Has Ether Been Classified as a "Security"? Ethereum Co-founder: The U.S. SEC "Deliberately" Impedes Approval of Spot ETF

Speaking at the FT Live Crypto and Digital Assets Summit in London, Ethereum co-founder Joseph Lubin asserted that the U.S. Securities and Exchange Commission (SEC) appears to have classified Ether as a security, emphasizing that the regulator is "deliberately" hindering the approval of Ether spot ETFs to prevent Ether from reshaping the banking landscape.

Lubin outlined Consensys's decision to sue the regulator after receiving a Wells Notice from the SEC.

He explained, "The U.S. SEC seems to have reclassified Ether as a security, but hasn't informed anyone about this fact. They're taking a series of strategic enforcement actions rather than engaging in open discussion or clear rulemaking."

As the CEO of Consensys, the developer of the MetaMask wallet, Lubin highlighted that these enforcement actions aim to instill fear, uncertainty, and doubt in the cryptocurrency industry, attempting to "paralyze" and force the company offshore.

Lubin pointed out that considering the Commodity Futures Trading Commission (CFTC) had previously classified Ether, Consensys's counteraction against the SEC aims to provide U.S. courts with clearer information.

He also emphasized that the SEC is set to announce its decision on approving the Ether spot ETF, using this as a catalyst to reinforce its enforcement actions against Ether.

"We believe the purpose of a series of activities is for them to demonstrate that even if they deny the Ether spot ETF, their behavior is not capricious," Lubin continued.

He further mentioned that the SEC noticed the significant inflow of capital into the ecosystem after the approval of the Bitcoin spot ETF.

"I think they're concerned that so much attention and capital will flow into our ecosystem because we're making great strides in scalability and usability."

Lubin speculated that the prospect of banking customers using decentralized finance (DeFi) structures to digitize their assets might frighten many banks and financial institutions.

The SEC's proactive actions could also have far-reaching effects on the U.S. crypto and tech landscape.

Lubin emphasized that the SEC's claim that Coinbase and MetaMask wallets act as broker-dealers sets a dangerous precedent.

He added that the idea of software acting as a broker-dealer is an "absurd notion."

"We disagree on whether MetaMask should be registered as a broker-dealer. If every MetaMask user had to register their wallet as a broker-dealer, it would be chilling," he continued.

Lubin concluded that the entire U.S. tech industry could be affected by the SEC's behavior.