eToro Settlement Fuels Speculation That SEC Has Clarified Ethereum Is Not a Security

Updated: 13 September 2024

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A US Securities and Exchange Commission (SEC) settlement with eToro is fueling speculation that the regulator has clarified that Ethereum is not a security.

The settlement, which required eToro to delist most tokens except Bitcoin, Bitcoin Cash, and Ethereum, is seen by some industry leaders as an implicit acknowledgment by the SEC that ETH is not a security.

“They just conceded ETH is not offered as an investment contract security in secondary markets,” said Coinbase’s chief legal officer Paul Grewal in a Sept. 12 post on X. ”But @SECGov will not explain why ETH and BTC but no others–because they can’t.”

They just conceded ETH is not offered as an investment contract security in secondary markets. But @SECGov will not explain why ETH and BTC but no others–because they can't. There is no plan, no framework, no logic, no due process, and certainly no respect for the law. pic.twitter.com/NNzaOtL6wR

— paulgrewal.eth (@iampaulgrewal) September 12, 2024

Metalpha Sends Millions Of ETH To Binance After eToro Settlement

Metalpha, a Hong Kong digital asset manager, sent sending $16.4 million worth of Ethereum to Binance after the settlement, as confidence around ETH’s regulatory standing appeared to strengthen in the wake of the settlement.

Metalpha deposited 6,999 ETH to Binance in the last 24 hours, the blockchain tracking platform Lookonchain said in a Sept. 12 X post.

Following this latest transfer, the asset manager has deposited a total of 62,588 ETH valued at $145.1 million to the crypto exchange over the past 6 days. Metalpha still holds 23.5K ETH worth $55 million, Lookonchain added.

The Ethereum price initially rose on news of the settlement, but is trading down 0.37% at $2,348 as of 3.58 a.m. EST.

SEC Lambasted For Not Having A Plan In Place To Regulate Crypto

eToro agreed to settle charges with the SEC on Sept. 12 relating to allegations that it operated as an unregistered broker and facilitated trading in some crypto assets that are considered as securities.

The fact eToro wasn’t required to delist Ethereum, Bitcoin or Bitcoin Cash prompted Coinbase’s Grewal criticize the SEC for not explaining why ETH and BTC are not securities. The agency has “no respect for the law,” he said, and has no plan or framework in place to regulate the crypto sector.

So the SEC finally admits that 1/ "crypto asset security" is a made up term and 2/ to prove a "crypto asset security" is an investment contract, the SEC needs evidence of a bundle of "contracts, expectations, and understandings"?

Think it's time for @SECgov to admit it has… https://t.co/iJIYTnNvxs pic.twitter.com/E58Pft7irc

— Stuart Alderoty (@s_alderoty) September 13, 2024

Ripple’s chief legal officer Stuart Alderoty also criticized the SEC for its approach to regulating the crypto space. He called the agency “a twisted pretzel of contradiction” after the agency said that “crypto asset security” is a made up term.