The U.S. Securities and Exchange Commission (SEC) has ended its investigation into Ethereum 2.0 after a legal challenge from Consensys, filed in April 2024, aimed at defending Ethereum’s status as a commodity.
In 2018, the SEC declared that Ether was not a security. However, in 2023, the SEC revised its position, claiming regulatory authority over Ether as a security and initiating an investigation into Ethereum. In response, Consensys filed a lawsuit on April 25, 2024, seeking to halt the investigation, arguing that Ether is a commodity and thus outside the SEC’s jurisdiction.
This legal move garnered significant support from policymakers, including members of Congress, and the public, who voiced concerns over the SEC’s approach. On June 7, 2024, Consensys urged the SEC to clarify that the approval of ETH ETFs in May 2024, which recognized Ether as a commodity, should conclude the Ethereum 2.0 investigation.
The SEC’s Enforcement Division has now informed Consensys that it will close its investigation into Ethereum 2.0 and will not pursue enforcement action. Consensys welcomed the SEC’s decision but emphasized the need for more consistent and clear regulations for the U.S. crypto industry. They criticized the SEC’s regulation-by-enforcement approach and called for well-defined guidelines to support technological innovation.
In its lawsuit, Consensys also sought a federal court ruling affirming that their MetaMask Swaps and Staking services do not constitute acting as a broker or issuing securities. They argued that companies should not have to endure costly litigation to determine lawful operations, stressing their commitment to developing software that fosters global use and innovation on the Ethereum network without the burden of unjust enforcement actions.
Consensys hopes this decision marks the beginning of a more transparent regulatory framework for the entire crypto sector, ensuring that technological advancements can thrive without unnecessary legal obstacles.