The U.S. Securities and Exchange Commission (SEC) has internally considered Ethereum a security for over a year, according to a revised portion of the lawsuit filed against the SEC by software giant Consensys released this morning.
Following Consensys’ complaint, Gurbir Grewal, director of the Commission’s Enforcement Division, issued an internal formal order on March 28, 2023 announcing an investigation into “Ethereum 2.0” and giving regulator staff the power to investigate and subpoena relevant parties. Permission granted. Buy and sell ETH.
The order, which Consensys said was approved by the Commission on April 13, 2023, explicitly refers to Ethereum itself as a security because it “authorizes the investigation of certain securities, including but not limited to ETH, if the registration statement is effective.” Either it was not done or it is not valid… and there was no exemption or it was not valid.”
It’s surprising that the SEC has officially considered ETH a security for over a year. SEC Chairman Gary Gensler repeatedly deferred when asked explicitly about the agency’s position on the issue. Last month, Gensler also refused to reveal the SEC’s position on ETH.
An SEC spokesperson said: decryption Regulators declined to comment on the matter.
Ethereum, which had already fallen along with the rest of the market on Monday, At the time of this writing, it is $3,143.69. CoinGecko data shows it is down 5% from this time yesterday, but only 1.5% lower than this time last week.
For years, the cryptocurrency industry has expressed hope that Ethereum, the world’s second-largest cryptocurrency after Bitcoin and the foundation of the massive Ethereum ecosystem, is considered a commodity in the eyes of the U.S. government, which could lead to ETH being incorporated into the cryptocurrency. I have embraced it. The U.S. economy is following a similar trajectory to Bitcoin.
The Chairman of the Commodity Futures Trading Commission (CFTC) has explicitly declared Ethereum a commodity in the past.
The SEC’s investigation of Ethereum appears to have expanded following the blockchain’s merger event in September 2022 and its shift to an energy-efficient proof-of-stake consensus mechanism. This new structure now allows users to stake ETH on the network to help the network function and gain interest in the process. This is a financial incentive that the SEC clearly takes issue with.
In the year since the SEC’s reported official order inside Ethereum, the agency has steadily stepped up its attacks on companies involved in the cryptocurrency. Last February, the Ethereum Foundation, a Swiss non-profit that supports the Ethereum ecosystem, received a subpoena from an unnamed “state agency.” Several US cryptocurrency companies have received subpoenas in connection with their dealings with the Ethereum Foundation.
And last week, Consensys, the largest U.S. company focused on Ethereum, filed a preemptive lawsuit against the SEC, arguing that there is no basis for regulating Ethereum because the asset should not be classified as a security.
Editor’s note: This article has been updated to reflect the SEC’s decision not to comment on unamended litigation.
Edited by Stacey Elliott.
