As the final decision for spot Ethereum (ETH) exchange-traded funds (ETFs) in the United States draws closer, the debate on whether Ether is a security or a commodity has dramatically escalated. By now, it is safe to assume that the United States Securities and Exchange Commission (SEC) views ETH as unregistered securities. 

Despite the bid by the Ethereum core developers to shift from the power-hungry Proof-of-Work (PoW) consensus mechanism to the Proof-of-Stake (PoS) method last year, the US SEC under Chair Gary Gensler has not changed the perspective.

US SEC Chair has Believed Ethereum Was a Security Despite the Ambiguity in Congress 

According to a new court filing dated March 28, 2023, the head of the SEC’s Division of Enforcement, Gurbir Grewal, approved a formal order of investigation into Ethereum’s status as a security. Notably, Grewal authorized enforcement staff to investigate and subpoena individuals and entities involved in the buying and selling of Ethereum Since its inception.

The new filings show that the five-member Commission approved the Division of Enforcement’s Ethereum 2.0 investigation on April 13, 2023. Interestingly, it was only five days before SEC Chair Gensler appeared before the House Financial Services Committee, where he refused to answer repeated questions from committee Chairman Patrick McHenry, on whether the SEC believed Ethereum to be a security or a commodity.

The filing says the Ethereum 2.0 investigation was based on the SEC’s belief that possible offers and sales of Ether had occurred since at least 2018. Meanwhile, the view by Gensler contradicts prior SEC Chairman Jay Clayton who stated in a speech that Ethereum was not a security.

What Next

The decision of whether Ether is a security or a commodity will impact more than 50 million American investors in Ethereum. However, Consensys firm believes Ethereum is a global computing platform and not an investment scheme. As a result, Ethereum cannot be classified as a security but instead should be viewed as a commodity as reaffirmed by the Commodity Futures and Trading Commission (CFTC). 

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