On June 19, 2024, the United States Securities and Exchange Commission (SEC) officially closed its investigation into whether Ether should be classified as a security.
Consensys lawyer Laura Brookover stated that crypto markets will see “no more protestations from the SEC that ETH is a security.”
However, Carol Goforth, a professor specializing in business associations and securities regulation, clarified to Cointelegraph, “all the decision means is that at this time, the SEC will not be continuing its investigation. This is not a final determination.”
Consensys believes the SEC’s withdrawal from its investigation of Ethereum has removed a significant burden that threatened the network’s survival.
The “momentous” SEC retreat has settled the dust from negative regulatory concerns regarding ETH as a security. Observers wonder how ETH’s price will react to having a clearer path.
The Ether price has been relatively stable since the SEC stopped its investigation. At publishing time, Ether is down 2%.
Some traders wonder whether ETH will surge and if the altcoin market will follow. Other market observers see great potential for future growth.
Conor O’Neill, community lead and partner of investment analytics company Blockcircle, told Cointelegraph that “the major regulatory barrier” for Ethereum has been removed, setting a significant precedent for regulators worldwide.
The expected launch of spot Ether exchange-traded funds (ETFs) on July 2 will undoubtedly impact the price of ETH.
Traditional markets are expected to inject capital into the ETFs, producing higher demand for ETH and boosting its price.
O’Neill explained that the ETH ETF “is highly likely to have a long-term positive impact on the price of Ethereum.” He mentioned a possible short-term pullback, similar to when Bitcoin ETFs were approved.
However, ETF issuers cannot offer an Ether ETF with staking. Goforth explained, “the SEC has alleged that staking itself involves an investment contract.”
This could harm ETH’s long-term performance as an institutional asset.
Grayscale’s Ethereum Trust, with a valuation over $10 billion, could see major outflows after ETH ETFs launch.
READ MORE: Bitcoin Faces Rare ‘FUD’ Surge Amid Sideways Trading, Analysts Predict Potential Price Surge
However, Grayscale has reduced its fees, indicating it doesn’t want a repeat of the Bitcoin ETF launch.
O’Neill predicted ETH will “follow a similar trajectory to Bitcoin’s price, with a dip followed by an exponential rise.”
He noted that Ethereum’s approval was unexpected, suggesting a bullish scenario where Ethereum might outperform Bitcoin.
The SEC halting its investigation may benefit other altcoins the agency has accused of being securities. O’Neill believes projects such as Aave or Chainlink from the decentralized finance (DeFi) sector or layer-2 chains like Arbitrum and Optimism could benefit from the SEC’s retreat.
However, many offer staking capabilities and are not yet free from SEC scrutiny.
The sudden approval of spot Ether ETFs, the growing number of ETF issuers, and the SEC’s investigation withdrawal signal a potential shift in the SEC’s approach, marking a pivotal moment for Ethereum and the broader cryptocurrency market.
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