The United States Securities and Exchange Commission (SEC) has raised eyebrows in the cryptocurrency industry by issuing multiple subpoenas to entities linked with the Ethereum Foundation. This move has triggered speculation about a potential reclassification of Ether (ETH) as a security.
Concerns have been voiced within the cryptocurrency community, with some interpreting the SEC's actions as a coordinated attack on Ethereum. Industry leaders fear this move could serve as a pretext to delay or reject applications for spot Ether exchange-traded funds (ETFs), further exacerbating regulatory uncertainty.
Notable figures in the cryptocurrency space, including Paul Grewal, Coinbase's Chief Legal Officer, and Travis Kling, Chief Investment Officer of Ikigai Asset Management, have criticized the SEC's actions. They argue that the SEC lacks a solid basis to reject applications for ETH Exchange Traded Products (ETPs), citing past statements from SEC Chair Gary Gensler affirming Ether's non-security status.
The SEC's probe into Ethereum has dampened expectations for the approval of spot Ether ETFs, with analysts revising their forecasts downward. Regulatory delays have prompted analysts to lower the likelihood of ETF approval by May, casting doubt on the prospects of major financial firms awaiting SEC decisions.
The debate surrounding Ether's classification has been complicated by Ethereum's transition to a proof-of-stake consensus mechanism. While some suggest this transition might influence the SEC's stance, others argue that the SEC had already considered this change before approving Ether futures ETFs.