SEC Ends Investigation on Whether ETH is a Security

After years of uncertainty, a dark cloud hanging over Ethereum has lifted.

Why? Because it's been confirmed the Securities and Exchange Commission is ending an investigation centered on whether ETH is a security.

On X, Consensys wasted no time in wheeling out the superlatives to describe how significant this is.

It said the decision was a "major win" for developers — and the end of the legal probe is nothing short of "momentous."

But striking a cautious note, the company added:

"It’s not a cure-all for the many blockchain developers, technology providers, and industry participants who have suffered under SEC’s unlawful and aggressive crypto enforcement regime."

The newfound clarity comes after the SEC tentatively gave the green light to exchange-traded funds based on ETH's spot price last month — ending a prolonged period of opposition.

This prompted Consensys to send a letter to the commission, to ask whether this means its investigation would now conclude.

Of particular concern to the SEC was Ethereum's switch from a Proof-of-Work to Proof-of-Stake blockchain, amid fears that this meant any and all sales of ETH amounted to securities transactions.

But given how the decision to approve ETH ETFs was on the premise that the world's second-largest cryptocurrency should be regarded as a commodity, this theoretically made the investigation moot anyway.

Consensys has been aggressive in taking the SEC to task — and filed a lawsuit to argue that Ether was and remains a commodity, meaning it shouldn't fall under Gary Gensler's purview at all.

However, the company has warned that the U.S. crypto sector is still far away from a happy ending.

"It is imperative that the SEC abandon its unprincipled and opaque regulation-by-enforcement campaign in favor of much-needed regulatory clarity for an industry that serves as the backbone to countless new technologies and innovations."

Consensys is continuing to ask for a federal court to conclude that the business doesn't act as a broker, nor does it issue securities, through MetaMask swaps and staking.

The statement concluded by expressing exasperation that it's had "to resort to costly litigation to obtain clarity about what is and is not lawful" — mirroring the likes of Coinbase, which has also complained that its attempts to get clear rules of the road to follow have been rebuffed.

ETH is one of the few bright spots in the crypto markets on Wednesday as traders digest the news. It's risen by 4% over the past 24 hours and pierced the psychologically significant threshold of $3,500. By comparison, Bitcoin is flat over the same timeframe and battling to stay above $65,000.