- Consensys sued the SEC to halt an investigation into Ethereum 2.0, arguing ETH is a commodity.
- Public and congressional pressure contributed to the SEC’s closing of the investigation.
- Consensys seeks further legal clarity on its software offerings, MetaMask Swaps and Staking.
The SEC has officially closed its investigation into Ethereum 2.0, confirming that ETH sales do not constitute securities transactions. This decision follows a letter from ConsenSys requesting that the SEC confirm Ether’s position as a commodity following the May ETF approval.
Consensys Won the SEC, but the Battle Is Still Active
ConsenSys, an Ethereum developer, hailed the announcement as a “major win for Ethereum developers, technology providers, and industry participants.” Despite this victory, ConsenSys underlined that its regulatory battle with the SEC, led by Gary Gensler, is still ongoing.
Consensys also stated about the lawsuit,
Our fight continues. In our lawsuit, we also seek a declaration that offering the user interface software MetaMask Swaps and Staking does not violate the securities laws. It should not take a lawsuit to provide the much-needed regulatory clarity to allow an industry that serves as the backbone to countless new technologies and innovations to thrive – but here we are.
On June 7, ConsenSys requested that the SEC affirm the approval of ETH ETFs. It was on June 18th that the SEC’s notice letter was released, putting an end to the investigation and leaving with no charges against any party.
ConsenSys lawyer Laura Brookover also stated that,
The SEC sent us a closing letter in the Ethereum 2.0 investigation today. Things have changed remarkably fast since we filed our lawsuit against the SEC in late April, culminating in today’s development. After more than a year, the Ethereum investigation is finally over with no charges against anyone.
The Backstory of Consensys vs. SEC
In 2018, the SEC ruled that Ether (ETH) was not a security. However, in 2023, the SEC secretly switched its position and began an inquiry into Ethereum as a security. Consensys objected strongly to this probe, arguing that ETH is a commodity and so falls beyond the SEC’s regulatory scope.
Consensys takes SEC to Court on ETH Security ClassificationCriticism of the SEC’s Overreach
ConsenSys criticized the SEC’s actions as an unlawful power grab, warning that such actions could undermine America’s leadership in the next generation of the internet. They stressed that this could open the door for other countries to lead in developing an economy built on the technological evolution of the internet.
Bill Morgan, echoing a similar opinion, blames the SEC for its inconsistent approach to cryptocurrencies. He cites the recent closing of the Ethereum probe as its “second free pass,” following the Hinman speech in 2018 that declared Ethereum is not a security. He compared this with the SEC’s strong position against Ripple (XRP), claiming that the agency’s actions are arbitrary and unjust, demonstrating a lack of consistency in its regulatory approach.
