“Crypto” – Ethereum ETFs May Have Ended the SEC’s War on Crypto#1

Introduction

The approval of spot Ethereum ETFs by the United States Securities and Exchange Commission (SEC) may have significantly impacted the SEC’s legal stance against cryptocurrencies. Attorney Carlo D’Angelo explains the implications of this decision.

About the Author

Carlo D’Angelo is a lawyer, former law professor, and a fan of crypto and NFTs. He advises clients on blockchain technology law and hosts the Lex Line podcast, which focuses on crypto and blockchain law. The views in this article are his own and not necessarily those of Decrypt.

Approval of Ethereum ETFs

In May, the SEC approved spot Ethereum ETFs, marking a significant moment for crypto policy. This approval could weaken the SEC’s ongoing efforts to regulate cryptocurrencies strictly.

Key Points:

• Bipartisan Support: Before the approval, a group of House of Representatives members sent a letter to SEC Chair Gary Gensler. They urged the SEC to approve the Ethereum ETFs and consider other digital asset ETFs in the future.
• Public Announcement: The SEC eventually announced the approval of eight spot Ethereum ETF applications on a Thursday.

Implications of the Approval

Paul Grewal, Chief Legal Officer at Coinbase, stated that the approval of spot ETFs suggests that Ethereum (ETH) is considered a commodity. If ETH is indeed a commodity, it would fall under the Commodity Futures Trading Commission (CFTC) rather than the SEC.

Key Distinctions:

• SEC’s Role: The SEC regulates securities and aims to protect investors.
• CFTC’s Role: The CFTC oversees commodities like raw materials and agricultural goods, focusing on preventing market manipulation and fraud.
• Regulatory Differences: The CFTC’s regulations are generally less strict compared to the SEC’s rules for securities.

Conclusion

The SEC’s approval of spot Ethereum ETFs could mark a turning point in regulating cryptocurrencies, potentially shifting the oversight from the SEC to the CFTC. This change could lead to a less stringent regulatory environment for Ethereum and other digital assets.

References

• Carlo D’Angelo’s insights on the implications of the SEC’s decision
• Paul Grewal’s assessment of Ethereum’s classification as a commodity

By understanding these points, we can better grasp the potential shift in regulatory oversight for cryptocurrencies following the SEC’s approval of spot Ethereum ETFs.

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