SEC Confirms Ethereum as Non-Security in Settlement with eToro, Signals Shift

• SEC confirms Ethereum’s non-security status, signaling a shift from prior cautious positions and clarifying its regulatory stance.
• eToro agrees to a $1.5 million fine and halts trading in cryptocurrencies flagged as securities, except Bitcoin, Ethereum, and Bitcoin Cash.
• The SEC’s recent decision aligns with the approval of Ethereum ETFs, reinforcing Ethereum’s classification as a decentralized commodity.

The U.S. Securities and Exchange Commission (SEC) has confirmed that it views Ethereum (ETH) as a non-security in its recent settlement with the cryptocurrency trading platform eToro. As part of the agreement, eToro will halt trading in almost all cryptocurrencies except for Ethereum, Bitcoin, and Bitcoin Cash.

EToro to Pay $1.5 Million Fine  

eToro, facing charges of violating Section 15(a) of the Exchange Act, has agreed to pay a $1.5 million fine to resolve the allegations. The SEC accused eToro of acting as a broker, clearing agency, and custodian without proper registration. However, the agency chose not to bring or settle specific charges, focusing instead on the platform’s future compliance.

This settlement marks a significant shift in the SEC’s stance towards Ethereum. The regulatory body previously held a more cautious position, especially under the leadership of SEC Chairman Gary Gensler, who argued that Proof of Stake (PoS) cryptocurrencies, like Ethereum, might qualify as securities. However, this deal signals a change in the SEC’s approach, treating Ethereum as a commodity.

EToro Restricts Cryptocurrency Trading

As part of the settlement, eToro has agreed to stop offering trades in Dash (DAH), Algorand (ALGO), and other assets previously flagged as securities by the SEC. The Israeli investment platform also faced similar scrutiny from Australian regulators over its leveraged derivative contracts.

The SEC’s decision aligns with its recent approval of spot Ether ETFs, which strengthened the case for Ethereum being treated as a commodity. Applicants removed Ethereum staking clauses from their filings to avoid security classifications, signaling that staking may not influence Ethereum’s status as a decentralized asset.

Industry Response  

Blockchain software company Consensys, which recently sued the SEC over its inconsistent approach to Ethereum, welcomed the ruling. The company criticized the SEC for its previous ad hoc regulations and emphasized that this decision is crucial for innovation in the crypto industry. Consensys believes Ethereum is, and should be, treated as a decentralized commodity, not a security.