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The Securities and Exchange Commission and its chairman, Gary Gensler, were perceived to believe Ethereum was a security for at least a year. It is an unregistered security traded out of compliance with current federal regulations.
Since the beginning of April, the SEC and Gary Gensler have been silent on whether Ethereum, the second largest cryptocurrency, is a security or not.
On April 25, the Ethereum software company Consensys sued the SEC in a Texas federal court in a so-called Wells notice it received detailing the SEC’s plans to sue the firm for failure to comply with federal securities laws.
Details Of The Lawsuit
Further documents were filed on Monday, highlighting insights into the timeline behind the SEC’s thinking regarding ethereum’s alleged status as a security. The report also shed light on the biggest question facing the $2 Trillion digital asset industry about the regulatory status of a cryptocurrency that is held by millions of investors.
As per the filing made on March 28, 2023, Gubir Grewal, the head of the SEC’s Division of Enforcement, approved a formal notice for an investigation into Ether’s status as a security.
The investigation was named the Ethereum 2.0 investigation, and it authorized the enforcing staff for the investigating judicial summon and individuals and entities involved in the buying and selling of the cryptocurrency.
Terret noted that recipients of judicial summons were strictly instructed by the SEC to maintain the privacy of the investigation, based on the anonymous sources.
Basis Of The Investigation
The dedicated investigation was based on the SEC’s belief that there were potential unregistered sales and offerings of Ether executed since 2018. If the Gensler led SEC determines that Ether is a security, then it will contradict the earlier standing of the SEC under the former guidance of Chair Jay Clayton.
The basis for the prior belief was perceived in the statement of Director of Corporation Finance Bill Hinman in a speech in June 2018 that Ether alongside BTC was not a security.
Updates In The Following Filing
The followed up filings revealed that the five-member commission approved the Ethereum 2.0 investigation on April 13, 2023. The approval was given just five days prior to Gensler’s appearance before the House Financial Services Committee.
Gensler refused to answer the repeated question on whether the SEC approves Ethereum as a security. The revelation of this update came recently when the discussion around the approval of Spot Ether Exchange Traded Funds in the US stock market was on.
Now, with this, most of the applicants and firms involved in the ETH ETF believe that the SEC will delay the decision, looking at the findings of the previous investigation and the silence of Gary Gensler and the agency.
The popular Bloomberg ETF analyst, Eric Balchunas, also believes that the continued stance of Gensler on Ether will substantially impact the decision on spot ETH ETF, as he again recently refused to clarify whether Ether was considered a security last year.
Steefan George is a crypto and blockchain enthusiast, with a remarkable grasp on market and technology. Having a graduate degree in computer science and an MBA in BFSI, he is an excellent technology writer at The Coin Republic. He is passionate about getting a billion of the human population onto Web3. His principle is to write like “explaining to a 6-year old”, so that a layman can learn the potential of, and get benefitted from this revolutionary technology.
