‘It Can Be Said With Confidence the SEC Is Investigating Ethereum’: Consensys’ Bill Hughes Talks

Consensys Senior Counsel and Director of Global Regulatory talks about ETH's legal status and Ethereum's future.
Last month, news broke that the U.S. Securities and Exchange Commission (SEC) had subpoenaed the Ethereum Foundation in a seeming first move in preparing a potential lawsuit. At this point, all the world knows, really, is that some “state authority” had made contact, the organizing force behind the creation of second-largest cryptocurrency ether (ETH), according to the missing “canary” on the for-profit foundation.
Consensys, the Brooklyn-based incubator that has developed a number of core tools for the Ethereum ecosystem, including the largest non-custodial wallet MetaMask, node infrastructure service Infura as well as clients like Besu and Teku. To a large extent, Ethereum wouldn’t be what it is today without Consensys.
Bill Hughes is a speaker at this year's Consensus Festival in Austin, Texas, May 29-31.
“What I'll say is: Consensys likes to walk the walk and not just talk the talk,” Consensys Senior Counsel and Director of Global Regulatory Matters Bill Hughes, who is speaking at CoinDesk’s upcoming Consensus 2024 conference in May, said in an interview. The firm has spun out a number of projects built internally to be privately run or governed by their users. “It's a tricky thing going from centralized to decentralized,” Hughes said.
If the SEC is building a case to declare a ETH a security — like it has for similar blockchain projects like Solana (SOL), Cardano (ADA) and Ripple (XRP) — it may consider Consensys’ outsized role in the ecosystem. There are a lot of reasons why it doesn’t make sense to redefine ETH as a security; notably, there is a multi-billion dollar economy that has already been built on it under the implicit understanding that it isn’t.
But that isn’t the only argument the agency could make. Unlike Bitcoin, Ethereum’s creator Vitalik Buterin is still around. There’s the open question of whether the ETH token launch was an “investment contract.” Plus the aforementioned Ethereum Foundation, which still plays an active role in coordinating development. The question is whether “there is a common enterprise” building Ethereum, and whether investors expect to practice from their work.
It’s a tricky legal subject, not made easier by the SEC’s reluctance to provide clear guidance regarding crypto. In fact, the securities watchdog may even be deploying backdoor strategies to try to sow confusion, like issuing a special purpose broker dealer license to a trading platform that intends to list ETH as a security or lying to a court to freeze a small blockchain project’s funds.
CoinDesk reached out to Consensys’ Bill Hughes to get an overview of the ETH securities issue, Consensys’ role in the ecosystem and whether specially licensed broker dealer Prometheum may be used as a wedge to deny approval of spot ether exchange-traded funds.
Are crypto lobbyists doing a good job?
I think they are. It’s hard because the policy space is pretty confusing. The subject matter is pretty confusing. Many people they need to talk to just don't care one way or another. I mean, I'm biased, I'm on the board of Blockchain Association, but it does a really good job of keeping its membership informed, educating them about the Hill and and coming up with smart plans on how to pursue what we view as productive policy...
https://www.coindesk.com/consensus-magazine/2024/04/18/it-can-be-said-with-confidence-the-sec-is-investigating-ethereum-consensys-bill-hughes-talks-crypto-law/
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