The United States Securities and Exchange Commission (SEC) has announced it will drop its investigation into whether Ether (ETH) is classified as a security. The enforcement division of the SEC notified Consensys, an Ethereum development company, that it is closing its investigation into Ethereum 2.0, as stated in a June 19 post on X (formerly Twitter).
Major Win for Ethereum
Consensys hailed this decision as a significant victory for Ethereum developers, technology providers, and industry participants. The firm emphasized that the SEC will not bring charges alleging that sales of ETH constitute securities transactions.
Background and Letter to the SEC
The SEC's decision came after Consensys sent a letter to the agency on June 7, requesting the closure of its investigation into Ether. The request followed the SEC's approval of spot Ether exchange-traded funds (ETFs) in May, which Consensys argued are based on the premise that ETH is a commodity.
Official Response
Laura Brookover, senior counsel at Consensys, shared the SEC’s response letter, which indicated that the agency does not "intend to recommend an enforcement action." However, the SEC has not yet provided an immediate public comment on this matter.
Previous SEC Actions
In March, Fortune reported that the SEC had issued subpoenas to multiple companies as part of efforts to classify ETH as a security. This led to Consensys suing the SEC in April, following a Wells notice from the agency warning that its MetaMask crypto wallet might have violated securities laws. The lawsuit claims that the SEC and its Chair, Gary Gensler, had considered ETH security since early 2023.
Ongoing Lawsuit
Despite the SEC dropping its investigation into Ethereum 2.0, Consensys stated that its lawsuit against the SEC is still ongoing. The company alleges that SEC Division of Enforcement Director Gurbir Grewal approved a formal order of investigation into Ether's status as a security on March 28, 2023.
The SEC’s decision to close its investigation into Ethereum marks a crucial development for the cryptocurrency industry, particularly for Ethereum and its stakeholders. While this decision is a positive step, the ongoing lawsuit between Consensys and the SEC highlights that regulatory scrutiny and legal battles in the crypto space are far from over.
Source: Cointelegraph
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