SEC's Subpoenas Over Ether's Potential Security Classification Stir Disruption
Summary:
The United States Securities and Exchange Commission (SEC) has issued subpoenas to several firms amid investigations into the Ethereum Foundation, potentially classifying Ether (ETH) as a security. This SEC investigation has stirred up pressure on market regulators to provide clarity for digital assets. The crypto firm Prometheum's announcement to offer Ether institutional custody services has increased the need for clarification from the SEC. The potential regulation of Ether could lead to a conflict with the U.S. Commodity Futures Trading Commission.
The United States Securities and Exchange Commission (SEC) has evidently issued numerous subpoenas to various firms in connection with the potential categorization of Ether (ETH) as a security, as reported on March 20 by Fortune. An ongoing SEC investigation into the Ethereum Foundation could potentially see the regulatory body obtaining jurisdiction to officially declare ETH as a security. The Ethereum Foundation revealed via GitHub that it might be under state authority scrutiny.
Several companies based in the U.S. have allegedly been served subpoenas by the SEC, with the commission seeking financial records and documentation relating to their transactions with the Ethereum Foundation. Informed sources revealed that the commission initiated a move to classify ETH as a security, in line with the blockchain's shift from proof-of-work to proof-of-stake in 2022.
Gary Gensler, the SEC Chair, throughout his term, has repeatedly dodged direct inquiries regarding the possible classification of ETH as a security under the commission's jurisdiction, despite once stating in 2018 that Bitcoin (BTC), Ether and other cryptocurrencies were not securities. Though the commission has given the green light to exchange-traded funds (ETFs) linked to Ether futures, it still hasn't confirmed its stance on spot ETH ETFs, leaving industry experts to anticipate a decision by May.
Crypto company Prometheum, one of the scarce businesses to receive U.S. financial regulatory approval for operating as a unique purpose broker-dealer for digital asset securities, stated in February its intention to offer Ether institutional custody services. This move has put further pressure on the SEC to provide clarity for firms aiming to sidestep potential liabilities associated with certain digital assets.
If the SEC proceeds with the regulation of Ether, it could lead to a potential clash with the U.S. Commodity Futures Trading Commission. There are ongoing legislative attempts to clearly define the regulator roles for digital asset oversight, but no such law has been enacted as of yet.
Reported notes: Senate opposition confronts Ether ETFs, Wright does not qualify as Satoshi, and Dencun's live launch: Hodler’s Digest, March 10-16.
Published At
3/20/2024 9:07:37 PM
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