- SEC’s scrutiny of Ethereum is risking innovation beyond simply Ether’s classification
- Analysts believe the possible approval of a spot ETH ETF in the United States is under threat now
The United States is locked in a regulatory tussle between the Securities and Exchange Commission (SEC) and crypto-entities, with the latter claiming that the former is consistently overstepping into the crypto-domain. Consensys, a blockchain software technology company, took this tussle a step further by taking the agency to court.
Taking issue with how the SEC has been treating Ethereum, Joe Lubin, CEO of Consensys, on a recent edition of “Bankless” claimed,
“The U.S. is trying to disconnect from Ethereum.”
According to the exec, the scrutiny extends beyond just the classification of Ethereum (ETH), to actions taken by software developers. He believes that this will potentially impact the entire industry and stifle innovation.
What’s unique about this case?
While the SEC has targeted crypto-entities before, Consensys’ General Counsel, Matt Corva, highlighted some unique aspects of this case. He said,
“The real differentiator we think in our case is Ethereum itself, which is under attack.”
He added,
“We think they’re seeking to unplug Ethereum and we think that’s just wrong. They have sort of deputized themselves of the police of open-source technology in a way that we think is outside of their agency authority.”
This highlights the extensive nature of the SEC’s inquiry into Ethereum’s development process, focusing on contributors to Ethereum Improvement Proposals (EIPs).
The SEC’s motive
Additionally, touching upon the motivations behind the SEC’s actions and dismissing theories linking it to Ethereum’s shift to proof of stake., Lubin added,
“It’s a foolish theory.”
Here, it’s worth noting that Lubin also expressed uncertainty regarding the org’s own steps against the SEC.
“One thing we didn’t want to do is, harm the prospects of the approval of the Ether spot ETF.”
Ergo, the question – Could Consensys’ actions hinder the approval of the spot Ethereum ETF? When asked the same, Corva responded,
“We thought that we wouldn’t need to bring the Ethereum action if the SEC was going to approve the Ethereum ETF because that’s your best evidence to say, look Ethereum is obviously not a security.”
What lies ahead?
According to Corva, their case doesn’t solely rely on this broader narrative but rather on specific facts regarding the SEC’s involvement in Ethereum.
Winning the case would establish Ether as a commodity, potentially affecting how the SEC regulates assets and non-custodial wallets like Metamask.
