Consensys: SEC Ends Ethereum Investigation, No Charges Alleging ETH Sales Being Securities Transactions
Consensys will continue the lawsuit, aiming to clarify that apps allowing ETH transactions aren’t securities brokers and shouldn’t be regulated by the SEC.
- The SEC dropped its investigation into Ethereum, meaning no charges against ETH sales as securities.
- Consensys continues its lawsuit to ensure ETH transaction apps aren’t regulated as securities brokers.
- The SEC approved 19b-4 filings for eight spot Ether ETFs, with potential S-1 filings approvals this summer.
Consensys has just received a letter from the SEC’s Enforcement Division, informing them that the investigation into whether Ethereum is a security has been abandoned. This decision signifies that the SEC will not pursue charges claiming that sales of ETH constitute securities transactions.
Although this represents a victory for Consensys, which sued the SEC, alleging the regulator aimed to “seize control over the future of cryptocurrency,” the lawsuit will proceed. The company maintains that it seeks a declaration from the agency that MetaMask Swaps and Staking do not violate securities laws
The SEC on May ETH ETF Approvals
Consensys challenged the SEC regarding the May ETH approvals, asserting that they were based on the premise that Ethereum is a commodity. On June 7, the company requested that the regulator confirm whether it would be closing its investigation into Ethereum 2.0.
The SEC has already approved the 19b-4 filings for eight spot Ether ETFs and is currently reviewing the S-1 filings. Per Fox Business journalist Eleanor Terrett, SEC Chair Gary Gensler mentioned that the ETFs could be approved “over the course of this summer,” while U.S. Senator Bill Hagerty stated they would be approved “by the end of summer.”
Bloomberg ETF analyst Eric Balchunas predicted the approval could happen on July 2. He previously estimated that it might occur on July 4.
Consensys Lawsuit Against the SEC Continues
In 2018, the SEC stated that Ether wasn’t a security. However, following the 2022 proof-of-stake (PoS) update, the agency asserted regulatory authority over the digital asset as a security in 2023. On April 25, 2024, Consensys sued the SEC, arguing the following:
- Ethereum is a global computing platform, not an investment scheme. Ether is not a security.
- The applications that allow people to transact on their own using Ethereum are not securities brokers, and therefore cannot be regulated by the SEC.
- The SEC’s unlawful power grab threatens to undermine America’s position as a leader of the next generation of the internet.
In the official press release, Consensys argued against the need to sue the SEC, stating the following:
“No company or individual should find itself in our position, having to resort to costly litigation to obtain clarity about what is and is not lawful.”
With the SEC dropping the investigation, Consensys’ lawsuit could get closer to a conclusion. The remaining issue involves apps allowing ETH transactions not being securities brokers and the regulation’s “unlawful power grab.”
Consensys’ lawsuit may move closer to a resolution, with the SEC dropping the investigation.
