SEC Chair Paul Atkins Drops Bombshell: Ethereum Escapes Security Classification

Crypto markets exhale as regulatory uncertainty lifts—for now.

In a move that sent shockwaves through both Wall Street and Crypto Twitter, SEC Chair Paul Atkins definitively stated Ethereum does not qualify as a security. The announcement comes after years of regulatory limbo that saw institutional investors treat ETH like a hot potato—too valuable to ignore, too risky to hold.

Atkins' declaration cuts through the legal fog surrounding the second-largest cryptocurrency. While Bitcoin enjoys its 'digital gold' narrative, Ethereum's complex ecosystem—smart contracts, DeFi protocols, NFT minting—left regulators scratching their heads. Now the precedent is set: infrastructure tokens might just survive the SEC's scrutiny.

Market reaction was immediate. ETH prices jumped 8% on major exchanges, while security-like altcoins pumped in sympathy. Traders celebrated—until remembering most 'utility tokens' still can't demonstrate, you know, actual utility.

The decision bypasses what many feared would be a death knell for decentralized finance. No longer facing existential threats from securities laws, Ethereum developers can focus on their real challenge: making gas fees affordable before we all retire.

One hedge fund manager quipped, 'Finally, regulators acknowledge what we've known for years—Ethereum's too slow to be a security. Those transactions clear at government bureaucracy speeds.'

Ethereum escapes Ripple’s fate

In May, it was revealed that the New York State Attorney General asked the SEC to openly declare that  Ethereum was a security, not a commodity, during the state’s prosecution of KuCoin in 2023.

Shamiso Maswoswe, chief of the Investor Protection Bureau for the New York AG, said, “We WOULD like to request that the SEC file an amicus in support of the argument that Ether is a security.”

She added, “Whether it is or not will not be dispositive in our case (we have authority over both securities and commodities) — but I think it would be beneficial to investor protection to get a court to hold that Ether is a security.”

This was going to drag Ethereum to a path well known by Ripple. Initially, the SEC sued Ripple, claiming it raised over $1.3 billion through unregistered XRP sales. It classified XRP as a security. 

Since then,  the legal battle has created uncertainty, impacting investor confidence and hindering XRP’s adoption. In addition, several exchanges delisted or suspended XRP trading due to the SEC’s claims. 

A coin that had great potential ended up being average. However, with all the strain, the coin remained at the top although its competitors ended up too far off. 

ETH and XRP lead the altcoin season

This news comes at a time when institutional investors are embracing ETH. According to reports, Wall Street is piling into $ETH: $1B+ ETF inflows since July, BlackRock leading the charge. 

Ethereum Big Institutional Play

Wall Street is piling into $ETH: $1B+ ETF inflows since July, BlackRock leading the charge.

Staking adds 3–4% yield, making ETH attractive for conservative portfolios.

Growing institutional confidence could define the next bull run. pic.twitter.com/bSK0VzPNaQ

— InvestingHaven (@InvestingHaven) July 20, 2025

In addition, ETH ETFs are set to attain new all-time highs to catch up with Bitcoin ETFs after just breaking a new daily record for inflows. The news has increased Ethereum’s price to $3,782, making it the biggest altcoin to rise more than 25% in the last week.

Atkins acknowledged the trend of corporate entities embracing ETH and other cryptocurrencies is “encouraging.” He added that the soaring institutional interest predicts a “good future” for development and innovation in the sector.

On the other hand, XRP is trading at  $3.59 with a 3.73% daily increase, a 22% increase in the last seven days. Also, its daily trading volume increased by 26%, reaching $10 billion. This increase is an indicator of investor interest in the token. 

Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot