Commodity chapter for Ethereum in the ETF saga won’t stop the SEC’s war on crypto

Industry experts and executives have been discussing the implications of the SEC’s apparent U-turn on Ethereum.

Its approval of spot Ether ETFs on May 23 may be a sign that the regulator now sees the asset as a commodity and not a security.

The regulator officially approved the 19b-4 applications of VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy and Bitwise to issue Ethereum spot ETFs.

However, not all are convinced that this is also a sign that their war on crypto could be over soon.

Starting today, you can update your bio to “commodity trader” and no longer have to shyly say “crypto” when your date asks you about your job.

— Adam Cochran (adamscochran.eth) (@adamscochran) May 23, 2024

ConsenSys is not convinced

On May 24, Ethereum software solutions provider ConsenSys said it welcomed the decision as a step in the right direction, but added:

“This seemingly last-minute approval is yet another example of the SEC’s problematic ad hoc approach to digital assets.”

The company noted that the SEC’s “regulatory abuse” is “unfair to market participants, contrary to the rule of law, and stifles innovation.”

On today’s SEC ruling:

While Consensys welcomes today’s decision to approve ETH Spot ETFs as a step in the right direction, this seemingly last-minute approval is another example of the SEC’s problematic ad hoc approach to assets digital No other industry, market or…

— Consensys (@Consensys) May 23, 2024

ConsenSys is one of several crypto companies involved in legal battles with the SEC, which maintains its position that they have been offering unregistered securities. The agency’s decision on Ethereum is “contrary to the position it continued to take before this week’s events,” ConsenSys said.

Meanwhile, financial services lawyer James Murphy said that “the SEC has deep problems with some of its crypto cases in light of its determination that ETH is a commodity.”

The regulator has repeatedly argued in the hearing on Coinbase’s motion to rule out that crypto tokens operating within an “ecosystem” are securities, he added. The exchange’s chief legal officer, Paul Grewal, echoed the sentiment in a post on X on May 24, questioning the SEC’s baffling U-turn.

In accordance with @secgov, an “ecosystem” without any contract or company can qualify token transactions as securities. But that same SEC has now effectively said that ETH sales cannot be securities because ETH ETFs can be registered by funds with an S-1. So ETH doesn’t have to have a…

— paulgrewal.eth (@iampaulgrewal) May 24, 2024

More smoke and mirrors

Financial lawyer Scott Johnsson observed that the SEC “completely sidestepped” the ETH clarification in its approval orders. ETF Store President Nate Geraci said something similar on May 24.

“Zero statements from SEC commissioners on spot ETFs…Silence speaks volumes”.

Meanwhile, crypto attorney Jake Chervinsky was optimistic that there was a change in motion:

“We hope that today’s expected ETF approval will provide a clue as to how real this pro-crypto pivot could be.”

ETH prices rose to $3,933 when the news broke, but returned to yesterday’s levels shortly after and were trading at $3,670 at the time of writing.

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