A case of regulatory overreach (and a surprise twist)

The saga of the United States Securities and Exchange Commission (SECOND) Ethereum’s pursuit continues to unfold, with a recent development offering a glimmer of hope for the future of the world’s second-largest blockchain.

Let’s go back a little. Last April, Consensys, a prominent Ethereum development company, shocked the crypto world by sue the SEC. This lawsuit stems from a Wells Notice – a precursor to enforcement action – received by Consensys, alluding to the SEC’s potential classification of Ether (ETH), Ethereum’s native token, as a security.

Consensys sues SEC for ‘illegal’ Ethereum authority following Wells opinion

Consensys received a Wells Notice earlier this month from the SEC, which it said targeted its wallet product, Metamask. The company is now suing the regulator for its “illegal assumption of authority” over Ethereum.

This decision by the SEC has attracted widespread criticism. Many see this as an excess of regulatory authority, likely to stifle innovation in the booming DeFi (decentralized finance) space. Consensys argued that Ethereum is a decentralized network and that ETH functions more like a commodity than a security.

Fast forward to June, and a surprising twist emerged. On Wednesday, news broke that Consensys announced the closure of the SEC investigation into Ethereum 2.0 (the next upgrade to the Ethereum network). Although Consensys clarified that the fight is not entirely over, this development represents an important victory for the Ethereum community.

“Closing the Ethereum investigation is momentous, but it is not a panacea for the many blockchain developers, technology providers, and industry players who have suffered from Ethereum’s illegal and aggressive crypto enforcement regime. the SEC,” Consensys said in a tweet.

The news provided a boost to cryptocurrencies across the board, with Ethereum rising from its Tuesday low of around $3,380 to $3,527 at the time of writing, according to data from CoinMarketCap.

What does that mean?

The closure of the SEC investigation is a positive sign for Ethereum and the broader cryptocurrency space. This suggests that the SEC may reevaluate its position on how to classify decentralized blockchain networks and their native tokens. This could pave the way for a more collaborative approach between regulators and the crypto industry.

Recent developments have potential implications for the long-awaited approval of Spot Ethereum ETFs in the United States. These ETFs would directly track the price of ETH, allowing investors to gain exposure to Ethereum without needing to hold the underlying asset themselves.

The SEC’s previous stance on Ethereum has created uncertainty for these ETF proposals. However, with the Ethereum 2.0 investigation closed, the path to approval of Spot Ethereum ETFs may be clearer. Regulatory clarity from the SEC is still needed, but this positive development increases the chances of these ETFs coming to fruition sooner rather than later in the United States.

Although recent news is encouraging, the regulatory landscape for cryptocurrencies in the United States remains murky. The closure of the investigation focused specifically on Ethereum 2.0, leaving the status of ETH under the SEC’s radar.

Consensys, for example, emphasized that they are still seeking more clarity from the SEC on how regulations apply to features like MetaMask Swaps and Staking.

Bitwise revises ETF filing

Another sign of optimism for the Ethereum ecosystem, Bitwise Asset Management recently revised his file for its Ethereum spot ETF, ETHW. This revision notably includes a potential investment of $100 million from crypto investment company Pantera Capital. Bitwise’s initial seed capital investment amounted to $2.5 million, making it easier to purchase ETH before listing.

Further Ethereum ETF S-1 spot changes are expected in the coming days. Two sources said The block that there is a Friday deadline for potential ETF issuers to respond to SEC comments regarding their S-1 forms. The sources described the comments as “mild” and “reasonable.”

Somewhere else

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21Shares taps former BlackRock exec Federico Brokate to lead US crypto ETF expansion

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