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The revelations come a few days after Consensys sued the US SEC for attempting to label Ethereum amid decreased odds of spot Ether ETF approval.
A few weeks to the final decision by the United States Securities and Exchange (SEC) regarding the spot Ethereum (ETH) exchange-traded funds (ETFs) and the debate on whether the asset is a security or a commodity has escalated.
With the US Congress having not approved a clear crypto regulatory framework ahead of the upcoming general election, the US SEC and the Commodity Futures and Trading Commission (CFTC) have publicly contradicted cryptocurrency matters.
Nonetheless, Bitcoin is a commodity following the approval of spot Bitcoin ETFs earlier this year.
US SEC Chair Has Believed Ethereum Is a Security
According to unredacted court documents filed by Consensys Software Inc, the US SEC and its chairman Gary Gensler have believed for at least a year that Ethereum is an unregistered security. As Coinspeaker noted last week, Consensys is attempting to fight for the crypto community as Ethereum is a global computing platform and not an investment scheme.
Consensys has noted that the head of the SEC’s Division of Enforcement, Gurbir Grewal, approved a formal order of investigation into Ethereum’s status as a security on March 28, 2023. Reportedly, Grewal authorized enforcement staff to investigate and subpoena individuals and entities involved in the trading of Ethereum.
The investigation dubbed Ethereum 2.0 looked into possible offers and sales of certain securities but not limited to Ethereum. As a result, the closure of the Consensys case will be crucial for the entire altcoin industry.
Consensys is bound to argue that the SEC has severally contradicted itself in the past regarding the crypto regulations. Furthermore, the former SEC director of corporation finance, Bill Hinman, believed that Ethereum alongside Bitcoin is not secure.
Interestingly, the US SEC approved the Ethereum 2.0 investigation on April 13, 2023, a few days before Chair Gensler appeared before the House Financial Services Committee. Notably, Gensler refused to answer the question from committee Chairman Patrick McHenry, on whether the ethereum is a security or not.
Market Picture
With a few weeks to the final decision on the spot Ether ETFs, market experts believe the US SEC will most likely reject its listing and trading. However, there is hope for the Ethereum community as the court could compel the agency to relook into the spot ETF applications from a similar angle as the Ether futures ETP.
Furthermore, the approval of the spot Bitcoin ETFs earlier this year was heavily influenced by the outcomes of the SEC vs Grayscale Investment’s case.
Meanwhile, Ethereum price has continued to struggle to rally towards the all-time high. From a technical standpoint, Ethereum’s price must defend the support level around $3,170 to avoid a capitulation towards $2,700.
