SEC Investigating Ethereum’s Status as a Security Under Chair Gary Gensler: What You Need to Know

The U.S. Securities and Exchange Commission (SEC) has been making waves in the cryptocurrency world with its ongoing investigation into Ethereum’s status as a security. This investigation, which dates back to at least 2018, has been brought to light by a lawsuit filed by Consensys, a blockchain software company.

The SEC’s Division of Enforcement officially began its formal investigation into “Ethereum 2.0” on March 28, 2023, and was granted the authority to issue subpoenas to individuals and entities involved in Ethereum transactions on April 13, 2023. This marks a significant shift from the agency’s previous stance under former Chairman Jay Clayton, who did not classify Ethereum as a security.

The SEC’s probe raises questions about unregistered offerings and sales of Ethereum, potentially impacting the future of Ethereum-based financial products, including the possibility of a spot Ether exchange-traded fund (ETF). This uncertainty has led to a 3.1% decrease in total crypto market capitalization, which now stands at US$2.44 trillion, according to CoinGecko.

Despite the SEC’s scrutiny, SEC Chair Gary Gensler has not publicly confirmed the agency’s position on Ethereum, leaving many in the industry wondering about the future of the popular cryptocurrency. Additionally, a report from Reuters suggests that the SEC is likely to reject spot Ethereum ETF applications next month, further adding to the uncertainty surrounding Ethereum.

As a result of these developments, Ether, the native cryptocurrency of the Ethereum network, has fallen nearly 5% to US$3,171 in the past 24 hours. With the SEC’s investigation ongoing and the future of Ethereum-based financial products in question, the cryptocurrency market is facing a period of volatility and uncertainty.