Read more about ConsenSys filed a lawsuit against the SEC over Ethereum rules

On Thursday, ConsenSys, a cryptocurrency company that creates Ethereum software, sued the US Securities and Exchange Commission in an attempt to overturn the SEC’s oversight of Ethereum’s Ether (ETH).

The lawsuit aims to prevent the Securities and Exchange Commission (SEC) from classifying the Ethereum blockchain as a security weakness. According to ConsenSys, such a classification would have a detrimental effect on the entire Ethereum network. ConsenSys argues that the SEC’s classification of ETH would prevent the implementation of decentralized Ethereum apps and services and could potentially harm the usefulness of the blockchain within the United States.

The lawsuit draws attention to the potential harm that the SEC’s approach could have on ConsenSys’ MetaMask wallet, where users can manage ETH and other cryptocurrencies.

ConsenSys claimed to have received a Wells notice, three subpoenas, and a letter from the Securities and Exchange Commission (SEC) outlining the agency’s intention to pursue enforcement actions regarding MetaMask’s SWAPS and STAKES features and allegations that ConsenSys was acting as an unlicensed broker-dealer. ConsenSys is seeking a court declaration that ETH does not constitute a security and its ETH sales do not represent securities transactions.

ConsenSys’ lawsuit against the SEC follows the SEC’s criticism of its lack of clear rules governing digital assets. Due to the lack of formal rulemaking, companies such as ConsenSys have found themselves in a regulatory blind spot, leading to calls for more specific guidance. ConsenSys’ case is similar to Coinbase’s, which has called for more specific rules for the cryptocurrency space.

The SEC’s lack of clear enforcement measures has been met with criticism from SEC Commissioners Hester Peirce (D) and Mark Uyeda (R), who have both called for more transparency in the regulatory environment.