Regulators have decided to back off from Ether, which many observers believe could create an opportunity for the asset to expand.
On June 19, 2024, the United States Securities and Exchange Commission (SEC) officially ended its investigation into whether Ether (ETH) should be considered a security. According to Consensys lawyer Laura Brookover, the crypto markets will no longer face any challenges from the SEC regarding the classification of ETH as a security. However, Carol Goforth, a professor at the University of Arkansas School of Law, specializing in business associations and securities regulation, clarified that this decision does not represent a final determination but simply indicates that the SEC will not continue its investigation for the time being.
Consensys sees the SEC’s withdrawal from the Ethereum investigation as lifting a substantial burden that posed a threat to the network’s survival.
The SEC’s significant retreat has resolved the negative regulatory concerns about ETH being considered a security. However, the question remains: how will ETH’s price respond to having a clearer path forward? The SEC’s investigation also impacted other cryptocurrencies with similar features to Ether. Therefore, which alternative coins could benefit from Ethereum’s liberation?
Observers predict a surge in the Ether price. Since the SEC halted its investigation, the Ether price has remained relatively stable, maintaining a horizontal pattern that has been consistent since the news of the approval of the spot Ether ETF on May 23.
At the time of publication, Ether is down 2%, leading some traders to speculate about a potential surge in the price of ETH and its impact on the altcoin market.
Conor O’Neill, community lead and partner of investment analytics company Blockcircle, believes that the major regulatory barrier for Ethereum has been eliminated, setting a significant precedent for regulators worldwide. He anticipates that the price of Ethereum is poised to surge.
The expected launch of spot Ether exchange-traded funds on July 2 will undoubtedly affect the price of ETH. Traditional markets are expected to inject capital into these ETFs, creating a higher demand for ETH and boosting its price. O’Neill explained that the ETH ETF is highly likely to have a long-term positive impact on the price of Ethereum.
While the approval of the ETH ETF is positive news for the crypto markets, the SEC has approved Ether ETFs under certain conditions. ETF issuers cannot offer an Ether ETF with staking. Goforth explained that the SEC has alleged that staking itself involves an investment contract, eliminating the possibility of providing additional gains to its holders.
Some have also questioned whether Grayscale outflows could affect the Ether price after ETFs launch. O’Neill believes that the amount of ETH held by Grayscale is likely to increase exponentially with the launch of the ETF.
In conclusion, the SEC’s decision to end the investigation, the growing number of ETF issuers, and the withdrawal of the SEC’s investigation signal a potential shift in the SEC’s approach. These changes mark a crucial moment for Ethereum and the broader cryptocurrency market.