Fidelity’s digital assets business plans to launch ether trading for institutional customers by the end of the month, suggesting the company believes the SEC will retain its position that cryptocurrencies are commodities, not securities.
On October 28th, a Fidelity Digital Assets spokeswoman informed Blockworks, the business would let institutional investors purchase, trade, and transfer ether, Ethereum’s native asset.
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This action is in response to the growing concern about how to properly categorize tokens. The SEC’s former head of corporate finance, William Hinman, publicly said in 2018 that the agency had no intentions to label bitcoin and ether as securities.
In September, though, SEC Chair Gary Gensler seemed to back down, saying that staking ether for returns similar to fixed income is compatible with securities classifications. Following Gensler’s comments, the price of ether fell by 11%.
For unregistered securities offers, tokens have been a frequent focus of SEC enforcement efforts. As part of allegations brought against ex-Coinbase workers for suspected insider trading in June, the agency argued that nine cryptocurrencies constituted securities.
Nearly two years ago, the SEC filed charges against Ripple Labs for conducting an unregistered securities offering in connection with the XRP cryptocurrency. This was the SEC’s most significant first excursion into the rule-making underlying the digital assets ecosystem.
The case that has been going on for quite some time should be resolved in the next several months. Industry players are keen to dissect how the agency’s regulation of ether may factor into the decision, and both parties have consented to a summary judgment.
A source close to the situation has confirmed to Blockworks that ether does match Fidelity’s criterion for listed assets. Since bitcoin’s introduction in 2018, trading has been possible via Fidelity Digital Assets.
Several weeks after the investment bank introduced its Ethereum index fund in October to certified investors willing to deposit at least $50,000, the platform is expected to gain widespread acceptance.