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The Securities and Exchange Commission (SEC) is closing its investigation into Ethereum, the second-largest cryptocurrency by market capitalisation, as a security, Consensys confirmed today (Wednesday).
Ethereum Is Not a Security
“The Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0,” the tweet by the company stated, adding: “This means that the SEC will not bring charges alleging that sales of ETH are securities transactions.”
Consensys further confirmed that the decision came after the US-based blockchain firm sent a letter to the regulator on June 7 asking to “confirm that the May ETH ETF approvals, which were premised on ETH being a commodity, meant the agency would close its Ethereum 2.0 investigation.”
The decision follows a letter we sent on June 7, asking the SEC to confirm that the May ETH ETF approvals, which were premised on ETH being a commodity, meant the agency would close its Ethereum 2.0 investigation.
— Consensys (@Consensys) June 19, 2024
The closing of the Ethereum investigation is momentous, but it’s…
A Relief for the Blockchain Companies
The status of cryptocurrencies remained unclear, and no regulations were proposed for them in the US. Although Bitcoin is considered a commodity, the status of Ether remained uncertain with the SEC's interest in several Ether offerings.
Earlier this year, Consensys, the company behind the popular MetaMask wallet, sued the SEC to deter the regulator from overseeing the Ethereum blockchain. The lawsuit argued that if the SEC continues to exert its authority over Ethereum, it would bring the blockchain to a halt, “crippling one of the internet’s greatest innovations.”
Today, Consensys filed a lawsuit against the Securities and Exchange Commission.
— Consensys (@Consensys) April 25, 2024
The goal behind this is to ensure that Ethereum remains a vibrant and indispensable blockchain platform and to preserve access for the countless developers, market participants, and institutions…
The lawsuit came in response to a Wells Notice received by Consensys indicating that the regulator was preparing to bring enforcement actions against the company over the services of its MetaMask wallet.
The company argued that MetaMask is not a broker and “neither holds customers’ digital assets nor carries out any transaction functions.”
With the SEC confirming the closing of its investigations, companies offering Ethereum-based services can be relieved that they will not face actions for unregistered securities offerings.
However, Consensys confirmed that it would continue with the lawsuit as it is seeking “a declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws.”