Consensys, an Ethereum development firm, has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC) on Thursday, challenging the agency’s stance on Ethereum’s Ether (ETH).

The legal action, taken in the U.S. District Court for the Northern District of Texas, aims to block the SEC from labeling ETH as a security, a move Consensys argues could disrupt the Ethereum network and its operations.

The company asserts that such a classification by the SEC would hinder the functionality of Ethereum’s decentralized applications and services, potentially damaging the blockchain’s utility in the United States.

The lawsuit highlights the potential adverse effects of the SEC’s approach on Consensys’ MetaMask wallet, which allows users to manage ETH and other digital currencies.

Consensys said that it has received a Wells notice and three subpoenas from the SEC, indicating the agency’s intention to possibly pursue enforcement actions related to MetaMask’s Swaps and Staking features, and suggesting that Consensys acted as an unregistered broker-dealer.

The firm is requesting a judicial declaration that ETH is not a security and that its ETH sales are not securities transactions.

Consensys’ legal battle with the SEC comes at a time when the regulatory body faces criticism for its unclear enforcement policies in the digital asset space.

The lack of formal rulemaking has left companies like Consensys in a regulatory gray area, prompting calls for more definitive guidelines. This lawsuit echoes a similar action taken by Coinbase, which also demands clearer regulations for the cryptocurrency sector.

SEC Commissioners Hester Peirce and Mark Uyeda have publicly denounced the agency’s vague enforcement strategies, underscoring the necessity for more transparent regulatory frameworks.