As the debate surrounding Ethereum’s (ETH) regulatory status heats up, Representative William Timmons has written a letter to the US Securities and Exchange Commission (SEC) chairman, Paul Atkins, demanding that the agency release specific internal documents related to its historical stance on the second-largest cryptocurrency by market capitalization.
In his letter, the Republican lawmaker from South Carolina expressed concerns to Atkins over the regulator’s inconsistency, especially when it came to determining Ether’s status as a security, which he described as a “zigzagging approach”. He cited that the SEC needs to provide more clarity to the public and crypto market participants following years of mixed signals.
Rep. Willian Timmons Requests SEC to Reveal Internal Communications Related to Its Stance on Ethereum
Rep. Timmons has requested three key internal documents from the SEC – emails discussing Ethereum and whether it qualifies as a security under the Howey Test, emails sent to Biden-appointed SEC chair Gary Gensler about the agency’s ETH 2.0 investigation, and communications titled “ETH – Security or Not” and related subjects.
These documents were previously used in a SEC lawsuit involving the American crypto exchange Coinbase, but had not been shared publicly.
The lawmaker highlighted a 2018 speech given by the former SEC Director of Corporate Finance, William Hinman, suggesting that the Commission would not treat Ether or Bitcoin as securities. The high-ranking official’s statement made at the ‘Yahoo Finance All Market Summit: Crypto’ was in line with the comments made by then-SEC chair Jay Clayton, who had noted key differences between cryptocurrencies and digital tokens.
Clayton, who served as the agency’s chief under the first Trump Administration (2017-2021), said that cryptocurrencies that are used as “replacements” for sovereign currencies were not securities. Still, it regarded digital assets issued by a company as securities.
While Hinman’s comments made investors feel more secure about their crypto assets, the SEC under the Biden administration took a controversial “regulation by enforcement” approach, which involved taking legal actions against major industry participants such as Kraken, Binance, and Coinbase.
During a congressional testimony in April 2023, Gensler was criticized by Republican lawmakers for not providing clear guidance on the regulatory designation of cryptocurrencies. At the time, Representatives Warren Davidson and Patrick McHenry specifically pointed to his refusal to state whether the native token of the Ethereum blockchain is a security asset.
SEC Dropped Legal Efforts Against Ethereum Following Spot Ether ETF Approvals in 2024
Two days before Gensler’s congressional hearing, the SEC launched a formal investigation into Ether’s security status, titled “In the Matter of ETH 2.0”. Critics argued that the regulator was building up cases against Ethereum in a bid to reverse its previous assertion that it is a commodity, citing that the blockchain transitioned from proof-of-work (PoW) to proof-of-stake (PoS) consensus in 2022. Gurbir Grewal, the former Director of the Division of Enforcement at the agency, approved Formal Orders to issue legal subpoenas against entities that bought or sold ETH, which it alleged were securities transactions.
However, a thorn in the flesh for the SEC was its May 2024 approval of spot Ethereum exchange-traded funds (ETFs). In June 2024, US-based blockchain technology firm Consensys sent a letter to the regulator asking it to confirm that the ETF approvals, which the company claimed were permitted on the basis of ETH being a commodity, meant that it would close its investigation into Ethereum 2.0.
Consensys, the company behind the popular MetaMask crypto wallet, previously sued the SEC for attempting to oversee the operations of the Ethereum blockchain. The lawsuit argued that the regulator’s attempts to exert authority over the blockchain’s operations would bring it to a halt, crippling “one of the internet’s greatest innovations”. The SEC closed its investigation into Ethereum soon after receiving a letter from Consensus last June, stating it would not bring charges alleging that ETH sales are securities transactions.
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Lawmaker Says Legal Clarity is Crucial Before Passing CLARITY Act to Regulate Crypto Assets In the US
Rep. Timmons also pointed this out in his letter, arguing that the SEC would only have greenlit Ether ETFs if it did not deem the underlying asset a security. He noted that these inconsistencies are confusing to American crypto participants and destabilizing the industry’s growth in the country.
He stated that disclosing these documents is essential to ensuring that the digital asset industry and the general public fully understand the SEC’s “historical approach” to interpreting and enforcing federal securities laws, and why its position on ETH shifted during Gensler’s reign.
Timmons also added that it will bring the transparency that the cryptic community “deserves” on the agency’s shadow regulation by enforcement approach under President Biden, which hindered innovation and growth across the industry. He said the legal clarity is necessary before the US Congress moves ahead with the impending CLARITY Act.
The CLARITY Act, formally titled the “Digital Asset Market Clarity Act”, is a bill introduced by Rep. French Hill in May 2025 that seeks to establish a comprehensive regulatory framework for digital assets in the US. The primary goal of the proposed legislation is to clarify the roles of federal agencies, particularly the SEC and the Commodity Futures Trading Commission (CFTC), in overseeing cryptocurrencies. It aims to clarify the longstanding confusion over which agency has legal authority over specific types of crypto assets, thereby reducing regulatory ambiguity.
At the time of writing, ETH is trading at $2,791 – up 4.91% in the last 24 hours.
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