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While applicants await a decision from the United States Securities and Exchange Commission (SEC) on spot Ethereum ETF, the agency is reportedly intensifying efforts to classify the underlying cryptocurrency, Ether as a security.&nbsp; 
<h2 id="strong-the-alleged-ethereum-foundation-probe-strong">The Alleged Ethereum Foundation Probe</h2> 
According to a Fortune Report, some U.S. companies have been subpoenaed by the SEC about an investigation into ETH, sparking a threat to the spot Ethereum ETF push. These companies revealed the securities agency’s efforts toward the second-largest cryptocurrency by market capitalization. Precisely, the SEC is demanding that these U.S-based firms provide documents and financial records that have to do with their transactions with the Ethereum Foundation.&nbsp; 
Coingape had earlier reported a probe into the <a href="https://coingape.com/breaking-ethereum-foundation-under-investigation-by-a-state-authority/">Ethereum Foundation</a> by an unnamed state authority as was disclosed through the Ethereum GitHub repository. At the time, the inquiry was not clear, especially considering that this was the first time any State Authority would be issuing such a probe into the Ethereum blockchain developer. However, the report from the subpoenaed companies suggests that the unnamed state authority may be the U.S. SEC.&nbsp; 
For the longest possible time, the regulator under Gary Gensler’s watch has been trying to classify Ethereum as well as many other digital assets as securities. The move intensified in September 2022 after <a href="https://coingape.com/web-stories/ethereum-merge-is-complete-heres-how-the-industry-is-reacting/">The Merge</a>, a transition of Ethereum from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) mechanism.&nbsp; 
The switch to PoS adjusted the energy requirement of Ethereum, that is, from the energy-intensive model being utilized by Bitcoin to a more conservative algorithm. The new model relies on validators rather than miners, who stake some ETH to run the system. Meanwhile, the SEC perceives this as an avenue to categorize ETH as a security.&nbsp; 
<h2 id="strong-sec-investigation-and-odds-of-spot-ethereum-etf-strong">SEC Investigation and Odds of Spot Ethereum ETF&nbsp;</h2> 
It is worth noting that at this time, this kind of investigation has the likelihood of jeopardizing the odds of receiving approval from the SEC on the spot Ethereum ETF. Many market experts and industry players have maintained positivity about receiving approval from the SEC drawing on precedents set by <a href="https://coingape.com/breaking-sec-gives-nod-to-spot-bitcoin-etf-opens-door-for-trading/">spot Bitcoin ETFs</a> in January. 
From the twists and turns in recent times, this confidence has gradually plummeted, fuelled by some trends including <a href="https://coingape.com/spot-ethereum-etf-sec-chairman-gary-gensler-digresses-on-likelihood/">Gensler’s statement</a> during an interview with Yahoo Finance&nbsp;where he constantly digressed from the subject of spot Ethereum ETF approval.&nbsp; 
As it stands, the excitement and enthusiasm towards the proposed rule change are lacking. Despite the FUD – Fear, Uncertainty and Doubt stirred by the news, the price of Ethereum (ETH) has kept its pace, up 0.58% in the past 24 hours to $3,316.02. 
The post <a href="https://coingape.com/spot-ethereum-etf-approval-odds-drop-as-sec-eyes-securities-tag/">Ethereum ETF: Approval Odds Drop As SEC Eyes Securities Tag</a> appeared first on <a href="https://coingape.com">CoinGape</a>.

Ethereum ETF: Approval Odds Drop As SEC Eyes Securities Tag

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