The Ethereum Foundation, a Swiss nonprofit at the heart of the Ethereum ecosystem, is reportedly under investigation by an undisclosed “state authority.”
The investigation was disclosed Feb. 26 on the group’s GitHub repository, CoinDesk reported Wednesday (March 20).
A commit on the Ethereum Foundation’s GitHub repository, showing a change made to its website, said “we have received a voluntary enquiry from a state authority that included a requirement for confidentiality.”
The Ethereum Foundation did not immediately reply to PYMNTS’ request for comment.
The inquiry comes at a pivotal time for Ethereum and its native asset, ETH, as U.S. investment firms are looking to offer it as an exchange-traded fund (ETF), according to the CoinDesk report.
Simultaneously, the Securities and Exchange Commission is reportedly examining whether ETH should be classified as a security, a development that could have far-reaching implications for Ethereum and the wider crypto industry, the report said.
The foundation’s website previously stated that it had never been contacted by any agency in a manner that required non-disclosure, a statement that was removed at the time of the Feb. 26 update to the website’s GitHub repository, per the report. The specifics of the inquiry and the identity of the authority have not been disclosed.
An SEC investigation into ETH’s classification leading to ETH being deemed a security could have consequences for Ethereum, ETH ETF applications, and the cryptocurrency market at large, according to the report.
The specific reasons for the inquiry remain unknown, but it is possible that a Swiss regulator may have issued a document request to the Ethereum Foundation, possibly in collaboration with the SEC, the report said, citing its interview with an unnamed attorney. The timing of the inquiry could be related to the SEC’s upcoming deadline on May 23, indicating increased activity and investigations by regulatory authorities.
The SEC approved bitcoin as an ETF in January after years of opposition to the idea of an ETF that invests in bitcoin. While that approval was heralded by figures throughout the cryptocurrency industry, SEC Chairman Gary Gensler stressed that the approval applies only to bitcoin and should not be seen as an indication that the regulator is ready to approve other listed securities.
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