It seems that the SEC has changed its mind about Ethereum, and now considers it a commodity.
That he had changed his mind about Ethereum was already clear from the moment he approved the requests for the issuance of spot ETH ETFs in May, but now another confirmation has arrived.
The renunciation of the SEC: Ethereum is a commodity
In fact, last night Consensys announced on its official X profile that it has received a notification that the SEC’s Enforcement Division is closing its investigation into Ethereum 2.0.
ETHEREUM SURVIVES THE SEC.
Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0.
This means that the SEC…
— Consensys (@Consensys) June 19, 2024
This, according to Consensys, would mean that the SEC will no longer accuse those who allow the buying and selling of ETH of allowing the exchange of unregistered securities.
After the transition to Proof-of-Stake, in September 2022, the SEC had started to believe that ETH could be considered a security, given that the introduction of PoS also generates the possibility of earning simply by staking one’s tokens.
However, it is not the SEC that decides what should be considered a security, and what instead a commodity, and last year a court explicitly ruled on the XRP case stating that when this cryptocurrency is traded on secondary markets (the exchanges) it cannot be considered an investment contract, and therefore not even a security.
At that point, many began to think that if a court were ever forced to rule on Ethereum (ETH), it would have supported more or less the same thing, but the SEC did not want to hear about it anyway.
The role of ETF approval
For these reasons, it was expected that the SEC would reject the requests to issue an ETF on spot ETH in May, as it considered ETH an unregistered security and therefore not tradable on regulated markets.
And instead, unexpectedly, ended up approving these requests.
It is worth noting that in the past it had also rejected requests for the issuance of spot Bitcoin ETFs, despite BTC always being considered a commodity.
It always took a court ruling, issued last year, to effectively force the SEC to approve them.
Instead in May, evidently, he had already changed his mind.
The hypothesis circulating is that, being in the electoral campaign for the November presidential elections, the current Biden administration did not want to go looking for trouble with the crypto community, precisely at a time when his challenger Trump seems to be able to become a political reference point in the USA for this community.
So the SEC, probably reluctantly, in May approved the requests for spot ETH ETFs, after the resounding success in traditional markets of spot BTC ETFs in the first part of the year, and now it has effectively found itself unable to sustain the hypothesis that ETH should be considered an unregistered security.
The volte-face of the SEC: the agency changes its mind on Ethereum (ETH), it is a commodity
The point is that, if the SEC really considered ETH an unregistered security, it would not have been able to approve spot ETFs collateralized in ETH.
So it was already clear from May that the SEC had changed its mind about Ethereum, from this point of view, even if probably reluctantly and in a not at all convinced way.
On the other hand, the SEC is in all respects a government agency, whose heads and members can be replaced by the government. Therefore, ultimately it is the American government that decides its policy, and not the internal bodies.
At this point, it was also inevitable that the SEC would decide not to proceed with the case against Ethereum, deemed an unregistered security, because it would have effectively meant self-accusing of having violated the law by authorizing an ETF on an asset considered non-tradable according to market regulations.
The result is that not only has the SEC approved spot ETH ETFs on US exchanges, but it has also inevitably had to stop accusing Ethereum of being an unregistered security.
At this point in the USA, it can be stated that ETH should be considered a commodity, like Bitcoin.
The company Consensys
Consensys received this notification because on June 7th they sent a letter to the SEC asking the agency to confirm that the approvals of the spot ETH ETFs in May were based on the fact that ETH was considered a commodity. In response, the agency was forced to admit that it had closed its investigation into Ethereum 2.0.
The company, however, also states that its fight continues, because it is now also requesting an official statement regarding the fact that the offer of the MetaMask Swaps and Staking user interface software does not violate security laws.
Consensys in fact is the company that developed the well-known crypto wallet MetaMask, within which exchange functionalities have also been integrated for some time now.
MetaMask is probably the most used wallet for Ethereum in the world, and Consensys is the leading company in this field, excluding non-profit organizations like the Ethereum Foundation.
The founder of Consensys is Joseph Lubin, who in turn was also one of the secondary co-founders of Ethereum. He is a true giant in this sector, and this is why he insists so much even at high levels to prevent the authorities from stopping Ethereum.
One of the things he did was to sue the SEC itself, in an attempt to prevent the agency from imposing its will beyond its rightful role.
As of now, it can be stated that this battle of Consensys against the SEC is concluding with a victory for the crypto company, and a defeat for the government agency, even though theoretically it is not yet a completely concluded battle. At this moment, however, a final reversal of the situation seems rather difficult.
