The crypto industry received an important jolt of clarity and optimism as the US Securities and Exchange Commission (SEC) concluded its investigation into Ethereum 2.0, announcing that it would not pursue any enforcement actions. This decision marks an important victory for Ethereum and could serve as an important reference point for the management of digital assets under US securities law.
Ethereum Is Not a Security
In 2018, the SEC made the important distinction that Ether was not a security. However, in 2023, amid improving performance and the transition to Ethereum 2.0, the SEC re-examined the situation, pointing to a possible regulatory direction. This change led to growing scrutiny and uncertainty among the Ethereum community, leading to a lawsuit filed by Consensys on April 25, 2024. The lawsuit aimed to confirm the classification of ETH as a commodity, arguing that the SEC had no authority over its trading and governance. .
In an important response dated June 7, 2024, Consensys urged the SEC to approve the approval of Ethereum-based ETFs made in early May, which was predicated on the assumption that ETH is a commodity. Consensys said this should completely end the SEC investigation into Ethereum 2.0.
The SEC’s Enforcement Division formally responded on June 18, 2024, as reported in a letter to Kevin S. Schwartz, Consensys’ attorney. The letter said, “We are writing to give notice that we have completed the investigation into the matter identified above.” […] based on the information we have as of this date, we do not intend to recommend enforcement action to the Commission.”
Importantly, the SEC stressed that this closure should not be seen as a release or that no action may result from the employee investigation. However, Laura Brookover, a Consensys attorney, emphasized the importance of this development, saying, “The SEC sent us a closing letter in the Ethereum 2.0 investigation today. Things have changed surprisingly quickly since we filed our lawsuit against the SEC in late April, resulting in in modern development.”
This decision can be considered a critical moment in the broader crypto industry, especially in the way digital assets are classified and regulated. Alexander Grieve from Paradigm noted the tone of the SEC’s notice, noting, “They’re very evasive in their notice—BUT it’s unusual for the SEC to single out a company that’s closed an investigation. “
The closure of this investigation without enforcement action may be an example of how other cryptocurrencies are treated by regulatory agencies, which may facilitate the control of digital assets.
Although the immediate threat of enforcement action has been mitigated, Consensys and the broader crypto industry are looking for more clarity on regulatory policy. Concurring in their lawsuit are also seeking a federal court ruling on their practice, asserting that they do not act as brokers or issue securities through their software offerings such as MetaMask Swaps and Staking.
As stated in their lawsuit, “Consensys is designed to create software products that allow people around the world to use and build on the Ethereum network, and has the right to conduct its business without the cost, burden, and uncertainty of illegal. enforcement action.”
At the time of press, the price of Ether (ETH) responded well to the SEC decision, showing a significant increase of 3.3%, which brings the current trading price of $ 3,561.
The featured image was created with DALL·E, a chart from TradingView.com
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