On 31 May 2025, United States Securities and Exchange Commission (US SEC) Commissioner Caroline A. Crenshaw issued a powerful dissent titled “Muddying the Waters: More Confusion on Crypto Asset Security Status,” sharply criticising what she described as deepening inconsistencies in how the US SEC classifies crypto assets, especially in the wake of recently approved exchange-traded funds (ETFs) tied to Ethereum (ETH) and Solana (SOL). The Commissioner expressed concern that regulatory clarity is being sacrificed in favour of expediency, warning that current actions may “thwart any meaningful attempt to apply a coherent regime to crypto assets.”
Over the past few months, the US SEC’s Division of Corporation Finance has released multiple staff statements—each pronouncing that different categories of crypto assets, including meme coins, proof-of-work tokens, and stablecoins, are not securities. Yet on 30 May 2025, two new ETFs i.e. Rex-Osprey ETH + Staking ETF and Rex-Osprey SOL + Staking ETF, were allowed to become effective under Form N-1A filings, indicating their classification as investment companies dealing primarily in securities. This apparent contradiction was further exacerbated by unresolved staff comments on the funds’ registration, disclosed in a correspondence posted on the US SEC’s EDGAR system.
Commissioner Crenshaw also pointed to the lack of internal procedural rigour, citing that the Division of Investment Management’s serious concerns about the ETFs’ compliance and investor disclosures were not addressed before the funds were made effective. She warned that “it is to the detriment of market participants and investors when the staff’s review is not met with good faith engagement and comments are not fully resolved prior to effectiveness.”
Crenshaw invoked several prior US SEC documents, including the Statement on Meme Coins dated 27 February 2025, Statement on Proof of Work Mining dated 20 March 2025, and Statement on Stablecoins dated 4 April 2025, all of which claim certain crypto assets are not securities. She contrasted these positions with the registration of ETFs investing in ETH and SOL as if they were securities—emphasising that this is not merely a matter of differing statutes, but a violation of foundational legal coherence. She asserted, “These assets cannot be both securities and not securities at the exact same time.”
In closing, she concluded that rather than moving towards regulatory clarity, the US SEC is adrift in “increasingly muddy waters of our own making.” Crenshaw’s statement is the reflection of growing intra-agency friction within the US SEC and the urgent need for consistent, principled interpretation of US federal securities laws in the evolving crypto economy.
