Yesterday the U.S. Securities and Exchange Commission (SEC) approved the listing of eight spot Ether ETFs in a bulk order. However, there is another formality before they can be sold to the public, which may take a few months. A key aspect of the order is that each ETF is considered a ‘Commodity-Based Trust Share’. Several years ago the SEC classified Ether as a commodity, but that changed over a year ago without any announcement. It concluded that Ether had become a security following the migration to Ethereum 2.0, which adopted Proof of Stake. This came to light due to Ethereum development house Consensys suing the SEC over claims that Ether is a security.
Therefore, the ETF’s recognition of Ether as a commodity marks a significant reversal. There’s considerable debate about the reason for the abrupt shift. With Congress passing the FIT 21 crypto Bill this week with the backing of many Democrats, the politics around crypto is shifting. That’s particularly in the run up to an election where the Biden administration’s crypto stance might be viewed as a potential vote loser.
Interestingly, the SEC Commissioners did not directly vote on the ETFs, unlike the Bitcoin ETFs. Instead, they delegated the authority to the Division of Trading and Markets. While delegation is a common practice, it’s notable that this decision would not have been made without the majority of the Commissioners’ approval, as highlighted by Bloomberg’s James Seyffart.
The eight ETFs are from Grayscale, Bitwise, BlackRock’s iShares, VanEck, ARK 21shares, Invesco Galaxy, Fidelity and Franklin Templeton.
Consensys to continue its fight
Meanwhile, Consensys has vowed to continue with its litigation against the SEC. “Today’s approval signals that the SEC views that ETH is a commodity and not a security – contrary to the position it continued to take prior to the events of this week, as described in our recent lawsuit against the SEC,” the company wrote on X. “We will continue to fight for definitive regulatory clarity in our case.”
It added, “this seemingly last minute approval is yet another example of the SEC’s troublesome ad hoc approach to digital assets.”
It’s not just the crypto community that’s been unhappy with the SEC. Both Congress and the Senate voted in favor of a resolution to overturn an SEC accounting bulletin (SAB 121) that effectively blocks banks from providing digital asset custody. It is the first digital assets-related law passed by both legislative branches, yet another sign of the changing political tide. However, the White House has vowed to veto it.
