SEC Omits Ether From Securities List in eToro Settlement

Recently, trading platform eToro has come to a settlement with the US Securities and Exchange Commission.

The SEC declared on Thursday that eToro “has agreed to pay $1.5 million to resolve allegations that it functioned as an unregistered broker and clearing agency regarding its trading platform that enabled the buying and selling of certain crypto assets as securities.”

Additionally, eToro has consented to discontinue trading for all cryptocurrencies except Bitcoin, Bitcoin Cash, and Ether.

“By eliminating tokens offered as investment contracts from its platform, eToro has opted to adhere to compliance standards and operate within our established regulatory framework,” stated Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

This settlement might offer further understanding of the SEC’s perspective on cryptocurrencies. It strengthens the interpretation of Ether as a commodity rather than a security, a crucial question in the US policy surrounding cryptocurrency regulation.

The SEC, which oversees much of Wall Street’s trading, has adopted varying viewpoints on different cryptocurrencies. The Commodities Futures Trading Commission (CFTC) also maintains that cryptocurrencies can be either securities or commodities.

So, if Ether is not a security, what is it?

The ‘ETH is Property’ Argument

According to US tax regulations as defined by the Internal Revenue Service, Ether and most secure digital tokens are categorized as property and are taxed as such.

As a cryptocurrency, Ether can indeed be classified as property under the IRS tax regulations. This is also the stance of Coinbase in its argument against the SEC, positing that cryptocurrencies are like property, similar to baseball cards.

The ‘ETH is Capital, Sort of’ Argument

Another perspective on Ether, which is not contradictory to viewing it as either a commodity or a form of property, is that it represents free speech embodied in software, albeit software that provides something remarkably unique in the history of the Internet.

Ether acts as a self-executing, programmable contract on Ethereum, a decentralized and autonomous peer-to-peer network.

However, it isn’t precisely equivalent to a legal contract, even though the Ethereum platform can indeed facilitate legally-enforceable smart contracts; that could be among its primary functionalities.

Instead, Ether functions as a system composed of numbers and words that can be utilized by your home or business to perform tasks. While it is digital, it resembles a fax machine, telephone, or rolodex. Ethereum serves as a tool that can enhance its users’ productive capabilities.