Efe Nail Saltık 
Lawyers Say Questions Remain on Whether ETH is a Security Despite SEC’s Approval of Ethereum ETFs
The approval of Ethereum ETFs by the U.S. Securities and Exchange Commission (SEC) has sparked debate about whether ether (ETH) is considered a security. Legal experts are divided on the implications of this approval.
The SEC’s jurisdiction over ether has been unclear. SEC Chair Gary Gensler has not definitively stated whether ether is a security. However, a recent complaint by Consensys suggested that the SEC may view ether as a security.
Conversely, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam has labeled ether as a commodity.
Last Thursday, the SEC approved 19b-4 forms for eight Ethereum ETFs, but issuers must have their S-1 registration statements go effective before trading begins. Opinions vary on whether this signifies a shift in the SEC’s stance on ether.
Paul Grewal, Chief Legal Officer at Coinbase, described the SEC’s approval as a pivotal moment in the debate over ether’s status. He criticized the SEC for not clearly stating its position on whether ether is a security or a commodity.
Grewal noted that by requiring the use of the S-1 form, the SEC implies that these funds do not predominantly contain securities, suggesting ether might not be classified as a security.
The SEC did not respond to requests for comment.
Others, such as Coy Garrison, former counsel to SEC Commissioner Hester Peirce, argued that ether must be a commodity following the approval of spot Ethereum ETFs. Garrison highlighted that the SEC’s approval order refers to the funds as “commodity-based trust shares,” indicating that classifying ether as a security would have been inappropriate under current exchange rules. Garrison, now a partner at Steptoe LLP, maintains that this approval aligns ether with commodities.