana, which offers greater scalability among other blockchain network peers in the market. The development comes following the SEC’s regulatory action last week that labeled Solana’s native token SOL as a security.

However, a prominent developer has brought to light that the Solana Foundation and other programmers on the platform aren’t entirely enthusiastic about the idea. In a report on Wednesday, June 14, developer Matías Kudelski, a cyber-security expert who audited Solana’s code, said he’s working on one of the most significant projects on Solana.

Kudelski appraised that developers on the Solana blockchain were discussing the hard fork there. He also mentioned that despite the community discussion around the hard fork, the Solana Foundation isn’t considering this move.

Even if, they consider moving ahead with the proposal, the Solana community remains divided on how the hard fork should be conducted. Some have cited the example of Ethereum and Ethereum Classic hardfork, which saw the reversal of stolen funds while allowing the Ethereum core chain, led by Vitalik Buterin to thrive.

In addition to the potential for success, they contend that the hard fork will sever ties with Alameda Research’s control. Alameda Research, the investment arm linked to the insolvent FTX, currently possesses 8.2% of the overall SOL supply. If their holdings were to become accessible and sold on the open market, it could add further strain on SOL.

The SOL Price Correction and SEC Lawsuit

Ever since the U.S. Securities and Exchange Commission (SEC) labeled Solana as a security, the SOL price has come under immense selling pressure. Since the SEC lawsuit on Binance, the SOL price has corrected by over 35% and is currently trading at $14.22 with a market cap of under $6 billion.

As said, Solana has been caught in the crossfire of the SEC’s crackdown on crypto assets with the federal securities regulator naming several tokens. The federal securities agency categorizes the asset as a security because it meets the Howey Test’s conditions.

According to the test, people who own this asset have invested money and expect to make a profit from the work done by others, such as platform development. If the asset doesn’t meet the SEC’s registration rules for securities, it could have legal consequences, which worries the Solana community.

However, the Solana Foundation has taken a stand to challenge the SEC’s classification of SOL as a security. The Solana Foundation expresses its disagreement with the classification of SOL as a security. They appreciate the ongoing involvement of policymakers as collaborative allies in establishing clear regulations for the digital assets industry. They said this clarity is essential for the numerous entrepreneurs in the United States who are actively involved in developing within the digital assets space.