The SEC Concludes Investigation into ‘Ethereum 2.0’ without Taking Action against Consensys
The SEC has closed its investigation into ‘Ethereum 2.0’ without taking legal action against Consensys, the company announced.
Detailed Decision of the SEC
Consensys, the developer of the MetaMask wallet and other Ethereum-related products, received letters from the SEC stating that the regulatory body does not recommend enforcement action after the conclusion of its investigation. These letters, sent to its law firms on Tuesday, referenced ‘Re: In the Matter of Ethereum 2.0 (C-08950)’ but did not explicitly mention the blockchain associated with the second largest cryptocurrency by market capitalization.
One of the letters stated:
We have concluded the investigation into the above-referenced matter. Based on the information we have at this time, we do not intend to recommend enforcement action by the Commission against your client, Consensys Software Inc.
Reactions and Implications for Consensys and Ethereum
The news of the investigation’s conclusion has led to an increase in the price of ETH. In a blog post, Consensys confirmed that the SEC was ‘ending its investigation into Ethereum 2.0.’ However, the SEC clarified that the conclusion of the investigation does not guarantee that there will never be enforcement action in the future.
The letter also stated that while an investigation is concluded, it does not mean that the entity in question is exempt or that no action may result from the SEC staff’s investigation into this particular matter. The Commission has instructed its staff to be able to inform a person under investigation that their formal investigation has concluded, but this action is at the discretion of the staff for the reasons stated.
Legal and Historical Context
The second letter sent by the SEC reiterated the conclusion of the investigation while noting that it does not endorse any factual statements or legal conclusions expressed by Consensys lawyers in a letter sent to the regulator. This Consensys letter sought clarification on the status of ETH as a security in relation to the SEC’s approval of certain Ethereum spot ETF requests.
Consensys had sued the SEC in April, alleging that the regulator was investigating to determine whether Ethereum, after The Merge, could be deemed as a security. This investigation and the subsequent response from the SEC have highlighted the regulatory uncertainties surrounding cryptocurrencies and their technological advancements, such as the transition to Ethereum 2.0.
The SEC’s decision not to pursue Consensys at this time is a significant development for the cryptocurrency industry, marking an important step towards regulatory clarity around Ethereum and its future developments.
