SEC and Gensler believe Ethereum is a security for at least a year

Consensys' lawsuit against the US Securities and Exchange Commission has revealed additional information about the SEC's position on Ethereum (ETH).

According to a report from Fox Business producer Eleanor Terret , the Securities and Exchange Commission (SEC) and its Chairman Gary Gensler believe that Ethereum is a security, at least for a time.

Citing court documents filed April 29 by Ethereum software firm Consensys, Terrett wrote that the SEC and Gensler «appear to have believed for at least a year» that Ether was an «unregistered securities trading not in compliance with applicable federal regulations.»

SEC Chairman Gary Gensler at the U.S. Treasury's Financial Stability Oversight Board meeting on July 28, 2023.. Source: Fox Business

The new information comes days after Consensys filed an unredacted complaint against the SEC in Texas federal court on April 25. The filing was in response to Wells' notice from securities regulators detailing its plans to sue the firm for failure to comply with federal securities laws.

According to the new document, on March 28, 2023, SEC Enforcement Chief Gurbir Grewal approved a formal investigation into Ether's status as a security.

The investigation, known as “Ethereum 2.0,” has reportedly authorized law enforcement officials to investigate and subpoena individuals and entities involved in the buying and selling of cryptocurrency.

Citing anonymous sources with direct knowledge of the matter, Terrett noted that the SEC has instructed recipients of the subpoenas to keep the investigation strictly confidential if they want additional details about the investigation.

The «Ethereum 2.0» investigation was reportedly based on the SEC's belief that potential unregistered offers and sales of Ethereum had been occurring since at least 2018.

If the Gensler SEC deems Ethereum a security, it would contradict the SEC's previous determination under former Chairman Jay Clayton. In June 2018, then-CFO Bill Hinman stated in a speech the SEC's position that Ethereum, along with Bitcoin (BTC), is not a security.

New documents showed that the five-member panel approved the Division of Enforcement's «Ethereum 2.0» investigation on April 13, 2023, just five days before Gensler appeared before the House Financial Services Committee, where he refused to answer repeated questions about whether Ethereum is a security from the SEC's point of view.

The news comes days after applicants and firms involved in a potential U.S. Ether spot exchange-traded fund said the SEC would likely delay a decision in May on whether to approve such a product.

Bloomberg ETF analyst Eric Balchunas believes Gensler's position on Ethereum could influence the decision-making process, as Gensler declined to clarify last year whether Ethereum is a security.