The political landscape might influence how the United States Securities and Exchange Commission (SEC) handles crypto-related policies in the lead-up to the 2024 election, according to Consensys’ senior counsel.
Speaking to Cointelegraph at the Consensus conference in Austin on May 29, Consensys senior counsel and director of global regulatory matters Bill Hughes said it was still unclear whether the changing political and regulatory landscape in the U.S. could affect the firm’s lawsuit against the SEC over Ether (ETH). In the last 30 days, lawmakers have advanced legislation calling for regulatory clarity at the SEC. The commission has approved the spot for Ether exchange-traded funds for the first time, and digital assets have been part of both major party presidential candidates’ actions before the election.
“What impact this has on the investigations [the SEC has] open, their theories as to what is or is not a securities offering in their view, has yet to be seen,” said Hughes, referring to the approval of spot Ether ETFs. “We think it’s a fundamentally positive development and a development that shouldn’t have been controversial whatsoever.”
In April, Consensys filed a lawsuit against the SEC and its five commissioners in Texas over claims they planned “to regulate ETH as a security.” The company said th it received a Wells notice from the commission, warning of potential enforcement actions related to its MetaMask Swaps and MetaMask Staking products.
However, the lawsuit came before the SEC approved 19b-4 filings for several asset managers seeking to list and trade spot Ether ETFs on U.S. exchanges, suggesting the commission largely recognized ETH as a commodity. Consensys filings included statements from SEC Chair Gary Gensler and the commission’s enforcement division head Gurbir Grewal, who approved a formal investigation into Ether as a security.
“The political landscape is shifting, and the full impact of that on the commission’s decisions and on the work of the staff has yet to be seen,” said Hughes. “What the chair and his two Democratic colleagues might now be thinking that they weren’t two weeks ago is really the question.”
The Consensys counsel speculated on the SEC’s actions:
“I don’t expect a wave of proposed rulemakings like the industry has suggested for years now. [Approving spot Ether ETFs] may be the only thing that they do which is considered less antagonistic to crypto than they’ve normally been doing.”
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Lawmakers in the U.S. Senate will likely consider the Financial Innovation and Technology for the 21st Century Act, or FIT21, within a year of it passing through the House of Representatives. The bill would clarify the SEC’s role over digital assets, offering the Commodity Futures Trading Commission a path to regulate many tokens as commodities.
“It was always our belief that the politics — maybe not external from the SEC but inside the SEC — was fueling a decision to dictate certain policy choices,” said Hughes. “But if there are external pressures for particular policy approaches that are impacting decision-makers at the SEC [...] how else it’s going to filter down in the different divisions has yet to be seen.”
On June 5, Chair Gensler suggested that the SEC would “take some time” greenlighting the S-1 registration statements from asset managers applying for spot Ether ETFs — the final step before exchanges could list and trade the investment vehicles. ETF analyst Eric Balchunas predicted a July 4 launch date for spot Ether ETFs in the United States.
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