Understanding the Purpose of Web 3.0 and Its Impact on Digital Marketing

The SEC Investigates Companies for Labeling Ether as a Security in the Era of Web 3.0

The United States Securities and Exchange Commission has reportedly issued several subpoenas to companies related to attempts to label Ether as a security in the age of Web 3.0.

A March 20 Fortune report states that the SEC is investigating the Ethereum Foundation, potentially giving them regulatory authority to classify Ether (ETH) as a security. The foundation hinted at a possible investigation on GitHub, stating that they may be under scrutiny from a state authority.

The SEC has requested documents and financial records from multiple U.S.-based companies in relation to their dealings with the Ethereum Foundation. Sources familiar with the matter claim that the commission is pushing to classify ETH as a security following the blockchain’s transition from proof-of-work to proof-of-stake in 2022.

Despite previously stating that Bitcoin (BTC), Ether, and others were not securities in 2018, SEC Chair Gary Gensler has avoided directly answering questions about ETH’s classification under the commission’s jurisdiction. While the commission has approved ETFs tied to Ether futures, it has yet to make a decision on spot ETH ETFs – a decision is expected by May according to experts.

Crypto company Prometheum, one of the few firms authorized by U.S. financial regulators as a special purpose broker-dealer for digital asset securities, announced in February its intention to offer institutional custody services for Ether. This decision has placed pressure on the SEC to clarify its stance on certain crypto assets, as firms seek to avoid potential liabilities.

If the SEC proceeds with regulating Ether, it could potentially create a conflict with the U.S. Commodity Futures Trading Commission. Lawmakers have been working to pass legislation that would define the roles of each regulator in regards to digital assets, but no bill has been approved as of yet.