US SEC Slammed By Lawmaker Over Misleading Ethereum Security Tag

SEC Chairman Gary Gensler’s insistent categorization of Ethereum (ETH) as security has attracted a comment from American attorney and lawmaker Thomas Emmer. The United States Representative perceives a hint of dishonesty in the lack of a clear stance on the matter.

SEC Accused of Regulatory Dishonesty

According to FOX Business reporter Eleanor Terrett, her conversation with Emmer on the recent court filing from ConsenSys led to the subject of Ethereum categorization. 

Emmer pointed to the fact that the Securities and Exchange Commission (SEC) employed several means to avoid giving a clear answer to Congress on whether ETH is a security or a commodity in 2023. Therefore, it was quite unclear what the exact time frame behind the Commission’s alleged grouping of Ethereum as a security was.

This lack of clarity caused multiple entities to voice their displeasure at the time. Even the CFTC disagreed with the SEC, citing that Ethereum should fall under a commodity like Bitcoin (BTC), 

However, Emmer said that newly released documents claimed the regulator’s enforcement team was very direct in their stance on Ethereum’s security status. It is worth acknowledging that these documents surfaced only a few weeks before the SEC Chair had his congressional testimony where he took a stance as though Ethereum is a security by all standards.

The Majority Whip of the United States House of Representatives described this act from Gensler, SEC, and its enforcement team as “regulatory dishonesty” which should be condemned. Emmer noted that such an act is harmful to investors and even the U.S. leadership.

“it’s tainting our great capital markets, harming investors, and threatening U.S. global leadership,” Emmer said. 

ConsenSys and SEC Ethereum Lawsuit to Focus on Categorization

The SEC categorization of Ethereum as security is believed to be the reason being the delay in receiving approval from the Commission on the numerous spot Ethereum ETF applications that were submitted by BlackRock, Fidelity, and other investment asset management firms. Unfortunately, this led to the newly instigated ConsenSys versus SEC lawsuit.

By March, the SEC received a comment letter from ConsenSys in advocacy for Ethereum ETF approval. The firm emphasized the altcoin’s security features and urged SEC recognition amidst market anticipation. About a month later, the Ethereum developer served the SEC a suit on the same matter in the District Court for the Northern District of Texas.

In the latest court filing, the bone of contention is now to establish the timeframe of when the SEC categorically said ETH was a security. The verdict at the end of this lawsuit is crucial to the crypto ecosystem, seeing that victory for the commission could cripple the entire landscape.