ETHEREUMREGULATION

SEC drops investigation into ETH, but still plans to sue MetaMask for staking and trading features

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SEC drops investigation into ETH, but still plans to sue MetaMask for staking and trading features

Consensys has stated that the U.S. Securities and Exchange Commission (SEC) has notified the company that it will be concluding its investigation into Ethereum 2.0. The SEC's decision came after Consensys issued a request letter seeking clarification on whether the ether in an Ethereum spot ETF would be considered a security by the SEC.

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SEC Gives Up Chasing ETH as a Security?

According to an announcement by Consensys, Consensys describes this as a "major victory for the industry," with their tweet stating:

Ethereum has been spared from SEC scrutiny, meaning the SEC will not charge ETH sales as securities transactions. Our letter sent on June 7 requested the SEC to confirm that the approval of the Ethereum ETF in May was based on ETH being a commodity. The conclusion of the Ethereum investigation is significant, but it is not a panacea for many blockchain developers, technology providers, and industry participants who have suffered from the SEC's illegal and aggressive crypto enforcement.

Consensys received a Wells notice from the SEC on April 10 and decided to proactively sue the SEC, with the following demands at the time:

  1. Hoping for a federal court to declare that ETH is not a security.

  2. Asserting that MetaMask's staking service does not violate securities laws.

  3. Stating that MetaMask is not a broker under federal law.

Consensys Sues SEC, Stands by Ethereum, and Points Out "Four Reasons" Why ETH is Not a Security

Consensys Products Still at Risk

The lawsuit by Consensys is still ongoing, with FOX journalist Eleanor Terrett tweeting that in fact, the SEC has not yet made any accusations against Consensys regarding the violations mentioned in the Wells notice, such as the Swap trading and staking features in MetaMask, which may be formally charged in the coming days or weeks.

Consensys also stated in their announcement:

Our fight continues, and we will demonstrate in the lawsuit that the swap and staking functions provided by the MetaMask interface do not violate securities laws and should not be used through litigation to provide much-needed regulatory clarity.