What Happens if the SEC Brands ETH a Security?
The status of Ethereum is in limbo – currently ETH is not considered a security by the U.S. Securities and Exchange Commission (SEC) — but this could all change very quickly.
Ethereum is viewed as a decentralized cryptocurrency, rather than a security. However, regulatory agencies like the SEC continue to monitor the cryptocurrency space and may provide further guidance and sudden change or new rulings in the future. It’s essential to stay updated on regulatory developments.
It has been widely reported that a number of U.S. based companies have received subpoenas attempting to label ETH as a security.
Kenzi Wang, the co-founder and general partner at Symbolic Capital, told Cryptonews, it is highly unlikely the SEC will classify Ethereum as a security. Wang explains, the SEC now classifying ETH as a security would not only undo years of precedent, but also be directly contradictory to their partner regulatory body the Commodity Futures Trading Commission (CFTC).
“While the SEC continues to levy vague statements about the potential security status of ETH, the CFTC has clearly stated that they view ETH as a commodity — most clearly in 2022 filings around the FTX/Alameda investigation,” said Wang.
The SEC itself approved ETH futures trading on regulated exchanges more recently in late 2023. During this approval process, the SEC took no action to change the commodity classification of ETH by the CFTC, explains Wang.
“Misalignment between these two regulators [SEC and CFTC] is not only harmful to the public, but also a major reason why we don’t see the SEC moving forward with security classification of ETH,” argues Wang.
Several applications have been submitted for a Ethereum exchange-traded fund (ETF) with the SEC and the
