SEC's Determination Casts Shadow Over Ethereum's Future
Recent reports indicate that the SEC remains steadfast in its determination to classify Ethereum as a security, despite the prior approval of Ethereum futures ETFs, potential substantial losses for businesses dealing with the altcoin, and discord with the Commodity Futures Trading Commission (CFTC). A recent development reveals that multiple US companies have been served subpoenas by the SEC, compelling them to disclose details of their interactions with the Ethereum Foundation. Speculation within the crypto community suggests that the Ethereum Foundation itself has received similar demands, evidenced by the removal of specific text from its official website in late February.
Furthermore, the distinctive yellow canary logo, often used by companies to signal the absence of confidential subpoenas, has disappeared from the Ethereum Foundation's branding. Web developer Pablo Pettinari later confirmed the reception of the government agency's letter by the foundation.
For Ethereum investors, these events signal troubling times ahead, potentially leading to Ethereum falling further behind Bitcoin as investors become increasingly aware of the associated risks. Hopes for the introduction of spot Ethereum ETFs in May are dwindling, with approval odds now estimated at less than 30%. The looming security classification is expected to deter most US companies from engaging with Ethereum due to heightened regulatory requirements.
Institutional investors have reacted by increasing outflows from Ethereum ETFs, with a significant $14 million withdrawn last week, a trend likely to continue. The recent success of the Dencun hardfork, aimed at reducing fees in Layer-2 (L2) networks, has been overshadowed by SEC pressure. Despite this, Ethereum's trading volume reached multi-year highs post-L2 implementation.
American investors are pinning their hopes on potential intervention from Congress or the Supreme Court, which could provide clearer distinctions between crypto assets as commodities or securities. Meanwhile, the SEC has yet to establish transparent criteria, instead relying on outdated frameworks like the Howey Test from 1946.