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- The recent crackdown on crypto mixing platforms like Tornado Cash raises concerns about the SEC’s potential overreach in its crypto regulatory efforts.
- Additionally, the SEC’s likely rejection of spot Ethereum ETFs further indicates its regulatory stance, as issuers anticipate denial despite efforts from BlackRock and Grayscale.
The U.S. Securities and Exchange Commission (SEC) has been constantly expanding its reach in the crypto regulatory market ever since its case on Ripple. The securities regulator has slapped lawsuits on some of the top crypto firms like coinbase, Binance and others. In a recent crackdown, the SEC is going after crypto mixing platforms like Tornado Cash, which leads everyone to question whether is the SEC going too far with its crypto outreach?
It’s noteworthy that there has been a lack of consistency in legal rulings regarding the classification of tokens as investment contracts. An example of this is evident in the Ripple case, where Judge Torres and Judge Failla issued differing rulings, thus leading to uncertainty surrounding the legal status of tokens.
Amid this uncertainty, Crypto News Flash reported the resignation of two SEC lawyers, which follows a federal judge’s sanctioning and strong criticism of the Wall Street regulator for what was deemed as “gross abuse” of power in a crypto-related case.
Michael Welsh and Joseph Watkins, who were lead attorneys in a case against DEBT Box, stepped down from their positions at the SEC this month. Speaking on this resignation crypto lawyer Jake Chevinsky said:
“I think it will work an irreparable damage to the SEC’s reputation. A lot of folks in the crypto industry have been celebrating this order and, I totally understand that because I think it makes us all feel seen.”
Will the SEC’s Overreach Extend to Ethereum?
Similar to Ripple, the SEC has also been targeting Ethereum (ETH) to bring it under the securities laws, as reported by Crypto News Flash. The latest report also suggests that the U.S. SEC is much likely to reject the approval of the spot Ethereum ETF, the final date of which in next month in May 23.
Sources familiar with the matter indicate that the U.S. Securities and Exchange Commission (SEC) is likely to reject the eagerly awaited approval of spot Ethereum ETFs. Following recent meetings with the securities regulator, issuers of spot Ether ETFs, along with other firms, anticipate the denial of their applications next month, as reported by Reuters on April 25.
Among the applicants are prominent names such as BlackRock, Grayscale, VanEck, and Ark Invest, seeking approval to list ETFs tracking the spot prices of Ethereum (ETH), mirroring the structure of spot Bitcoin ETFs. Also, VanEck and Ark Invest are scheduled to receive the SEC’s decision on May 23 and May 24, respectively, per the Crypto News Flash report.
Insiders familiar with the discussions revealed that the SEC and its staff have displayed little interest in the concept of spot Ether ETFs and their potential. Participants characterized the conversations as one-sided, signaling a lack of enthusiasm from the regulatory side.
