The Swiss Ethereum Foundation Receives “Voluntary Enquiry” from Undisclosed State Authority
The crypto industry is currently facing a significant development as the Swiss Ethereum Foundation recently received a “voluntary enquiry” from an undisclosed “state authority”. The authority demanded confidentiality, marking a first in the foundation’s history. This revelation was made through the removal of the Warrant Canary from its website and a note in a Github repository. It raises questions about the future of Ethereum and its regulatory status.
SEC Attempts to Declare ETH as a Security
In addition to this development, a report by Forbes claims that the United States Securities and Exchange Commission (SEC) is the agency behind the voluntary enquiry. The SEC is reportedly seeking to declare Ether (ETH), the native cryptocurrency of the Ethereum network, as a security. This action comes after the SEC’s approval of Bitcoin ETFs in January and ahead of the mid-May deadline for spot ETH Exchange Traded Funds (ETFs).
A16z Opposes SEC’s Security Probe Into Ethereum
Brian Quintenz, Global Head of Policy at Andreessen Horowitz (A16z), a leading venture capital firm in the crypto space, has strongly opposed the SEC’s attempt to categorize Ether as a security. Quintenz argues that the SEC had previously acknowledged ETH as a non-security when it allowed ETH Futures ETFs to trade on regulated security exchanges. He emphasizes that this approval occurred after Ethereum transitioned to a Proof of Stake (PoS) model, indicating that ETH was not considered a security by the SEC.
- Quintenz highlights that if there were any doubts about Ethereum’s regulatory treatment, they should have been resolved with the futures ETF approval.
- He points out potential contradictions in the SEC’s approach and argues that the approval of ETH futures contracts implies that ETH is not a security.
Coinbase CLO Supports Ethereum’s Classification as a Commodity
Paul Grewal, Coinbase Chief Legal Officer (CLO), also supports the classification of Ethereum as a commodity rather than a security. He references previous statements by SEC officials and the consistent position of the Commodity Futures Trading Commission (CFTC) and federal courts. Grewal emphasizes that millions of Americans hold ETH, which has been vital to the crypto industry since its launch in 2015.
- Grewal argues that even if the Howey Test, a legal standard used to determine investment contracts, were applied to Ethereum, it would fail the test.
- He asserts that nothing about the merge between Ethereum and Proof of Stake changes the conclusion that ETH is a commodity.
Ethereum’s Current Price
As of now, ETH is trading at $3,507.
Hot Take: The Future of Ethereum’s Regulatory Status
The voluntary enquiry received by the Swiss Ethereum Foundation from an undisclosed state authority raises concerns about the regulatory status of Ethereum and its native cryptocurrency, Ether. The SEC’s attempt to declare ETH as a security further complicates the situation. However, industry experts like Brian Quintenz and Paul Grewal argue against this classification, asserting that ETH should be considered a non-security commodity. The outcome of this regulatory battle will have significant implications for Ethereum and its position in the crypto market.
Sources:
Forbes
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