On June 19, 2024, the United States Securities and Exchange Commission (SEC) closed its investigation into whether Ether should be classified as a security.
Consensys lawyer Laura Brookover noted that crypto markets will see “no more protestations from the SEC that ETH is a security.”
However, Carol Goforth, a professor at the University of Arkansas School of Law, clarified to Cointelegraph that “all the decision means is that at this time, the SEC will not be continuing its investigation.
“This is not a final determination.”
Consensys believes the SEC’s withdrawal from its investigation of Ethereum has lifted a significant burden from the network.
The SEC retreat has alleviated negative regulatory concerns regarding ETH as a security, raising questions about how ETH’s price will react and which altcoins might benefit.
Observers anticipate Ether’s price could surge.
Since the SEC stopped its investigation, Ether’s price has remained relatively stable, following a horizontal pattern since the news of spot Ether ETF approval on May 23.
At the time of publishing, Ether is down 2%, prompting traders to wonder if ETH will surge and if the altcoin market will follow.
Conor O’Neill, community lead and partner of investment analytics company Blockcircle, stated that “the major regulatory barrier” for Ethereum has been removed, setting a significant precedent for regulators worldwide.
O’Neill believes the removal of this barrier will likely cause Ether’s price to increase significantly, barring a catastrophic world event.
The expected launch of spot Ether exchange-traded funds (ETFs) on July 2 will impact ETH’s price.
Traditional markets are expected to inject capital into the ETFs, boosting ETH demand and price.
O’Neill explained that the ETH ETF “is highly likely to have a long-term positive impact on the price of Ethereum.”
However, he cautioned about a potential short-term pullback similar to the one seen when Bitcoin ETFs were approved.
ETF issuers cannot offer an Ether ETF with staking, as the SEC alleges that staking involves an investment contract, which could negatively impact ETH’s long-term performance.
Some have questioned whether Grayscale outflows could affect Ether’s price after ETFs launch.
However, O’Neill highlighted that Grayscale’s reduced fees for its Ether trust compared to other Ether ETF providers could mitigate this effect.
O’Neill predicted that ETH will “follow a similar trajectory to Bitcoin’s price, with a dip followed by an exponential rise.”
He noted that many market commentators did not expect Ethereum’s approval, suggesting a potentially bullish scenario for ETH.
When Bitcoin’s price surges, it often lifts the entire crypto market, including altcoins.
The SEC’s decision may benefit other altcoins previously accused of being securities.
O’Neill believes projects like Aave, Chainlink, or layer-2 chains such as Arbitrum, Optimism, or Base could benefit.
However, he noted that many of these projects offer staking capabilities and are not entirely free from SEC scrutiny.
The SEC’s approach could change with the U.S. presidential election approaching, potentially impacting its stance on digital assets and staking.
The approval of spot Ether ETFs and the withdrawal of the SEC’s investigation signal a potential shift in the SEC’s approach, marking a pivotal moment for Ethereum and the broader cryptocurrency market.
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