Congressman Challenges Ethereum’s Security Status – SEC’s Mixed Signals Continue

During a recent congressional hearing, Democrat Ritchie Torres argued that Ethereum (ETH) should not be considered a security.

Torres pointed out that, unlike stocks where investors anticipate profits from a company’s management, Ethereum does not fit this model.

Is Ether a security? When you buy Apple stock, it means you’re expecting a profit from the managerial efforts of Apple the company. But when you buy Ether, from whose managerial efforts are you expecting a profit? pic.twitter.com/k8OnzcZplQ

— Rep. Ritchie Torres (@RepRitchie) September 18, 2024

Dan Gallagher, a former SEC commissioner, supported this view, noting that Ethereum lacks a direct corporate counterpart like Apple.

The SEC has recognized Ethereum’s non-security status by allowing eToro to continue trading it alongside Bitcoin and Bitcoin Cash.

However, this decision resulted from a private settlement and does not set a legal precedent. SEC Chair Gary Gensler has avoided public commentary on Ethereum’s classification.

Gallagher, now the chief legal officer at Robinhood, revealed that despite numerous meetings and discussions with the SEC, his company still faced a Wells notice.

He criticized the SEC’s unresponsiveness and its aggressive stance, advocating for clearer regulatory guidelines for digital assets.