SEC Investigates Ethereum’s Security Designation With Crypto Exchanges

SEC has taken the first step to converse with various US companies to classify Ethereum as a Security.
By Ezra Icy
Updated: 28 May, 2025 | 05:35:17 AM GMT
SEC Investigates Ethereum's Security Designation With Crypto Exchanges

A Fortune report on the 20th of March revealed the ongoing investigation by the SEC (United States Securities and Exchange Commission) into the Ethereum foundation to conclude Ethereum as a Security. According to the Cointelegraph news, the foundation had presented some indirect indication for a disclosed investigation. 

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SEC Targets US-Based Companies

SEC has connected with three prominent US-based companies to collect documents and financial records against the Ethereum foundation to classify Ethereum as Security. This information is made public by many well-known personalities in the industry. The interaction with these companies is said to be a part of the campaign to declare Ethereum as security.

An anonymous office employee has confirmed that the investigation had begun briefly after the merge happened in 2022. Back then Ethereum shifted from Proof-of-Work to Proof-of-Stake. 

Gary Gensler, the SEC head, failed to answer the question on the classification of Ethereum. There’s no clear answer from the SEC on Ethereum as to whether it’s a Security or Commodity. It is one of the factors delaying Ethereum Spot ETF approval.

Also Read: Ethereum Price is Up 12%; Why is ETH Price Rising Today?

In a 2018 statement, Gary made a statement classifying Bitcoin, Ethereum, and others as “Not securities” but has now changed it to the statement without a definitive answer. 

SEC’s Stance On Ethereum ETF

The probability of Spot ETH ETF approval is reducing over time. Last month, the analyst’s prediction guaranteed a 50% chance of approval by the SEC in May. But by the previous week’s analysis, that has changed to less than 35% chances.

The delay in this decision is associated with Gary Gensler’s unclear decision about Ethereum being a security or commodity. The silence over this topic points towards the negative news for the Ethereum supporters. 

Despite all this confusion, the ETF tied to ETH futures has been approved by the commission, but the approval for Spot Ethereum ETFs has been on hold for months. The final response on that has been shifted to May now.

This SEC behavior is despised among the crypto community and by the United States Representative French Hill. During testimony on Wednesday, Congressman French Hill (R-LA) alleged that the SEC, under Gensler’s guidance, had “blatantly and repeatedly” exceeded “its statutory authority.”

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Final Thoughts

The ongoing drama with SEC over the Ethereum Spot ETF looks more severe over time with the chance of rejection of the ETF. The analysts have also talked of the same where earlier it was called to be a done deal because of the popularity of Bitcoin Spot ETF, but with the continuous delays, the expectation has been lowered. The new date for the ruling on Spot ETH ETF is said to be in May. All we can do is wait to see how the SEC decision will roll out at that time. 

Read more about Bitcoin Price Bounce Back With Fed Meeting: Will Crypto Market Recover?

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Ezra Icy
Ezra Icy, the creative wizard from Phoenix, Arizona, specializes in crafting magnetic content for Web3 brands. In the digital realm, he doesn't just connect users; he orchestrates a symphony of community and human bonds. Connect with Ezra in transforming pixels into unforgettable moments and turning the virtual landscape into a warm, welcoming oasis of connection only at [email protected]
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