Ethereum ETF approvals becoming ‘giant political issue’ — Joseph Lubin


According to Consensys CEO Joseph Lubin, early-stage applications to launch Ethereum exchange-traded funds (ETFs) in the United States are “as good as done.”

Speaking exclusively to Cointelegraph at DappCon in Berlin, Lubin said several 19b-4 applications filed by firms like BlackRock will be approved by the U.S. Securities and Exchange Commission (SEC). However, their launch to the public could be a more protracted process.

“These 19- b4’s from the exchanges, I think that’s as good as done,” Lubin said. 

“But the S1’s, essentially these new ETFs going public, that could drag on for a while. It’s not clear that it will. My guess is this is now a giant political issue.”

According to Lubin, Donald Trump’s presidential campaign representatives have also been talking to cryptocurrency ecosystem participants for over two months.

“That’s what we’ve heard. They’re trying to formulate a strategy, considering there are some really savvy supporters on the Democratic side. I believe that the presidential campaign and others will want to appear pro-crypto,” Lubin said.

Ethereum co-founder Joseph Lubin onstage at DappCon in Berlin. Source: Gareth Jenkinson

The Ethereum co-founder added that the SEC is now under strong pressure to adopt a more neutral stance as the U.S. presidential elections draw closer. Lubin said that the potential approval of Ether (ETH) ETFs would “hopefully” turn the SEC into a “thoughtful regulator.”

“If 40%, 50%, or 60% of the voting public have digital assets, you don’t want to stomp on their portfolios. You don’t want to stomp on institutions, pension funds or other kinds of conserved funds,” Lubin added.

Consensys takes the fight to the SEC

Consensys announced in April that it was launching legal proceedings against the SEC for what Lubin has described as an undisclosed internal move to reclassify Ether as a security.

Lubin said that dealings with the previous SEC regime headed by Jay Clayton were more constructive. Prior conversations with the regulator afforded more discourse over whether Ether and other cryptocurrencies should be classified as securities.

Related: SEC doesn’t want Ethereum to transform banking landscape, says Joseph Lubin

According to the CEO, the situation changed when Gary Gensler took over as SEC chairman. Lubin said that high-level banking and government factions had worked together to co-opt the Ethereum ecosystem.

“That’s our working hypothesis. By co-opt, I mean make it into American-style decentralization where everybody has to come register. Maybe introduce some backdoors in the cryptography,” Lubin elaborated.

Over the course of two years, Consensys has acquiesced to SEC requests, providing more than 100,000 pages of documentation to the regulator. A decision to preempt further legal action against the SEC was taken due to growing concerns that the regulator was shifting its crosshairs over MetaMask, staking, developers, the Ethereum protocol and its move to proof-of-stake consensus.

Related: ‘It’s happening’ — 5 Ethereum ETF bidders amend SEC filings

Lubin said the SEC’s lawsuits against Binance and Coinbase for allegedly offering unregistered securities and subsequent Wells notice letters issued to ecosystem players like Uniswap provided the impetus for Consensys’ decision to take on the securities regulator.

“We were told that there would be a Wells notice coming, and we’re certain that they were going to follow through and sue us. So we went ahead and crafted an action.”

As Lubin explained, the decision puts Consensys on the front foot to push for critical answers over the SEC’s actions over the past year. It also means that Gensler may have to give a definitive stance over whether Ether is being viewed as a commodity or security. 

“Everybody keeps saying it’s a commodity. Yet he can’t bring himself to say that it’s a security. He’s punishing everybody in our ecosystem as though they’ve already determined internally, secretly, that it is a security,” Lubin added.

SEC gaslighted Ethereum in America

The SEC’s stance on cryptocurrencies, and Ethereum in particular, has led Lubin to believe that it is intent on regulating technology and developers. This is far from the institution’s mandate to regulate securities.

Lubin said the SEC’s stance has “gaslit” the sector and perpetuated a cloud of regulatory uncertainty. Nevertheless, Consensys is “all in” on taking the fight to the SEC and was ready to spend tens of millions of dollars on it legal battle.

Magazine: Godzilla vs. Kong: SEC faces fierce battle against crypto’s legal firepower