On June 19, 2024, the United States Securities and Exchange Commission (SEC) closed its investigation into whether Ether should be classified as a security.
Consensys lawyer Laura Brookover noted that crypto markets will see âno more protestations from the SEC that ETH is a security.â
However, Carol Goforth, a professor at the University of Arkansas School of Law, clarified to Cointelegraph that âall the decision means is that at this time, the SEC will not be continuing its investigation.
âThis is not a final determination.â
Consensys believes the SECâs withdrawal from its investigation of Ethereum has lifted a significant burden from the network.
The SEC retreat has alleviated negative regulatory concerns regarding ETH as a security, raising questions about how ETHâs price will react and which altcoins might benefit.
Observers anticipate Etherâs price could surge.
Since the SEC stopped its investigation, Etherâs price has remained relatively stable, following a horizontal pattern since the news of spot Ether ETF approval on May 23.
At the time of publishing, Ether is down 2%, prompting traders to wonder if ETH will surge and if the altcoin market will follow.
Conor OâNeill, community lead and partner of investment analytics company Blockcircle, stated that âthe major regulatory barrierâ for Ethereum has been removed, setting a significant precedent for regulators worldwide.
OâNeill believes the removal of this barrier will likely cause Etherâs price to increase significantly, barring a catastrophic world event.
The expected launch of spot Ether exchange-traded funds (ETFs) on July 2 will impact ETHâs price.
Traditional markets are expected to inject capital into the ETFs, boosting ETH demand and price.
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OâNeill explained that the ETH ETF âis highly likely to have a long-term positive impact on the price of Ethereum.â
However, he cautioned about a potential short-term pullback similar to the one seen when Bitcoin ETFs were approved.
ETF issuers cannot offer an Ether ETF with staking, as the SEC alleges that staking involves an investment contract, which could negatively impact ETHâs long-term performance.
Some have questioned whether Grayscale outflows could affect Etherâs price after ETFs launch.
However, OâNeill highlighted that Grayscaleâs reduced fees for its Ether trust compared to other Ether ETF providers could mitigate this effect.
OâNeill predicted that ETH will âfollow a similar trajectory to Bitcoinâs price, with a dip followed by an exponential rise.â
He noted that many market commentators did not expect Ethereumâs approval, suggesting a potentially bullish scenario for ETH.
When Bitcoinâs price surges, it often lifts the entire crypto market, including altcoins.
The SECâs decision may benefit other altcoins previously accused of being securities.
OâNeill believes projects like Aave, Chainlink, or layer-2 chains such as Arbitrum, Optimism, or Base could benefit.
However, he noted that many of these projects offer staking capabilities and are not entirely free from SEC scrutiny.
The SECâs approach could change with the U.S. presidential election approaching, potentially impacting its stance on digital assets and staking.
The approval of spot Ether ETFs and the withdrawal of the SECâs investigation signal a potential shift in the SECâs approach, marking a pivotal moment for Ethereum and the broader cryptocurrency market.
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