An amazing piece of news was announced Tuesday reagrding all decentralized projects and the broader crypto world: the US SEC has officially closed its investigation into Ethereum. While, as of late, the Securities and Exchange Commission has been more forthcoming with regards to all-things Web3 – approving spot BTC ETFs in January, and Ethereum ones just last month – they are still being stubborn in other regards. And while the end of the investigation into Ethereum 2.0 is a good sign, the SEC noted that that the conclusion of the investigation should not be interpreted as an exoneration, leaving the door open for potential future inquiries. In this article, we will

  • Explore the nature of the SEC’s investigation into one of the main Ethereum 2.0 developers – Consensys, and their surrounding reasons.
  • Examine what the dropping of these charges means for the future of Web3 and more specifically Ethereum applications.

SEC VS Ethereum – What Happened?

The US SEC, with Gary Gensler as chair, has been hawkish and skeptical of all-things crypto – as the rest of the Biden administration generally has shown to be as well. The dropping of these charges does not necessarily signify a detachement from that stance, as Consensys themselves announced in a release yestaerday. Let’s take a look at how this diatribe came about and was resolved.

  • The animosity between Ethereum and the SEC started all the way back in 2018, when the commission declared that Ethereum was not a commodity, and the two have been on a rather bellicose path ever since.
  • This remains a relevant topic following the SEC’s approval of spot Ether ETFs. In fact, in a note following the approval, Consensys pointed out that the funds were based on ETH being classified as a commodity. This discrepancy shows the inconsistencies that the SEC has and still is using regarding these points.
  • Letters sent by Consenys to the SEC after its appoval of the spot ETFs, demanding clarification regarding the classification of Ethereum as an asset, could have impacted the ongoing investigation by the Commission. Ultimately, however, it did not, as the SEC announced it would not purse further action against Consensys.
  • Ultimately, by closing its investigation and not seeking charges, the SEC essentially determined that sales of Ethereum could not be considered as securities transactions. This has clarified the atmosphere surrounding Ethereum and Consensys for the moment, but what are the next steps and repercussions of this decision? Let’s take a look.

The Impact of this Decision

The closure of the investigation signifies a pivotal moment for the Ethereum community, providing a reprieve from potential regulatory actions. However, it has also brought about some more tangible benefits.

  • Following the SEC’s public announcement, Ethereum rose as much as 2.6% after a Consensys post on X, data from TradingView show. It is up around 3% over the last 24 hours, according to data from CoinGecko.
  • As Consensys pointed out, the legal fight is not just about Ethereum but about safeguarding the future of blockchain innovation in the United States and beyond. The SEC’s position on Ethereum had posed a risk to adopting and developing blockchain technologies, with potential negative implications for US leadership in this sector.
  • On the flip side, the SEC has also stated that this decision should not be taken to mean there will never be an enforcement action in the future with regards to Consensys or any other decentralized entity. For the moment, this news comes as a ray of sunshine through the clouds of crypto Twitter, which has been showing evident signs of pessimism in recent weeks.

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