The U.S. Securities and Exchange Commission (SEC) is reportedly investigating whether to classify Ethereum, the world’s second-largest cryptocurrency, as a security, according to multiple companies that received subpoenas related to the probe.
The SEC’s move casts a shadow over the crypto industry’s hopes for approval of spot Ethereum exchange-traded funds (ETFs) after the SEC greenlit a series of spot Bitcoin ETFs earlier this year.
The SEC’s investigation involves demanding documents and financial records from firms regarding their dealings with the Switzerland-based Ethereum Foundation, the non-profit overseeing the blockchain’s governance and development. Sources familiar with the subpoenas said the investigation began after Ethereum’s shift to a Proof-of-Stake network in September 2022.
The existence of the probe aligns with reports citing a recent update to the Ethereum Foundation’s code repository suggesting an investigation by an unidentified state agency.
Ethereum’s legal status is particularly murky. While then-Director of Corporation Finance William Hinman stated in 2018 that Ethereum didn’t resemble a security, Gensler’s arrival at the SEC in 2021 and Ethereum’s subsequent shift to Proof-of-Stake appear to have prompted a change in stance.
Gensler has suggested that cryptocurrencies relying on Proof-of-Stake consensus could be classified as securities, though he hasn’t explicitly addressed Ethereum. Further complicating the issue is the SEC’s approval of nine Ether futures ETFs in October 2023, seemingly aligning with the CFTC’s view of Ether as a commodity.
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- Source: https://www.cryptocompare.com/email-updates/daily/2024/mar/21/
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