- The SEC’s classification implied ETH is a commodity, not a security.
- ETH ETF approval conditions show how crypt assets can transition over time.
- Crypto assets founders can rest easier knowing their classifications could change.
The ETF Store president Nate Geraci has spotted a critical point included in a document describing how the SEC classified ETH while approving the spot Ethereum ETF. In a recent post on X, Geraci highlighted portions of a document shared by the Foley and Lardner law firm, showing the SEC implied ETH is a commodity, not a security.
Geraci also highlighted a portion of the document where the law firm stated that the SEC’s ETH ETF approval order demonstrates crypto assets can start life as securities and transition to commodities over time.
Notably, Foley and Lardner considered the SEC’s latest ETH classification the most crucial aspect of the ETH ETF approval order. According to the law firm, the SEC approved the applications under the rule for commodity-based trust shares, noting that none of the sponsors filed applications under the Investment Act of 1940, which is required for ETFs that trade securities.
Meanwhile, Foley and Lardner also spotted that the SEC only cited court precedents that involved commodities and not securities to support their approval of the applications. However, the approval order only covers ETH ETFs, not any other single-crypto-asset or multi-asset-crypto-fund.
Foley and Lardner acknowledged the SEC’s approval of two crypto ETFs as a shift in the political and regulatory landscape regarding crypto assets. According to the firm, the crypto community’s focus would shift to which cryptocurrency asset would be the next to gain ETF approval from the SEC, even if the regulator treats most cryptos as securities.
By the SEC’s ETH classification as a commodity, the law firm believes Ethereum’s founders and the founders of many other crypto assets can rest easier knowing their assets are or can become so decentralized that the SEC cannot classify them as securities.
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