Ethereum Officially Regarded as a Security by SEC for an Extended Duration

The U.S. Securities and Exchange Commission (SEC), led by Chairman Gary Gensler, has regarded Ethereum as a security for at least one year, as reported by FOX Business. Consensys, a company specializing in Ethereum software development, has filed a complaint against the SEC after this information came to light. The complaint reveals that the SEC’s investigation into Ethereum 2.0 was based on its belief that the sale of certain securities, including ETH, had taken place since 2018. Consensys’ lawsuit highlights that the SEC has been requesting additional information from the company regarding its involvement in the proof-of-stake update, as well as its acquisitions, holdings, and sales of Ethereum. Furthermore, the SEC may consider Ethereum sales even prior to the 2018 merger as securities. This stance contradicts the previous guidance provided by former SEC Chairman Jay Clayton, who, in June 2018, stated that Ethereum, along with Bitcoin, is not considered a security. Even before Gensler’s testimony, his reluctance to provide a definitive answer regarding Ethereum’s regulatory status raised concerns within the crypto industry. Many believe that the introduction of Ethereum’s Merge has made the cryptocurrency more akin to a security than its original consensus mechanism. In an effort to prevent the SEC from overseeing the Ethereum blockchain, Consensys has taken legal action against the regulatory body. The company’s action was prompted by an April 10 Wells notice, which indicated that the SEC was preparing to take enforcement action against Consensys regarding its MetaMask wallet services. Consensys has stressed that MetaMask is not a broker and does not store clients’ digital assets or engage in transactional functions.