Internet Security

SEC lacks grounds against ETH and valid reasons to reject Ethereum Spot ETF: Coinbase CLO

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The US Securities and Exchange Commission (SEC) is under fire for its perceived lack of clarity regarding Ethereum (ETH). In a recent post on X, Coinbase’s chief legal officer, Paul Grewal, challenged the SEC’s position, arguing that the SEC doesn’t have sufficient reasons to classify ETH as a security nor justifiable reasons to reject a spot Ethereum exchange-traded fund (ETF).

Grewal pointed to several key points about Ethereum, including the widespread adoption of ETH. According to him, classifying ETH as a security potentially impacts several US citizens.

The core argument is that “ETH is a commodity, not a security.” Grewal believes Ethereum should not be classified as a security, which would put it under stricter SEC regulations.

In support of his argument, Grewal referenced statements from former SEC officials. He highlighted comments by William Hinman, the SEC’s former Director of Corporation Finance, who previously declared, “ETH is not a security.” Grewal also mentioned that SEC Chair Gary Gensler himself, before his appointment, had publicly stated that “ETH is not a security.”

Grewal added that the Commodity Futures Trading Commission (CFTC) and federal courts have consistently classified ETH as a commodity. According to him, ETH futures contracts traded on CFTC-regulated exchanges demonstrate established regulatory acceptance of ETH as a commodity.

This raises concerns about a potential clash between the SEC and the CFTC. Some analysts have previously warned that if the SEC classifies ETH as a security, it could directly contradict the CFTC’s view.

Grewal further argued that the Howey Test, a legal framework used to identify investment contracts, doesn’t apply to determining ETH’s status as a commodity. He believes that even with the merge, Ethereum’s major update that transitioned the network to proof-of-stake, ETH wouldn’t meet the criteria of an investment contract under the Howey Test.

Despite the SEC’s uncertain stance on ETH, Grewal believes the SEC has no valid reason to reject applications for spot Ethereum ETFs.

News of a probe into the Ethereum Foundation by an undisclosed “state authority” has cast a shadow over the already uncertain fate of spot Ethereum ETFs. The legal status of ETH has been a point of contention, and this investigation could further complicate the SEC’s decision on several pending ETF applications.

Details regarding the SEC’s investigation into the Ethereum Foundation remain unclear. It’s unknown whether the SEC is the unnamed agency involved, and even if it is, the purpose of the investigation remains unconfirmed.

Coinbase’s Paul Grewal isn’t alone in advocating Ethereum’s classification as a commodity. Ripple CEO Brad Garlinghouse recently argued in a post that the SEC is “losing badly” in court battles regarding Ethereum and falling behind international regulatory standards.

Spot Ethereum ETFs face continued delays

The SEC has delayed its decision on several spot Ethereum ETFs, including Grayscale’s Ethereum Futures Trust ETF, which was pushed back again on Friday. Other major issuers, such as ARK Invest, VanEck, BlackRock, and Fidelity, are also waiting for the SEC’s green light on their proposed Ethereum ETFs.

Bloomberg ETF analysts’ latest update paints a grim picture for hopeful investors awaiting approval of spot Ethereum ETFs. Their revised estimates peg the chance of a May approval at a meager 35%, significantly lower than their predictions for spot Bitcoin ETF approval.

Adding to the uncertainty, two US senators sent a letter to SEC Chair Gary Gensler earlier this month urging him to deny new crypto ETFs. Meanwhile, Gensler remains tight-lipped on the topic.

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The US Securities and Exchange Commission (SEC) is under fire for its perceived lack of clarity regarding Ethereum (ETH). In a recent post on X, Coinbase’s chief legal officer, Paul Grewal, challenged the SEC’s position, arguing that the SEC doesn’t have sufficient reasons to classify ETH as a security nor justifiable reasons to reject a spot Ethereum exchange-traded fund (ETF).

Grewal pointed to several key points about Ethereum, including the widespread adoption of ETH. According to him, classifying ETH as a security potentially impacts several US citizens.

The core argument is that “ETH is a commodity, not a security.” Grewal believes Ethereum should not be classified as a security, which would put it under stricter SEC regulations.

In support of his argument, Grewal referenced statements from former SEC officials. He highlighted comments by William Hinman, the SEC’s former Director of Corporation Finance, who previously declared, “ETH is not a security.” Grewal also mentioned that SEC Chair Gary Gensler himself, before his appointment, had publicly stated that “ETH is not a security.”

Grewal added that the Commodity Futures Trading Commission (CFTC) and federal courts have consistently classified ETH as a commodity. According to him, ETH futures contracts traded on CFTC-regulated exchanges demonstrate established regulatory acceptance of ETH as a commodity.

This raises concerns about a potential clash between the SEC and the CFTC. Some analysts have previously warned that if the SEC classifies ETH as a security, it could directly contradict the CFTC’s view.

Grewal further argued that the Howey Test, a legal framework used to identify investment contracts, doesn’t apply to determining ETH’s status as a commodity. He believes that even with the merge, Ethereum’s major update that transitioned the network to proof-of-stake, ETH wouldn’t meet the criteria of an investment contract under the Howey Test.

Despite the SEC’s uncertain stance on ETH, Grewal believes the SEC has no valid reason to reject applications for spot Ethereum ETFs.

News of a probe into the Ethereum Foundation by an undisclosed “state authority” has cast a shadow over the already uncertain fate of spot Ethereum ETFs. The legal status of ETH has been a point of contention, and this investigation could further complicate the SEC’s decision on several pending ETF applications.

Details regarding the SEC’s investigation into the Ethereum Foundation remain unclear. It’s unknown whether the SEC is the unnamed agency involved, and even if it is, the purpose of the investigation remains unconfirmed.

Coinbase’s Paul Grewal isn’t alone in advocating Ethereum’s classification as a commodity. Ripple CEO Brad Garlinghouse recently argued in a post that the SEC is “losing badly” in court battles regarding Ethereum and falling behind international regulatory standards.

Spot Ethereum ETFs face continued delays

The SEC has delayed its decision on several spot Ethereum ETFs, including Grayscale’s Ethereum Futures Trust ETF, which was pushed back again

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Texas National Guard Faces Calls to Shoot Migrants After Being Overpowered

CLOSE X By Nick Mordowanec Staff Writer FOLLOW Share Copy Link The Texas National Guard is being encouraged by some social media users to be more violent in response to migrants attempting to enter the United States illegally. Illegal immigration has risen under President Joe Biden’s watch and continues to divide communities around the country

The Texas National Guard is being encouraged by some social media users to be more violent in response to migrants attempting to enter the United States illegally.

Illegal immigration has risen under President Joe Biden’s watch and continues to divide communities around the country, notably border states and cities with sanctuary status.

Videos taken Thursday on the U.S.-Mexico border in El Paso, Texas, showed a throng of migrants, described by on-scene reporters as hundreds of individuals of different nationalities, causing a “riot” and using force to try to overpower soldiers.

The incident occurred simultaneously as Texas waits and sees if it can enforce its own immigration laws, including arrests and deportation, through legislation known as Senate Bill 4 (S.B. 4). The legislation previously approved by state lawmakers continues to be litigated in appeals courts and as high as the U.S. Supreme Court.

Total border crossings exceeded 988,900 individuals between October and December, following a record-setting number of 2.4 million migrant encounters at the southern border in fiscal 2023—up from approximately 1.7 million in 2021.

Newsweek reached out to the Texas Department of Public Safety and other officials via email for comment.

“The TX National Guard & Dept. of Public Safety quickly regained control & are redoubling the razor wire barriers,” Texas Governor Greg Abbott wrote on X, formerly Twitter, following the border incident. “DPS is instructed to arrest every illegal immigrant involved for criminal trespass & destruction of property.”

Republican House Speaker Mike Johnson, a Louisiana Republican, described the scene as “chilling.”

“This is the result of the Biden Administration refusing to secure our border and protect America,” he wrote on X.

El Paso Migrants
Immigrants wait for transport and processing after crossing the U.S.-Mexico border on March 13 in El Paso, Texas. The Texas National Guard is being encouraged by some social media users to be more violent in…


John Moore/Getty Images

Mexican photojournalist J. Omar Ornelas, who lives on the northern border of Latin America, posted a different-angled video on X of the scene in El Paso—showing migrants purportedly from Africa, Central America, Colombia and Venezuela breaching concertina wire to get to the larger border wall.

Charlie Kirk, founder and president of the conservative organization Turning Point USA, wrote on X that having a national border means individuals have to protect it.

“Ultimately, having a border means being willing to have armed men at the border willing to use force to stop those attempting to cross it,” Kirk wrote. “If you aren’t willing to do that, then your border is fake — anyone who wants it badly enough can just force their way in. The world is calling Biden’s bluff.”

In February, Representative Morgan Luttrell, a Texas Republican, introduced the Defend Our Borders from Armed Invaders Act in the U.S. House, authorizing the National Guard to escalate force as necessary to repel an armed individual attempting to illegally enter the U.S. through Mexico.

A spokesperson for the congressman told Newsweek via email on Friday that the legislation applies only to those migrants carrying lethal weapons. The bill currently awaits committee mark-up.

“This border crisis is a full-on invasion, and the Biden Administration continues to recklessly turn a blind eye to the ongoing danger this presents,” Luttrell, a 14-year U.S. Navy veteran, told Newsweek. “I fully support Governor Abbott’s and the Texas Guard’s efforts to secure our border.”

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Abbott’s words, meanwhile, sparked some impassioned criticism on social media.

“Lethal force required,” one X user wrote in response to Abbott.

Another X user wrote: “If citizens did that to law-enforcement, they would be tased or shot, and they’d be lucky to be arrested. It’s time to deal harshly with invaders, Governor. We have sonic and millimeter wave crowd-control weapons. It’s time to use them.”

Podcaster and U.S. military veteran Wayne DuPree described the scene on X as an “invasion [that] should be dealt with accordingly,” adding that refugees don’t assault border agents.

“What good are guns at the border if we aren’t going to use them?” political commentator and Donald Trump supporter Gunther Eagleman asked on X.

“An unarmed American female veteran was shot to death at near point-blank range on Jan 6 because a federal officer considered her a threat for invading a public building,” wrote political commentator Julie Kelly. “Hey @LindseyGrahamSC where are your shoot to kill orders for these invaders?”

Update 03/22/24, 11:30 a.m. ET: This article was updated with comment from Luttrell.

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The Texas National Guard is being encouraged by some social media users to be more violent in response to migrants attempting to enter the United States illegally.

Illegal immigration has risen under President Joe Biden’s watch and continues to divide communities around the country, notably border states and cities with

Read More

Continue Reading