United States SEC Drops Case Into The Ethereum 2.0

The United States Securities and Exchange Commission (SEC) has concluded its investigation into Consensys, the blockchain technology company driving major improvements in the Ethereum ecosystem. For Ethereum and its community, the conclusion of this probe is a significant milestone since it removes regulatory doubts that have dogged the project for months.

Early in 2023, the SEC started looking into Consensys to determine whether the company’s move to Ethereum 2.0 and related operations comply with US securities laws. The SEC, through Its Enforcement Division, has given its feedback, notifying the public that it is officially closing the investigation into the Ethereum 2.0 case.

The statement also revealed that the SEC’s regulatory position on cryptocurrencies still stands. Ethereum 2.0, commonly called Eth2, is a significant update to the Ethereum network that replaces the Proof of Work (PoW) consensus method with a Proof of Stake (PoS) mechanism. The investigation was a component of the SEC’s larger examination of the cryptocurrency industry, specifically focusing on whether certain digital assets and activities qualify as securities.

Consensys Founder Speaks, Appreciates SEC, Says Action Reassuring

Consensys CEO and co-founder Joseph Lubin, a prominent member of the Ethereum community, thanked the SEC for a comprehensive and impartial inquiry. Lubin declared, “This is a historic time for Ethereum, Consensys, and the entire blockchain ecosystem. The SEC’s ruling “reaffirms our commitment to innovation, compliance, and transparency.”

 Lubin went further to assure its clients that the company is excited to keep working on Ethereum 2.0 and other initiatives that stretch the limits of decentralized technology. The announcement was also well received by the Ethereum community.

The statement also stated that it is important that the SEC drop all its unsolicited and strict laws on cryptocurrency, which are accompanied by opaque enforcement. The industry has complained that such a move isn’t fair to the industry, which has grown to become the pillar of numerous modern innovative technologies and business ideas.

SEC Latest Decision Sets The Space In Cryptocurrency Operations 

Consensys and the Ethereum community are poised to accelerate the rollout of Ethereum 2.0’s phases, including integrating shard chains and further advancements in scalability and functionality.  Ethereum 2.0 is anticipated to bring significant improvements to the network, including faster transaction speeds, lower fees, and enhanced security.

These upgrades are crucial for Ethereum to maintain its position as the leading platform for dApps and smart contracts. Two main topics being examined were Consensys’s Initial Coin Offers (ICOs) and the rewards given to Ethereum 2.0 validators for staking. 

The SEC formally concluded its investigation of Consensys on June 18, 2024, and no enforcement action was taken. The SEC stated in its statement that following a careful investigation, it has not discovered any indications of any violations of securities laws about the creation and use of Ethereum 2.0.

Consensys Releases Statement, Demand For More Smooth Regulations By SEC

Consensys, in reaction, has disclosed that there’s a reason to worry, especially as it concerns SEC’s cryptocurrency guidelines despite the official closure of the case. The company further explained that it has been in constant dispute to protect the Ethereum cryptocurrency industry even after being tagged a non-security in 2018.

The decision later called for further review instead of judicial popular opinion.  Consensys’s statement also stated that while the company is excited about the SEC’s intentions to drop the case on Ethereum, a lot of work needs to be done to protect the United States cryptocurrency industry.

Ripple Labs and Coinbase have been at the forefront of speaking out against (what they’d termed) cruel cryptocurrency industry regulations. However, the industry, on its side, has continued to counter the commission from all angles fiercely.

Meanwhile, Consensys also owns MetaMask: the popular Web3 cryptocurrency wallet service provider.  MetaMask was said to have counter-sued SEC in April explaining that the commission’s chairman, Gary Gensler was deploying illegitimate methods to dominate the cryptocurrency industry and change ETH from a none security to a security token.