Today, the SEC and CFTC (Commodities and Futures Trading Commission) will discuss whether Ethereum, the cryptosphere’s second largest currency by market cap and third largest by daily volume is a security or not.
Ethereum was never registered as a security from the outset and if a ruling by the SEC and CFTC concludes that it is indeed a security, then the Ethereum Foundation could face heavy fines and cryptocurrency exchanges operating in the United States would have to cease trading until they themselves registered with the SEC. In this event we would likely witness a severe and aggressive sell off.
On the contrary, if the ruling finds that Ethereum is a currency or a commodity (as previously referred to by US District Judge Jack Weinstein), then we could see a huge surge in the price.
It is unlikely that a ruling will be given today and it may fill investors with confidence to know that Ethereum has already passed the Howey test, albeit informally.
Investors should also consider that Ethereum already has this regulatory uncertainty baked into the price – we would likely have witnessed an unpleasant sell off in the lead up to these proceedings but this did not transpire.
Lastly, Ethereum co-founder Joseph Lubin has been locked in conversations with lawyers over the past week and has assured the public that he is “comfortable that it (Ethereum) is not a security”. Whatever happens, it is important to remember that Ethereum and all cryptocurrency is borderless and cannot be stopped by the SEC, the CFTC or any other regulatory body.
Yes, it would be an unfortunate result if Ethereum was deemed as a security but over the long-term trajectory, we would classify the ruling as a mere hindrance.