JPMorgan Report Reveals Ethereum May Not Be a Security After All

  • CFTC Chairman Rostin Behnam views Ethereum as a commodity, amidst differing opinions and SEC’s silence on its classification.
  • JPMorgan report indicates Ethereum’s decreasing centralisation could prevent it from being deemed a security, citing the importance of network decentralisation.
  • However, BlackRock’s CEO Larry Fink believes that Ethereum’s classification as a security wouldn’t preclude the creation of a Spot Ethereum ETF.

Is Ethereum a security? A commodity? The Chairman of the US Commodity Futures Trading Commission (CFTC), Rostin Behnam thinks it’s the latter, affirming his views in late March at a congressional oversight hearing.

Others, like Gary Gensler, the chair of another major regulator, the Securities and Exchange Commission (SEC), haven’t publicly stated their opinions. However, recent reports about Prometheum suggest that the SEC’s hand may be forced on that matter.

Related: Is Ethereum Considered a Security? Prometheum Thinks So

Analysts Say ETH Not Necessarily A Security

But, a recent report by JPMorgan says otherwise, suggesting ETH may not necessarily be a security.


Nikolaos Panigirtzoglou, Managing Director at JPMorgan, said in a research report released earlier this week that a decline of staked ETH on Lido—the largest liquid staking protocol on the Ethereum network—could lead to ETH avoiding a security classification.

The share of Lido in staked ETH has decreased further from around one third a year ago to around a quarter at the moment. This should reduce concerns about concentration in the Ethereum network, thus raising the chance that Ethereum will avoid being designated as security in the future.

Nikolaos Panigirtzoglou, Managing Director at JPMorgan

JPMorgan analysts initially raised concerns about platforms like Lido, suggesting their centralisation could pose risks to Ethereum. However, these worries have lessened with Lido’s shrinking market share.

Panigirtzoglou and his team highlighted the importance of network decentralisation in the classification of digital tokens as securities, referencing the “Hinman documents” released by the SEC, which suggested tokens on decentralised networks might not be considered securities.

Following this, the analysts had speculated that US lawmakers might create a new category to exempt Ethereum from being classified as a security, amidst SEC chairman Gary Gensler’s refusal to clarify Ethereum’s regulatory status.

BlackRock CEO: Spot ETFs Still Possible, Even If Ethereum Is Classified a Security

Regardless whether ETH is a security or not, BlackRock CEO Larry Fink remains optimistic about the potential for a Spot Ethereum ETF. During a Fox Business interview with Charlie Gasparino, Fink, initially hesitant to comment, later suggested that Ethereum’s classification as a security wouldn’t necessarily hinder the launch of such an ETF.

Gasparino pressed Fink on the matter, asking if he believes the Spot Ethereum ETFs could go ahead if ETH was deemed a security, to which Fink simply responded by saying: “I think so, yes.”

Related: Fidelity Files S-1 Application, Seeks SEC Nod of Approval for Spot ETH ETF with Staking

His perspective aligns with the understanding that ETFs in general can include various types of investments, including securities such as stocks and bonds. Therefore, even if Ethereum were classified as a security, it wouldn’t automatically exclude it from being part of an ETF—the ETF would simply need to comply with the relevant securities regulations.

Aaron Feuerstein

Aaron Feuerstein

Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.

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