ETH Security Or Commodity? No Clarity From SEC

The legal status of Ethereum (ETH) has been a source of ongoing debate and uncertainty, with the U.S. Securities and Exchange Commission (SEC) historically providing little in the way of a definitive classification. However, recent events and statements from SEC officials have offered some clarity, though a formal, final ruling has yet to be made.

The SEC’s Evolving Stance

For a long time, the SEC’s position on Ethereum was ambiguous, particularly under the chairmanship of Gary Gensler. Gensler repeatedly avoided answering direct questions from lawmakers about whether he considered ETH a security or a commodity. This stance created a “regulatory never-never land” for the cryptocurrency, which was regulated as a commodity by the Commodity Futures Trading Commission (CFTC), but was also subject to informal investigations by the SEC.

However, a major turning point occurred in mid-2024. In June of that year, the SEC ended its investigation into “Ethereum 2.0,” a move that was seen as a major win for the crypto industry. The decision to close the investigation came after Consensys, a major Ethereum developer, argued that the SEC’s recent approval of spot Ethereum ETFs implied that ETH was a commodity, not a security.

This was followed by an even more significant development in July 2025. SEC Chairman Paul Atkins (who succeeded Gensler) stated in an interview that the SEC “informally” considers Ethereum to be a commodity, placing it in the same category as Bitcoin. He made it clear that while this view is not a formal rule-making, it represents the commission’s current position.

What This Means for Ethereum

While the SEC has not yet issued a formal, final ruling, the recent statements and actions have a number of key implications:

A “De Facto” Commodity Status: For all practical purposes, the SEC’s position now aligns with the CFTC’s view that ETH is a commodity. This has provided a much-needed sense of relief and clarity for investors and developers.

The Howey Test: The SEC’s previous reluctance to classify ETH was largely based on the “Howey Test,” which is used to determine if an asset is an investment contract (and thus a security). The argument was that Ethereum’s transition to a Proof-of-Stake mechanism could make it more “security-like.” By ending its investigation and now informally classifying ETH as a commodity, the SEC appears to have decided that the network’s decentralized nature outweighs these concerns.

Encouraging Innovation: The clearer, more favorable stance on Ethereum’s status is expected to drive more institutional and retail interest in the asset and its ecosystem. It reduces the risk for developers and companies building on the network, which could lead to a new wave of innovation in the decentralized finance (DeFi) space.

Regulatory Scrutiny Still Exists: Despite the good news, there are still some areas of concern. The SEC has been clear that while ETH itself may be a commodity, certain products or services built on the Ethereum network—such as liquid staking and certain token sales—could still be considered securities. This shows that the SEC is taking a nuanced approach and will continue to police the industry for what it deems to be unregistered securities offerings.