After stating in 2018 that Ether is not a security, the SEC changed its stance in 2023, asserting authority over Ether as a security and launching an unwarranted investigation into Ethereum. On April 25, 2024, Consensys filed a lawsuit against the SEC to protect the Ethereum ecosystem, requesting a court order to halt the investigation on the basis that ETH is a commodity, thus outside the SEC's regulatory jurisdiction.
Following this legal action, many policymakers—including members of Congress—and the public expressed their concerns about the SEC’s Ethereum 2.0 investigation. On 7 June 2024, Consensys asked the SEC to confirm that the ETH ETF approvals in May 2024, which were based on Ether being a commodity, would lead to the closure of its Ethereum 2.0 investigation.
Now, the Enforcement Division of the SEC responded by notifying Consensys that it is closing its investigation into Ethereum 2.0 and will not pursue an enforcement action against them.
While Consensys appreciated the SEC's decision to drop the Ethereum investigation, they emphasise that more needs to be done to protect the crypto industry in the US. The SEC must move away from its inconsistent and unclear regulation-by-enforcement approach and instead provide clear guidelines for an industry crucial to numerous technological advancements. Consensys's lawsuit also seeks a federal court ruling that their MetaMask Swaps and Staking services do not involve acting as a broker or issuing securities.
No company or individual should have to endure costly litigation to determine what is lawful. In their lawsuit, Consensys stated, ‘Our company is dedicated to developing software that enables global use and innovation on the Ethereum network. They should be able to operate without the expense, burden, and uncertainty of an unjust enforcement action.’ This principle applies to the entire crypto sector. Consensys hopes that this outcome signals the start of a new, clearer regulatory path.
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