Multiple subpoenas have reportedly been issued by the United States Securities and Exchange Commission (SEC) to various companies in relation to their efforts to categorize Ether as a security.
A report from Fortune on March 20 suggests that the SEC’s investigation into the Ethereum Foundation could allow the commission to legally define Ether (ETH) as a security. The foundation hinted on GitHub that it might be under investigation “by a state authority.”
According to sources familiar with the matter, several U.S.-based companies have received subpoenas from the SEC, requesting them to provide documents and financial records pertaining to their dealings with the Ethereum Foundation. It is believed that the commission initiated this campaign to classify ETH as a security after the blockchain’s transition from proof-of-work to proof-of-stake in 2022.
During his tenure as SEC Chair, Gary Gensler has consistently evaded direct questions about whether ETH falls under the commission’s jurisdiction as a security, despite stating in 2018 that Bitcoin (BTC), Ether, and others were “not securities.” While the commission has approved exchange-traded funds (ETFs) linked to Ether futures, it has yet to decide on the approval or denial of spot ETH ETFs. Many experts anticipate a decision to be made by May.
In February, crypto firm Prometheum, which has received approval from U.S. financial regulators to operate as a special purpose broker-dealer for digital asset securities, announced its plans to offer institutional custody services for Ether. This decision has put pressure on the SEC to provide clarity for firms seeking to avoid potential liabilities associated with certain crypto assets.
If the SEC proceeds with the regulation of Ether, it may potentially clash with the U.S. Commodity Futures Trading Commission. Lawmakers have been striving to pass legislation to define the roles each regulator would assume regarding digital assets, but no bill has been enacted as of yet.
Magazine:
Ether ETFs encounter Senate opposition, Wright’s claim as Satoshi debunked, and Dencun goes live: Hodler’s Digest, March 10-16