Regulation
Consensys founder believes crypto regulatory hurdles are nearing the finish line
On June 19, the United States Securities and Exchange Commission (SEC) officially ended its investigation into Ethereum 2.0 and no longer filed charges against sales of Ethereum as securities. According to Joseph LubinCanadian-American businessman and founder of ConsenSys, the landmark decision could be a sign that regulatory hurdles may soon ease.
As the SEC clears up the Ethereum case, the cryptocurrency industry is considering easing regulations.
“We hope that the antagonism toward crypto among some U.S. regulators begins to fade and that the nation’s investor protection strategy evolves from current guerrilla tactics,” Lubin shared his thoughts on the SEC’s decision with Eleanor Terrett of FOX Business.
The United States is lagging behind
The closure of the investigation has removed the uncertainty that has weighed on Ethereum in recent months. The move follows the SEC’s recent approval of Ethereum spot ETFs, which suggests the regulator’s softening stance towards cryptocurrencies.
Even if Lubin welcomes this development, he believes that it is “not enough”. According to him, Consensys’ goal is a more structured regulatory system for cryptocurrencies. “There must be a better way to regulate the market than ambushes,” he added. “…we intend to achieve more legal clarity for everyone. »
According to FOX Business, the SEC’s investigation into Ethereum 2.0 (Ethereum in the Proof-of-Stake era) had been ongoing since March 2023 under the leadership of Gurbir Grewal, Director of the SEC’s Enforcement Division.
In late April, Consensys filed a lawsuit against the SEC to defend itself the Ethereum ecosystem and its product, MetaMask. Consensys argued that Ether, Ethereum’s native token, is a commodity, not a security, and that the SEC does not have the legal authority to regulate it as such.
Earlier this month, the entity reportedly sent a letter to the SEC to reiterate its arguments. This time, Consensys used the SEC’s recent approval of Ethereum spot ETFs as an argument and asked the SEC to drop its investigation into Ethereum 2.0.
His effort was crowned with success. However, the company said it would continue its legal action against the Securities Commission to push for clear and fair regulations that protect investors.
The focus is now on MetaMask. Consensys claims that its MetaMask portfolio software does not operate as a broker-dealer and is therefore not subject to SEC regulation.
Ongoing prosecutions
Although the SEC has withdrawn from the investigation into Ethereum, it is unlikely to drop legal action against other cryptocurrency entities. Yesterday, Kraken, another major exchange facing an SEC lawsuit, was in court for its motion to dismiss the SEC’s enforcement action.
The SEC previously alleged that Kraken offered trading in 11 unregistered securities on its platform, including SOL, ADA and ALGO. In February 2024, Kraken filed a motion to dismiss the SEC’s lawsuit, arguing that the cryptocurrencies involved are not securities and that the SEC is exceeding its jurisdiction.
According to the latest developments, a US judge is unlikely to dismiss a lawsuit filed by the SEC against Kraken. The judge is skeptical of Kraken’s arguments, citing a similar SEC case against Coinbase that was not dismissed.
In addition to Kraken and Consensys, the SEC filed lawsuits against Coinbase and Binance last year. The main argument is the same; the commission claimed that these exchanges operated in the United States as unregistered securities exchanges, broker-dealers, and clearing agencies.
The SEC says most cryptocurrencies should be classified as securities, with Bitcoin being a notable exception. SEC Chairman Gary Gensler said the agency will continue to take enforcement action against companies that fail to register their digital assets.
The crypto industry has criticized the SEC’s approach, calling it an overreach of authority. Supporters and industry figures, including Coinbase CEO Brian Armstrong, say the SEC lacks the legal authority to regulate cryptocurrencies and that the agency’s actions will stifle innovation and will stimulate businesses abroad.