In a thought-provoking move that has captured the attention of the crypto community, David Schwartz, the Chief Technology Officer (CTO) of Ripple, has asked the U.S. Securities and Exchange Commission (SEC) a crucial question about the securities status of Ethereum (ETH) sales on exchanges.
This inquiry into Ethereum’s security status comes at a pivotal time, as the SEC is currently embroiled in an ongoing legal battle with Ripple over the sales of XRP as a security.
Awesome. Does the SEC think people selling ETH on exchanges are selling securities? I'd like to hear from the best source. https://t.co/Mvgaa9DgUH
— David "JoelKatz" Schwartz (@JoelKatz) October 17, 2023
While the SEC has yet to provide a response to Schwartz’s inquiry, his query is expected to generate debate and speculation within the crypto community.
Some industry observers see this move as a direct challenge to the SEC, which has faced allegations of favoring Ethereum. While others perceive it as a genuine attempt by Schwartz to seek clarity on a complex and contentious issue.
Ethereum’s relationship with the SEC has been dynamic and multifaceted. In 2018, William Hinman, the former Director of Corporation Finance at the SEC, asserted that Bitcoin (BTC) and Ethereum (ETH) did not possess the characteristics of traditional securities.
However, the SEC has since adopted a more cautious approach to crypto regulation, which has raised concerns and questions surrounding the SEC’s stance on Ethereum.
The SEC’s legal action against Ripple, filed in December 2020, alleges that the company’s sales of XRP constituted an unregistered securities offering. This ongoing lawsuit has heightened scrutiny surrounding the SEC’s regulatory approach to cryptocurrencies.
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Crypto Community’s Response
The response from the crypto community to Schwartz’s inquiry has been mixed. While some have commended him for his daring move, others have expressed reservations, fearing that it might further strain Ripple’s relationship with the SEC.
An example of the community’s reaction can be observed from a social media post by Tony Edward, the host of the Thinking Crypto podcast. Edward shared a gif humorously suggesting that SEC Chair Gary Gensler would prefer to avoid addressing questions related to Ethereum, symbolizing the perception of the SEC’s favoritism towards the cryptocurrency.
Fred Rispoli, a lawyer backing Ripple and XRP, also weighed in on Schwartz’s inquiry, stating that the SEC’s bias towards Ethereum is evident and concerning.
In conclusion, Schwartz’s recent inquiry presents a significant and timely question to the SEC. The outcome of the SEC’s case against Ripple holds substantial implications for the entire crypto industry.