Is Ethereum a Security? SEC Chair Gary Gensler Defers on the Question

SEC Chair Gary Gensler recently declined to comment on whether Ethereum is considered a security by the U.S. Securities and Exchange Commission (SEC). This comes at a time when the SEC is reviewing multiple applications for spot Ethereum exchange-traded funds (ETFs). Gensler emphasized that the classification of crypto tokens as securities is determined by the specific facts and circumstances surrounding them. The SEC’s stance on Ethereum is particularly significant due to the increasing number of applications for a U.S. spot Ethereum ETF. The regulator has repeatedly delayed its decision on these applications, including those from investment firms BlackRock, Fidelity, Invesco, and Galaxy Digital. Bloomberg ETF analyst James Seyffart predicts that the SEC will continue to postpone a decision on Ethereum ETFs until May 23, which coincides with the deadline for applications from VanEck and Ark Invest. Gensler’s cautious approach aligns with the SEC’s preference for prudence when it comes to crypto assets. He has referred to cryptocurrencies as a “highly speculative asset class” and has highlighted the potential risks associated with them. While Gensler’s current position on Ethereum remains unclear, before joining the SEC, he previously expressed the view that Ethereum had become sufficiently decentralized and, therefore, not considered a security.