SEC’s Secret Belief: Ethereum Is An Unregistered Security

The Securities and Exchange Commission (SEC) has long believed that Ethereum, the world’s second-largest cryptocurrency, is an unregistered security, according to unredacted portions of a lawsuit filed by Consensys against the regulatory body. The lawsuit has revealed that the SEC and its Chairman Gary Gensler have internally viewed Ethereum as a security for at least a year.

Consensys’ lawsuit has shed light on the SEC’s stance on the regulatory status of Ethereum, with court documents indicating that the Commission has been investigating Ethereum 2.0 and issuing subpoenas to parties involved in the trading of Ether. The SEC has been secretive about its investigation, requiring parties to sign nondisclosure agreements to access more information.

The revelation that the SEC has classified ETH as a security since 2023 is significant, especially considering Gensler’s reluctance to definitively answer questions about Ethereum’s status as a security. The SEC’s actions could have far-reaching implications for the cryptocurrency industry, particularly as the agency has taken enforcement actions against other crypto exchanges for selling unregistered securities.

Many believe that the SEC’s move to classify Ethereum as a security is a strategic one, potentially aimed at rejecting spot ETH exchange-traded funds (ETFs). With Ethereum being a major player in the blockchain space and home to various decentralized applications, reclassifying it as a security could have a significant impact on the digital asset industry.

As the situation unfolds, it remains uncertain how the reclassification of Ethereum as a security will ultimately affect the cryptocurrency market. The outcome of this saga could have wide-ranging implications for the future of Ethereum and the broader digital asset industry.