- The SEC is closing its investigation into Ethereum’s securities status.
- Ethereum developer Consensys is celebrating the regulatory win.
- The regulatory standards for the crypto industry remain murky.
For years, the Securities and Exchange Commission (SEC) has preyed on the crypto industry, launching enforcement actions against entities in the pursuit of tightened oversight of the asset class. Among those impacted is the world’s second-largest crypto asset, Ethereum, which became the focal point of the SEC’s investigation lens in March 2024, when the commission reignited its efforts to classify the asset as a security.
However, the months-long regulatory probe may now be nearing its end, and on a positive note for Ethereum.
SEC Lets Ethereum Off the Hook
In a Tuesday, June 18 blog post, Ethereum developer Consensys announced that it received a letter from the SEC, declaring the closing of its investigation into Ethereum 2.0.
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The decision follows Consensys’ letter to the regulatory commission following the partial approval of Ethereum exchange-traded funds on May 23, which the developers leveraged as predicated on Ether being a commodity.
Consensys lauded the regulatory decision as a major win for Ethereum developers, technology providers, and industry participants, asserting its significance in championing the much-needed regulatory clarity for the broader industry.
However, while the SEC’s decision marks the end to Etheruem’s regulatory woes, a caution in the notice hints at potential issues ahead.
Has the SEC Concluded Its Crusade?
In its letter dated June 18, 2024, shared by Consensys counsel Laura Brookover, the regulatory commission asserted that it currently has no plans to recommend enforcement actions regarding the investigation. However, the SEC did not stop there, adding that the closure of its probe does not preclude potential future actions.
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“The notice “must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation,” stated the letter.
Citing Securities Act Release No. 5310, the commission emphasized that the notice should not be interpreted as agreeing with Consensys’ assertions or as a declaration that Consensys is cleared of any potential wrongdoing. This suggests that the current phase may not mark the true end to the legal woes.
The SEC’s refusal to set clear regulatory standards for the crypto industry also remains a persistent challenge. Consensys counsel Matt Corva emphasized that despite the “great win” for Ethereum, the SEC has been evasive in outlining precise regulations for the asset class, making it challenging for service providers to determine rules to adhere to.
This echoes the sentiment regarding the commission’s approach to regulations, and the broader call across the industry for enhanced standards for the asset class.
On the Flipside
- In the wake of the news, Ethereum soared 5%, trading at $3,536 at press time.
- The SEC has often been criticized for adopting an unfriendly “regulation by enforcement” approach to industry regulations.
- The regulatory commission has recently signaled renewed interest in Ethereum ETF proposals.
Why This Matters
The closure of the SEC probe marks a significant victory for Ethereum and the broader crypto industry, reinforcing the classification of ETH as a commodity. However, the regulatory commission’s caution in its notice prevents declaring a complete win at this moment.
Anticipation for ETH ETF approval is mounting, read here to find out more about the likely timeline of launch:
Ethereum ETFs Teased for July 2nd Launch: Here’s What We Know
Read this article to discover how the Layer1 chain Sui is fostering Web 3 excellence:
Sui Joins Korea Blockchain Week as Official Event Partner
