As a researcher with a background in the crypto industry, I’m thrilled to see the recent development regarding Ethereum 2.0 and the SEC’s decision not to pursue any enforcement actions. Having followed this issue closely since 2018 when the SEC initially determined that Ether was not a security, I can attest to the uncertainty and scrutiny that ensued with the transition to Ethereum 2.0.
As a researcher studying the crypto industry, I’m thrilled to report that we’ve experienced a major breakthrough following the SEC’s conclusion of its investigation into Ethereum 2.0. The commission announced it won’t take any enforcement actions against this digital asset, marking an essential triumph for Ethereum. This landmark decision could set a crucial precedent for how other digital assets are treated under US securities law.
Ethereum Is Not A Security
In 2018, the Securities and Exchange Commission (SEC) determined that Ether was not classified as a security. However, with Ethereum’s advancements towards Ethereum 2.0 by 2023, the SEC reconsidered this decision. This change raised concerns and ambiguity within the Ethereum community, leading to Consensys filing a lawsuit on April 25, 2024. The objective of the lawsuit was to establish ETH as a commodity, maintaining that the SEC had no authority over its trading and governance.
On June 7, 2024, Consensys strongly advised the Securities and Exchange Commission (SEC) to recognize the approvals of Ethereum-based exchange-traded funds (ETFs) granted in May, under the belief that Ether (ETH) is considered a commodity. Consensys emphasized that this recognition would effectively put an end to the SEC’s ongoing investigation into Ethereum 2.0.
The SEC’s Enforcement Division issued a letter to Kevin S. Schwartz, attorney for Consensys, on June 18, 2024, signaling the end of their investigation into the mentioned case. According to the communication, the SEC does not plan to propose any enforcement action by the commission at this time, based on the information available to them as of that date.
Significantly, the SEC made it clear that this closure of the Ethereum 2.0 investigation should not be misconstrued as a absolution or an indication that no further action will be taken. Nonetheless, Laura Brookover, a Consensys lawyer, emphasized the importance of this milestone, explaining, “Today, we received a closing letter from the SEC in the Ethereum 2.0 investigation. The pace of developments has been remarkable since we filed our lawsuit against the SEC in late April, leading to this significant turn of events.”
As a crypto industry analyst, I view this resolution as a pivotal point, carrying significant implications for how digital assets are categorized and governed. According to Alexander Grieve from Paradigm, the tone of the SEC’s statement is somewhat ambiguous but noteworthy. He remarks, “The SEC’s notification strikes me as hedge-like in its evasiveness—yet it’s uncommon for the SEC to explicitly mention that an investigation has been concluded.”
As a crypto investor, I believe that the decision to close this investigation without taking any enforcement action could pave the way for how regulatory agencies approach other cryptocurrencies in the future. This might result in a more lenient regulatory landscape for digital assets.
As a researcher studying the crypto industry, I can tell you that although the imminent danger of regulatory action against Consensys has lessened, there is still a strong desire for more definitive guidance on regulatory policy from both Consensys and the wider community. In their ongoing lawsuit, Consensys argues that they do not function as brokers or issue securities through platforms like MetaMask Swaps and Staking.
According to their legal complaint, “Consensys asserts the right to operate its business, which involves creating software for global users of the Ethereum network, without facing the expense, hardship, and ambiguity of an alleged unlawful intervention.”
Currently, Ether (ETH) is trading at $3,561 after a 3.3% surge in response to the SEC’s recent decision.
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2024-06-19 10:11