Prominent XRP advocate and attorney, Bill Morgan, has taken it upon himself to correct Congress regarding the misinterpretation of Ethereum’s classification as a security. This correction comes in response to a post by the U.S. House Committee on Financial Services, suggesting that the Securities and Exchange Commission (SEC) has labeled ETH as a security. However, Attorney Morgan asserts that this is not the case.
The committee, responsible for overseeing the U.S. financial services industry, claims that the SEC’s attempt to categorize ETH as a security contradicts previous statements made by its chairman, Gary Gensler, regarding the regulatory status of the second-largest cryptocurrency. In a congressional hearing last year, Gensler refrained from answering questions regarding whether ETH is a security.
The Republican arm of the Financial Services Committee is determined to hold the SEC accountable for what they perceive as regulatory overreach. However, Attorney Morgan, a staunch supporter of XRP, has set out to correct Congress’ misunderstanding of the situation.
Morgan clarifies that the SEC is not seeking to classify ETH as a security. Instead, the regulatory agency is investigating whether specific transactions involving the offer and sale of ETH can be deemed investment contracts. He emphasizes the importance of Congress recognizing the distinction between classifying an asset as a security and determining whether certain transactions involving that asset can be considered securities.
Morgan criticizes policymakers for neglecting to read the summary judgment decision in the SEC v. Ripple lawsuit. According to him, the presiding judge ruled that a token itself is not a security, but certain transactions involving the token may qualify as investment contracts. In the case of XRP, the judge concluded that the token itself is not a security, but Ripple violated securities law when it sold XRP to institutional clients. Similarly, the SEC’s investigation into ETH focuses on whether specific transactions involving the cryptocurrency constitute securities.
In March, news of the SEC’s investigation gained widespread attention when Forbes reported that the regulatory agency had subpoenaed the Ethereum Foundation. Prior to this, the SEC had also issued subpoenas to other leading U.S.-based crypto businesses as part of its investigation. Given these indications, Consensys, a private blockchain firm and a major supporter of Ethereum, recently filed a lawsuit against the SEC in a Texas federal court. Consensys aims to prevent the SEC from classifying ETH as a security.
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