SEC Suspends Investigation Clearing Ethereum of Security Status

The journey to this victory began in April when Consensys sued the SEC, challenging the agency's suggestion that Ether might be classified as a security.

The cryptocurrency community has received some welcome news amid a challenging market environment. Ethereum, the second-largest cryptocurrency in the world, has emerged victorious as the United States Securities and Exchange Commission (SEC) has officially ended its investigation into Ethereum's native token, Ether (ETH).

Consensys Software Inc., a key developer behind Ethereum, announced in a blog post that the SEC's Enforcement Division notified them of the closure of its investigation into Ethereum 2.0. This means the SEC will not pursue any charges alleging that sales of ETH constitute securities transactions. Consensys celebrated the news as a major win for the Ethereum ecosystem.

The journey to this victory began in April when Consensys sued the SEC, challenging the agency's suggestion that Ether might be classified as a security. The firm argued that ETH is a commodity, a stance supported by the Commodity Futures Trading Commission (CFTC). On June 7, Consensys wrote to the SEC, requesting confirmation that the approvals for spot Ether exchange-traded funds (ETFs) would lead to the closure of the Ethereum 2.0 investigation.

Attorney Laura Brookover from Consensys shared the SEC’s response letter, highlighting the rapid developments since their lawsuit was filed.

Despite this victory, Consensys continues to criticize the SEC's regulatory approach. The company emphasized that this latest win is not a comprehensive solution for blockchain developers, technology providers, and industry participants affected by the SEC’s stringent enforcement actions. Consensys pointed out that achieving regulatory clarity should not require litigation and urged for a more transparent regulatory framework that fosters innovation.

"It should not take a lawsuit to provide the much-needed regulatory clarity to allow an industry that serves as the backbone to countless new technologies and innovations to thrive – but here we are", Consensys stated.

Consensys reiterated that Ethereum is a global computing platform, not an investment scheme. The firm emphasized that Ether (ETH) is not a security but a commodity, as repeatedly confirmed by the CFTC. This distinction is crucial as it influences how Ethereum and related applications are regulated.

The company also stressed that decentralized applications (dApps) enabling independent transactions using Ethereum are not securities brokers and should not fall under the SEC’s regulatory purview. Consensys warned that the SEC’s overreach could jeopardize America’s leadership in internet-based technological innovation, opening opportunities for other countries to dominate this critical sector.