ETH Is Not a Security: Coinbase Bites Back as SEC Targets The Ethereum Foundation
The SEC is seeking information from companies about their dealings with the Ethereum Foundation. The demands come as part of a review of the regulatory status of ETH and whether it should be classified as a security.
A subpoena from the regulator sought more information about various aspects of the Ethereum Foundation, according to Bloomberg.
Although SEC chair Gary Gensler claims many crypto assets are unregistered securities subject to agency rules, he has refused to say if Ethereum is part of that group.
Nevertheless, Gensler has indicated that Ethereum’s switch to a proof-of-stake consensus model could bring it under SEC jurisdiction as an “investment contract.”
The move could also be a means for the regulator to justify the disapproval of spot Ethereum ETFs.
Coinbase CLO Bites Back
On March 21, Coinbase chief legal officer Paul Grewal said, “Sigh… again with the ETH misinformation as we await a decision on ETH ETPs.”
He went on to state that millions of Americans hold Ethereum, which has been vital to the crypto since its launch in 2015, “and ETH is a commodity, not a security.”
He cited a statement from former senior SEC official William Hinman confirming that ETH is not a security.
Moreover, the Commodity Futures Trading Commission (CFTC) and federal courts have “consistently confirmed that ETH is a commodity,” he added. Additionally, the Howey Test doesn’t determine ETH’s status as there is no ongoing contractual obligation related to a business enterprise.
Sigh… again with the ETH misinformation as we await a decision on ETH ETPs. Ok–let’s talk about some basic facts about Ethereum. Millions of Americans hold ETH; it has been vital to crypto since its 2015 launch; and ETH is a commodity, not a security. 1/10
— paulgrewal.eth (@iampaulgrewal) March 20, 2024
“The SEC has no good reason to deny the ETH ETP applications,” Grewal concluded.
“And we hope they won’t try to invent one by questioning the long-established regulatory status of ETH, which the SEC has repeatedly endorsed. That’s not how the law works. And Americans deserve better.”
“So this now very obviously feels like a coordinated attack on ETH,” commented chief investment officer at Ikigai Asset Management, Travis Kling.
ETH Prices Bounce Back
Ethereum prices have recovered from their slump this week, bouncing back 13% on the day to reach $3,537 during the Thursday morning Asian trading session.
ETH dipped below $3,100 briefly on March 20 as the crypto market correction gathered pace, but most digital assets are in recovery mode today.
Ethereum remains 27.5% down from its 2021 all-time high and 13% down from its 2024 high of $4,070 on March 12.
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