SEC excludes Ether from securities in eToro case

Trading platform eToro has reached a settlement with the U.S. Securities and Exchange Commission (SEC), agreeing to pay a $1.5 million fine for operating as an unregistered broker and clearing agency. 

The settlement also requires eToro to halt trading for all cryptocurrencies except Bitcoin (CRYPTO:BTC), Bitcoin Cash (CRYPTO:BCH), and Ether (CRYPTO:ETH). 

This move offers a glimpse into the SEC’s evolving stance on cryptocurrencies and how they are regulated.

Gurbir S. Grewal, Director of the SEC's Division of Enforcement, stated, "By removing tokens offered as investment contracts from its platform, eToro has chosen to come into compliance and operate within our established regulatory framework." 

This decision reinforces the notion that Ether, one of the few cryptocurrencies still allowed on the platform, may not be considered a security under current U.S. regulations. 

Instead, it aligns with the view that Ether is more like a commodity or property, a distinction crucial to the legal and financial status of cryptocurrencies in the U.S.

The SEC's treatment of Ether as a non-security is significant, especially as it contrasts with other regulatory views that classify some cryptocurrencies as securities. 

Meanwhile, the Commodities Futures Trading Commission (CFTC) and other agencies also weigh in on how to define and regulate digital assets, adding layers of complexity to the matter.

There are different interpretations of Ether's classification. 

Under U.S. tax law, for example, Ether is treated as property, akin to physical assets like real estate or collectibles. 

Coinbase has also argued that cryptocurrencies should be considered property in its legal tussles with the SEC.

Moreover, some argue that Ether serves as both a form of capital and free speech within the realm of programmable software on the Ethereum network. 

This nuanced view points to Ether’s unique position as both a digital asset and a functional tool that powers decentralized applications and smart contracts.

At the time of reporting, the Ethereum (ETH) price was $2,291.19.