The US Securities and Exchange Commission (SEC) has decided not to investigate whether Ether (ETH) qualifies as a security, according to Ethereum developer Consensys.
Consensys announced on June 19 that the SEC’s Enforcement Division has officially closed its investigation into Ethereum 2.0.
“The SEC will not bring charges alleging that sales of ETH are securities transactions,” the firm stated, describing the decision as a major victory for developers, technology providers, and industry stakeholders in the Ethereum ecosystem.
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The SEC’s decision followed a letter from Consensys, sent on June 7, asking the agency to confirm if it closed the investigation into Ether. This came in the wake of the SEC’s approval of spot Ether exchange-traded funds (ETFs) in May, which Consensys argued are based on ETH being recognized as a commodity rather than a security.
Laura Brookover, Consensys’ senior counsel, shared the SEC’s response letter, confirming that the agency does not “intend to recommend an enforcement action.”
Consensys filed a lawsuit against the SEC in April, shortly after the company received a Wells notice from the agency. The notice suggested that the MetaMask crypto wallet, a product of Consensys, might have been in violation of securities laws.
The lawsuit alleges that SEC Chair Gary Gensler and the Division of Enforcement, led by Director Gurbir Grewal, had been treating ETH as a security since at least 2023. Consensys highlighted that Grewal approved a formal order of investigation into ETH’s security status on March 28, 2023.
Despite the SEC closing its probe into Ethereum 2.0, the lawsuit initiated by Consensys remains active, underscoring ongoing tensions between the regulatory body and the crypto industry.
In other news, the SEC has recently rejected Ripple’s request for a reduced penalty, arguing it would be inadequate.
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