Ether (ETH), the second-largest cryptocurrency, is facing a market downturn due to regulatory uncertainty in the United States. The US Securities and Exchange Commission (SEC) is yet to determine whether Ether will be classified as an unregistered security, which could complicate trading. In contrast, Bitcoin is recognized as a commodity, giving it a clear status.
The SEC has recently labeled 19 cryptocurrencies as unregistered securities in lawsuits against major exchanges Binance and Coinbase. These tokens have seen a significant drop in value, while Ether has only decreased by about 1% and Bitcoin has increased by approximately 12%. Investors are likely shifting away from assets with regulatory risks towards Bitcoin, which is also benefiting from the potential introduction of Bitcoin exchange-traded funds.
David Lawant, head of research at FalconX, expresses uncertainty about the SEC’s rationale for identifying certain tokens and warns that Ether’s absence from the list doesn’t guarantee safety from regulatory action.
There are concerns that Ether might be classified as a security under its new proof of stake model, similar to other tokens like Solana, Cardano, and Polygon’s MATIC that have been targeted by the SEC. However, some believe that enforcement action against Ethereum is unlikely due to its widespread use and the time since its initial sale.
Riyad Carey, a research analyst at Kaiko, suggests that the SEC’s mention of Ether staking services in their lawsuits could be contributing to the caution surrounding Ether. However, Lawant points out that the SEC doesn’t need to name every crypto asset they consider a security to make their case, leaving Ether’s status still uncertain.
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