- The SEC’s investigation into Ethereum as a security may result in more stringent rules and have an impact on U.S. trade.
- Although Ethereum’s decentralized structure makes compliance more difficult, its classification may have an impact on investor perception and ETF prospects.
Currently, the SEC is considering a significant reassessment that may result in Ethereum (ETH) being reclassified so that it more closely resembles a security than a commodity. This prospective move would substantially influence Ethereum’s legal situation in the US and is consistent with the SEC’s XRP position.
BREAKING: SEC is investigating the Ethereum Foundation and wants to define Ethereum as a security.
Yeah, nobody saw that coming… 🤨 pic.twitter.com/qT0xKlCuSl
— Radar🚨 (@RadarHits) March 20, 2024
What if ETH Becomes a Security?
If Ethereum becomes a security, institutional and ordinary investors may be affected. This might lead to tougher regulatory supervision, additional compliance requirements, and changes to US Ethereum trading.
The decentralized structure of Ethereum makes prospective securities regulations more difficult to apply. Ethereum’s activities and trading may continue unhindered outside of the United States due to the worldwide accessibility of blockchain technology.
This raises questions over the efficacy of such regulatory efforts and the potential for American traders to find alternative trading platforms.
As a result of the confusion around Ethereum’s regulatory status, there have already been notable price fluctuations. The market position of Ethereum may become unstable due to sell-offs caused by investor reluctance stoked by unclear regulations.
This regulatory shadow overshadows Ethereum’s recent favorable market trends, in stark contrast to its current regulatory issues.
Ethereum ETF Prospects Dimmed
As previously reported by ETHNews, the ongoing regulatory changes will make it more difficult to approve ETF proposals from significant companies like VanEck and may also jeopardize Ethereum’s chances of becoming a spot ETF.
The potential impediment to the expansion of ETF adoption in the cryptocurrency market is the reclassification of Ethereum as a security, which presents a considerable obstacle to the advancement of ETF integration within the ecosystem.
Meanwhile, the price of ETH had climbed 11.22% in the last 24 hours, going to $3,583.82. But, this represents a drop of 10% over the past 7 days.