The United States Securities and Exchange Commission (SEC) is said to have issued multiple subpoenas to companies in connection with their efforts to classify Ether as a security. An investigation into the Ethereum Foundation by the SEC could potentially give the commission the authority to designate Ether (ETH) as a security. The foundation hinted at being under investigation by a state authority on GitHub. According to sources, several US-based companies have received subpoenas from the SEC, demanding the submission of documents and financial records relating to their dealings with the Ethereum Foundation. The commission’s move to classify ETH as a security reportedly stems from the blockchain’s transition from proof-of-work to proof-of-stake in 2022.
During his tenure as SEC Chair, Gary Gensler has evaded direct questions about whether ETH can be considered a security under the commission’s jurisdiction, despite previously stating that Bitcoin (BTC), Ether, and other cryptocurrencies were not securities in 2018. The SEC has approved exchange-traded funds (ETFs) linked to Ether futures, but it is yet to decide on the approval or denial of spot ETH ETFs, with a decision expected by May, according to experts.
Prometheum, a cryptocurrency firm, made headlines in February when it announced its plans to offer institutional custody services for Ether. The company is one of the few to have obtained approval from US financial regulators as a special purpose broker-dealer for digital asset securities. Its decision has put pressure on the SEC to provide clarity to firms seeking to avoid potential liabilities associated with certain crypto assets.
If the SEC proceeds with regulating Ether, it could potentially clash with the US Commodity Futures Trading Commission. Lawmakers have been striving to pass legislation to define the roles each regulator would play in overseeing digital assets, but no bill has been enacted at the time of writing.
Source: Fortune