(Bloomberg) -- The US Securities and Exchange Commission has demanded information from companies about dealings with the Ethereum Foundation as part of a review of aspects of Ether — the world’s second-biggest cryptocurrency, according to people familiar with the matter.

The recent SEC inquiry may represent a significant escalation by Wall Street’s main regulator in its multiyear crackdown on the crypto industry. The agency’s chair, Gary Gensler, says many digital assets are unregistered securities subject to SEC rules. He’s refused to say if Ether is part of that group. 

Although Gensler has avoided making a declaration about Ether’s status, he has signaled that a feature of Ethereum software could lead to Ether falling under its jurisdiction. Such a determination would trigger a rash of compliance and investor protection rules, which many in the crypto industry say are ill-suited for digital assets.

Read More: Why It Matters Whether Crypto Coins Are Securities: QuickTake

A declaration that Ether is a security would also hit the broader crypto market because the Ethereum blockchain is so widely used across the industry by developers. At the same time, major investment companies are seeking the SEC’s blessing to list exchange-traded products based on Ether.

The SEC declined to comment. A representative for the Ethereum Foundation, a nonprofit based in Switzerland, didn’t respond to requests for comment. The SEC review was reported earlier by CoinDesk.

A subpoena from the regulator sought more information about various aspects of the Ethereum Foundation, said one of the people, who asked not to be identified discussing the information requests. The entire scope of the requests wasn’t immediately clear.

Some in the financial industry have said the way the organization initially offered Ether in 2014 resembled a securities offering. Concern eased during the Trump era when a top SEC official said transactions involving the token aren’t subject to federal securities rules. Gensler then appeared to open the door for a reversal in September 2022 when he took issue with Ethereum’s upgraded blockchain, which had been dubbed the “Merge.”

At the time, Gensler said that Ethereum’s new process known as “proof-of-stake,” in which coin holders can earn financial rewards by allowing a network to use some of their assets, could fall under securities rules. Ether had previously used the “proof-of-work” method that Bitcoin uses to run its blockchain. 

Bitcoin, the world’s largest digital asset, is the only cryptocurrency that Gensler has definitively said isn’t a security in his view. However, the Commodity Futures Trading Commission, Washington’s other main market regulator, has signaled that it considers Ether not to be a security and oversees trading in derivatives based on the token. 

--With assistance from Lydia Beyoud.

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