Consensys CEO cites SEC's frequent enforcement as a concern over potential changes to the U.S. financial industry due to Ethereum development.

Ethereum co-founder and Consensys CEO Joseph Lubin recently pointed out that the real reason the U.S. Securities and Exchange Commission (SEC) is intentionally hindering the development of the cryptocurrency industry is because it poses a threat to the existing financial and banking industry in the United States. Additionally, this enforcement action could also be used as a reason to reject the approval of an Ethereum exchange-traded fund (ETF).

Consensys sues SEC, supports Ethereum, and highlights "four reasons" why ETH is not a security

Consensys CEO: SEC Concerned Ethereum Poses Threat to US Finance Industry

Joseph Lubin criticized the lawsuit between Consensys and the SEC at the Digital Assets Summit in London, stating that the SEC's move to reclassify Ethereum (ETH) as a security is creating fear and uncertainty, and the lawsuit is aimed at gaining more legal clarity:

The SEC is taking enforcement actions strategically rather than engaging in open discussions or creating clear rules, which will force crypto companies to continue relocating.

He believes that the SEC seems to fear the continued growth prospects of Ethereum, speculating that the speed at which bank users are converting their assets into digital form may have raised concerns for the SEC, the financial, and banking industries:

It is clear that the SEC may not want to see any startup wave that could truly change the current state of the financial or banking industry.

Enforcement to be Used to Reject Ethereum ETF Approval?

Furthermore, Lubin believes that the SEC's renewed enforcement actions against Ethereum may be related to the final approval results of multiple Ethereum ETFs that are pending:

The SEC may use a series of enforcement actions against Ethereum and the data obtained during the process as reasons to reject the approval of Ethereum spot and futures ETFs.

It is reported that the SEC will make decisions on applications from VanEck, ARK 21Shares, and Hashdex on May 23, 24, and 30, respectively.

Lubin also pointed out that the SEC may have noticed the substantial capital inflows following the approval of the Bitcoin spot ETF and is concerned about this:

They are concerned that too much attention and capital flowing into the crypto ecosystem after the approval of the Ethereum ETF could boost the industry's scalability and application development.

A few days ago, Grayscale suddenly withdrew its application for an Ethereum futures ETF, adding uncertainty to the approval of the Ethereum ETF.

Grayscale Abandons Ethereum Futures ETF Plan Ahead of SEC Decision

Former SEC Commissioner: SEC Overinterpreting Howey Test

In addition, former SEC Commissioner Troy Paredes criticized the SEC's current enforcement actions at the TokenizeThis 2024 conference in Miami, stating that the SEC's interpretation of the securities factors of the Howey Test is very broad:

The criteria for securities determination under the Howey Test itself are very clear; conversely, there are many gray areas in the SEC's "jurisdictional issues" regarding digital assets.

He added, "If a token is not a security, then it is not within the SEC's jurisdiction."

This stance is broadly similar to that of other crypto lawyers who have previously accused the SEC of abusing Wells Notices as a means of intimidation against crypto companies.

Crypto Lawyers Accuse SEC of Abusing Wells Notices, CFTC: More Enforcement Actions to Come