Ethereum Emerges Victorious: SEC Drops Charges in Landmark Decision

TLDR

The U.S. SEC has closed its investigation into Ethereum 2.0 without filing charges, according to Consensys.
The decision comes after Consensys sent a letter to the SEC requesting confirmation that spot ether ETF approvals meant the end of the investigation.
Consensys had filed a lawsuit against the SEC in April, opposing the agency’s categorization of ether as a security.
The closure of the investigation has led to a 3% increase in the price of Ethereum.
The decision sets a precedent for the treatment of digital assets under U.S. securities law and could ease the regulatory environment for cryptocurrencies.

The U.S. Securities and Exchange Commission (SEC) has closed its investigation into Ethereum 2.0 without filing charges. The decision, announced by blockchain company Consensys, comes as a relief to the Ethereum community and could have broader implications for the regulatory treatment of digital assets in the United States.

ETHEREUM SURVIVES THE SEC.
Today we’re happy to announce a major win for Ethereum developers, technology providers, and industry participants: the Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0.
This means that the SEC…
— Consensys (@Consensys) June 19, 2024

The SEC’s investigation into Ethereum 2.0 began in March 2023, focusing on individuals and entities buying and selling ether following the network’s transition to a proof-of-stake consensus mechanism.
Consensys, the company behind the popular MetaMask Ethereum wallet, received a wells notice from the SEC in April, indicating the agency’s intention to take enforcement action.
In response, Consensys filed a lawsuit against the SEC, opposing the agency’s categorization of ether as a security. The company argued that ether did not possess the attributes of a security and that the SEC had previously stated that ether was not within its jurisdiction.
On June 7, 2024, Consensys sent a letter to the SEC, requesting confirmation that the approval of spot ether exchange-traded funds (ETFs) in May meant the end of the investigation into Ethereum 2.0. The approval of these ETFs was based on the premise that ether tokens were commodities.
The SEC’s Enforcement Division responded on June 18, 2024, notifying Consensys that it had concluded the investigation and did not intend to recommend an enforcement action.
While the SEC emphasized that the closure of the investigation should not be seen as an exoneration, the decision marks a significant victory for Ethereum and the broader cryptocurrency industry.
Following the announcement, the price of Ethereum (ETH) increased by approximately 3%, reaching $3,500.
The decision has also positively impacted other coins closely tied to Ethereum, such as Lido DAO’s governance token (LDO), Ethereum Name Service (ENS), and Maker (MKR).
The closure of the SEC’s investigation without enforcement action sets a precedent for the treatment of digital assets under U.S. securities law. It could potentially ease the regulatory environment for cryptocurrencies, which have faced increased scrutiny from the SEC in recent years.
However, some industry experts, such as Coinbase Chief Legal Officer Paul Grewal, argue that the decision does not address the broader issues faced by the cryptocurrency ecosystem.

Good. It was a silly theory of liability to begin with.
But what about the ecosystem? What about the promotional statements? What about the efforts of others?
How do you explain both this decision and the other projects maligned by the SEC’s broken Howey analysis? https://t.co/H5Z5PsY39O
— paulgrewal.eth (@iampaulgrewal) June 19, 2024

The SEC has been using the Howey Test to determine whether an asset qualifies as a security, a practice that has drawn criticism from various stakeholders who consider the test outdated and unfit for cryptocurrencies.
The post Ethereum Emerges Victorious: SEC Drops Charges in Landmark Decision appeared first on Blockonomi.