The U.S. Securities and Exchange Commission (SEC) is ending its investigation into whether Ether should be classified as a security. On June 19, 2024, Ether developer ConsenSys shared on social media that the commission’s Enforcement Division has closed its probe into Ether 2.0.
This decision implies that the commission will not pursue any legal actions that would categorize Ether transactions as securities deals. ConsenSys celebrated this development as a significant victory for the Ethereum community, including technology providers, developersand other stakeholders.
The decision from the SEC follows a letter sent by ConsenSys on June 7, requesting closure of the investigation. This request was made after the regulator approved Ether spot ETFs last month, which ConsenSys argued was based on the understanding that ETH is considered a commodity.
Laura Brookover, ConsenSys lead counsel, shared the SEC’s response, which stated that the commission doesn’t plan to recommend any enforcement actions against Ethereum. The commission has not yet commented on the matter.
Fortune magazine reported in March that the SEC had subpoenaed several companies as part of its efforts to determine if Ether should be labeled a security. ConsenSys filed a lawsuit in April against the commission after it sent the company a notice. The notice suggested that the MetaMask cryptocurrency wallet, developed by ConsenSys, might have breached securities laws.
The lawsuit argued that the commission had considered Ether a security from early 2023. Additionally, it claimed that an official probe into Ether’s categorization as a security had been ordered by the head of the commission’s Enforcement Division in March 2023.
Although the SEC has closed its investigation, ConsenSys’ lawsuit remains ongoing. The company is asking a judge to rule that there is no violation of securities laws with its staking and MetaMask swaps.
Following the announcement from ConsenSys, the price of Ether went up slightly, surpassing $3,500. Prior to the announcement, Ether’s price was $3,493. CoinGecko data shows that the price reached roughly $3,541, above the crucial $3,500 level within the first 20 minutes of the news. Ultimately, Ether was trading at $3,553, reflecting a 3% increase from the previous day. For traders, the $3,500 mark has been an important support level, with Ether often moving below and above this point over the last month.
The uptick in Ether’s price following ConsenSys’ statement suggests a boost in investor confidence. This positive sentiment may ease concerns about potential securities regulation violations related to Ether transactions if the SEC continues its investigation.
Exchanges such as Coinbase Global Inc. (NASDAQ: COIN) will be pleased by the discontinuation of the SEC investigation into Ether as such regulatory issues often create uncertainty in the operations of industry actors.
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