The ever-changing political landscape may have an impact on how the United States Securities and Exchange Commission (SEC) approaches crypto-related policies leading up to the 2024 election, as noted by the senior counsel at Consensys.
During an interview with Cointelegraph at the Consensus conference in Austin on May 29, Bill Hughes, the senior counsel and director of global regulatory matters at Consensys, expressed uncertainty about how the shifting political and regulatory environment in the U.S. could affect the company’s legal battle against the SEC regarding Ether (ETH). In recent weeks, legislators have been pushing for regulatory clarity at the SEC, which has, for the first time, given the green light to Ether exchange-traded funds. Additionally, digital assets have become a focal point for both major party presidential candidates.
Hughes highlighted the approval of spot Ether ETFs and its potential impact on the SEC’s ongoing investigations, especially in relation to securities offerings. Despite some controversy, he viewed this development as positive. In April, Consensys filed a lawsuit against the SEC and its commissioners in Texas, claiming that they intended to classify ETH as a security. This legal action followed a warning from the SEC regarding potential enforcement actions related to Consensys’ MetaMask Swaps and MetaMask Staking products.
Notably, the lawsuit was filed before the SEC approved 19b-4 filings for multiple asset managers seeking to list and trade spot Ether ETFs on U.S. exchanges, indicating a recognition of ETH as a commodity. Consensys’ filings included statements from SEC Chair Gary Gensler and Gurbir Grewal, head of the commission’s enforcement division, who initiated a formal investigation into Ether as a security.
Hughes remarked on the potential impact of the changing political landscape on the SEC’s decision-making process, particularly in light of the upcoming 2024 election. He speculated on how the political environment could influence the SEC’s stance on digital assets and the actions of its staff.
Looking ahead, it is anticipated that the U.S. Senate will consider the Financial Innovation and Technology for the 21st Century Act (FIT21) following its passage through the House of Representatives. This bill aims to clarify the SEC’s jurisdiction over digital assets, offering the Commodity Futures Trading Commission the authority to regulate many tokens as commodities.
Chair Gensler’s recent comments suggest that the SEC may take some time before approving S-1 registration statements for asset managers applying for spot Ether ETFs, delaying the listing and trading of these investment vehicles on exchanges. Despite the challenges ahead, there is optimism for a potential launch of spot Ether ETFs in the U.S. by July 4.
In summary, the SEC faces a tough legal battle against the crypto industry, as regulatory policies and political influences continue to shape the future of digital assets in the U.S.