SEC Legal Campaign Against Ethereum is Likely to Fail Says A16z

Joshua Ramos
Ethereum Upgrade Causes Withdrawal Delays for Crypto Investors
Source: Business Today

With news arriving yesterday that the US Securities and Exchange Commission (SEC) enacted a legal campaign against Ethereum, Andreessen Horowitz (A16z) has predicted the effort to fail. Specifically, the venture capital firm’s Global Head of Policy, Brian Quintenz, noted that ETH’s status as a non-security would ultimately prove the probe to fail.

The Ethereum Foundation, the Swiss-based non-profit that supports the network, was revealed to be facing a government inquiry yesterday. Subsequent reports identified the action as part of a concerted effort from the SEC. Altogether, it appears to be an attempt to curtail Spot Ethereum ETF approvals this year.

Also Read: SEC Pursuing Legal Campaign to Classify Ethereum as a Security

A16z Says Ethereum is Not a Security, Expects SEC Campaign to Fail

The last 24 hours have been rather eventful for the Ethereum ecosystem. Specifically, it finds itself as the latest digital asset entity in the crosshairs of the SEC. Following reluctant Spot Bitcoin ETF approvals in January, investors first sought similar Ethereum offerings. In response, the agency has begun its own efforts to alter its security status.

However, The SEC’s legal campaign against Ethereum is likely to fail, according to A16z head of Global Policy Brian Quintenz. Specifically, Quintenz took to X (formerly Twitter) to note that the SEC operated with the understanding that ETH was not a security.

“Reminder: When the SEC allowed ETH Futures ETFs to trade on its regulated security exchanges, it explicitly acknowledged the status of the underlying, ETH, as being a non-security and outside of its jurisdiction,” Quintenzz said.

Also Read: Ripple (XRP) & SEC Reach Agreement in Latest Lawsuit Update

Moreover, he discussed the timing of the efforts. according to reports, the SEC began its investigations when Ethereum transitioned to a proof-of-stake (PoS) governance model, a move that happened in 2022. Yet, Quintenze notes that ETH Futures ETF approval came well after that.

“If the SEC had any doubt about the regulatory treatment of ETH in Oct 2023, it wouldn’t have approved the ETF,” Quintenze said. “If ETH were in fact, a security, then the CFTC-listed futures contracts 9on which the ETFs were based) would be illegal,” he concluded.