The crypto industry finds itself at a pivotal juncture as the Swiss Ethereum Foundation received a \u201cvoluntary enquiry\u201d from an undisclosed \u201cstate authority\u201d which demanded confidentiality, as Bitrabo reported yesterday. This revelation, made through the removal of the Warrant Canary from its website and a note in a Github repository, marks a first in the foundation\u2019s history.<\/p>\n
A little later, a report<\/a> by Forbes surfaced, claiming that the United States Securities and Exchange Commission (SEC) is the agency, trying to declare ETH as a security. This action comes in the wake of the SEC\u2019s approval of Bitcoin ETFs in January and the looming mid-May deadline for spot ETH Exchange Traded Funds (ETFs).<\/p>\n The SEC\u2019s inquiry seeks extensive documentation from US companies on their interactions with the Ethereum Foundation, particularly after Ethereum\u2019s transition to a Proof of Stake (PoS) model. Seemingly, the SEC\u2019s probe of the Ethereum Foundation aims to categorize Ether as a security, particularly after Ethereum\u2019s transition to a PoS in September 2022.<\/p>\n In response<\/a> to the SEC\u2019s actions, Brian Quintenz, Global Head of Policy at Andreessen Horowitz (A16z), a leading venture capital firm with significant investments in the crypto space and $35 billion assets under management, has vocally opposed the SEC\u2019s attempt. Quintenz, through a series of statements on X (formerly Twitter), laid out a cogent argument against the SEC\u2019s probe.<\/p>\n Quintenz stated, \u201cReminder: When the SEC allowed ETH Futures ETFs to trade on its regulated security exchanges, it explicitly acknowledged the status of the underlying, ETH, as being a non-security and outside of its jurisdiction.\u201d<\/p>\n He further elaborated on the significance of the SEC\u2019s decision post-Ethereum\u2019s transition to a proof-of-stake (PoS) model, saying, \u201cImportantly, this [futures] ETF approval decision in October 2023 occurred well after Ethereum changed to PoS in Sept of 2022; meaning that to the SEC, ETH, in its present state as of Oct 2023, was not a security.\u201d<\/p>\n Quintenz argues that any doubts regarding Ethereum\u2019s regulatory treatment should have been resolved with the futures ETF approval, indicating a clear stance from the SEC that Ethereum does not fall under its jurisdiction as a security.<\/p>\n Highlighting the potential contradictions in the SEC\u2019s approach, Quintenz pointed out, \u201cIf the SEC had any doubt about the regulatory treatment of ETH in Oct 2023, it wouldn\u2019t have approved the ETF. If ETH were in fact a security, then the CFTC-listed futures contracts (on which the ETFs were based) would be illegal, as any derivative on ETH would be considered security futures contracts and subject to different rules, listed on different exchanges and subject to joint SEC\/CFTC jurisdiction.\u201d<\/p>\n Echoing Quintenz\u2019s sentiments, Paul Grewal, Coinbase Chief Legal Officer (CLO), reinforced Ethereum\u2019s classification as a commodity rather than a security. Grewal took to X, articulating, \u201cMillions of Americans hold ETH; it has been vital to crypto since its 2015 launch; and ETH is a commodity, not a security.\u201d<\/p>\n He backed his argument with references to previous statements by SEC officials and the consistent position of the Commodity Futures Trading Commission (CFTC) and federal courts. Notably, Grewal argued, \u201cEx. C. And even very recently, the SEC\u2019s trial lawyers continue to compare ETH to BTC,\u201d indicating a longstanding regulatory perspective that diverges from the current SEC probe.<\/p>\n The crux of the argument against Ethereum\u2019s classification as a security lies in the application of the Howey Test, a legal standard used to determine whether certain transactions qualify as investment contracts. Grewal contended, \u201cEven if we were to apply Howey, ETH utterly fails that test, and nothing about the merge changes that conclusion.\u201d<\/p>\n Sigh\u2026 again with the ETH misinformation as we await a decision on ETH ETPs. Ok\u2013let\u2019s 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<\/p>\n \u2014 paulgrewal.eth (@iampaulgrewal) March 20, 2024<\/a><\/p>\n<\/blockquote>\n At press time, ETH traded at $3,507.<\/p>\n<\/span>A16z SEC\u2019s Security Probe Into Ethereum<\/span><\/h2>\n
<\/span>Coinbase CLO Weighs In<\/span><\/h2>\n
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