According to PANews, the U.S. Securities and Exchange Commission (SEC)'s attempt to classify Ethereum as a security has sparked controversy, and blockchain software company Consensys has sued the SEC over the issue. Consensys stated in the lawsuit that the SEC has been "trying to illegally regulate Ethereum through special enforcement actions against Consensys and other companies." Consensys is seeking court confirmation on whether the SEC has the legal authority to regulate user-controlled software interfaces built on Ethereum. A Consensys spokesperson gave four reasons to support that Ethereum should not be considered a security:
1. SEC’s historical stance on Ethereum: William Hinman, former head of the SEC’s corporate finance department, said in 2018 that Ethereum is not a security.
2. CFTC classifies Ethereum as a commodity: The U.S. Commodity Futures Trading Commission (CFTC) has long regarded Ethereum as a commodity.
3. Decentralization and open protocol: The essence of Ethereum architecture lies in decentralization.
4. Irrelevantity of the Consensus Mechanism Transition: Ethereum’s recent transition from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism was cited by the SEC as a potential reason for reclassification, but this transition does not affect the core nature of Ethereum or its non-security classification.