According to reports, the United States Securities and Exchange Commission (SEC) has issued subpoenas to several companies in relation to their attempts to classify Ether (ETH) as a security. The SEC’s investigation into the Ethereum Foundation could potentially give the commission the authority to define ETH as a security. The foundation has hinted that it may be under investigation by a state authority. Various U.S.-based companies have allegedly received subpoenas from the SEC, requiring them to provide documents and financial records related to their dealings with the Ethereum Foundation. The SEC initiated this campaign to categorize 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 avoided directly answering questions about whether ETH qualifies as a security under the commission’s jurisdiction, despite previously stating that Bitcoin (BTC), Ether, and other cryptocurrencies were “not securities” back in 2018. While the SEC 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, Prometheum, a cryptocurrency firm approved by U.S. financial regulators as a special purpose broker-dealer for digital asset securities, announced its plans to offer institutional custody services for Ether. This decision has placed pressure on the SEC to provide clarity for companies seeking to avoid potential liabilities associated with certain crypto assets.
If the SEC proceeds with regulating Ether, it could potentially clash with the U.S. Commodity Futures Trading Commission. Lawmakers have been attempting to pass legislation to clarify the roles each regulatory body would assume concerning digital assets, but no bill has been enacted at the time of writing.
This article is part of the magazine’s “Hodler’s Digest,” which also covers topics such as Senate opposition to Ether ETFs, the denial of Craig Wright as Satoshi Nakamoto, and the launch of Dencun.