On May 23, 2025, the U.S. Securities and Exchange Commission (SEC) officially approved the 19b-4 filings for all eight Ethereum spot ETF applications — marking the second major milestone in the crypto industry this year, following the earlier approval of Bitcoin spot ETFs.
While this green light is a monumental regulatory breakthrough, it’s important to note that these ETFs are not yet live for trading. Issuers must still have their S-1 registration statements declared effective by the SEC. The agency has only recently begun discussions with applicants on these filings, and multiple revisions may be required. Industry analysts estimate it could take several weeks before the first Ethereum spot ETF begins trading on U.S. exchanges.
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Commodity or Security? The Regulatory Line Is Drawn
A critical factor in the SEC’s approval was the exclusion of staking mechanisms from the proposed ETF structures. Most applicants, including VanEck, Fidelity, and Grayscale, explicitly removed staking-related provisions from their filings — a move widely seen as essential to gaining regulatory clearance.
In its final order, the SEC emphasized:
"The proposal before the Commission in this order does not involve staking of Ethereum by the trusts. Therefore, the relative merits or risks of staking are beyond the scope of this order. Any future activity in which a trust directly or indirectly participates in proof-of-stake validation, earns additional ETH, or generates income would require a proposed rule change under 19b-4."
This distinction underscores a pivotal regulatory interpretation: Ethereum may be treated as a commodity when held passively in an ETF, but staking could trigger securities classification. This aligns with long-standing positions from the Commodity Futures Trading Commission (CFTC), which has consistently classified ETH as a digital commodity.
The shift from proof-of-work (PoW) to proof-of-stake (PoS) had previously complicated ETH’s legal status, as staking resembles yield-generating investment contracts — a hallmark of securities under U.S. law. By avoiding staking, issuers effectively sidestepped this regulatory gray zone.
Matthew Sigel, VanEck’s Head of Digital Asset Research, affirmed:
“The evidence is clear — Ethereum is a decentralized commodity, not a security. Its commodity status is now recognized through CFTC oversight of ETH futures, public statements by regulators, and federal court rulings.”
Political Winds Shift in Favor of Crypto
Just weeks before the approval, market sentiment suggested that Ethereum spot ETFs would face prolonged delays or rejection. What changed? Politics.
With the 2025 U.S. presidential election cycle intensifying, cryptocurrency has emerged as a key voter issue. Former President Donald Trump has openly embraced crypto, accepting campaign donations in digital assets and criticizing President Biden’s regulatory approach. In response, the Biden administration appears to have softened its stance to avoid alienating tech-savvy voters and innovation-driven investors.
Haseeb Qureshi, Partner at Dragonfly Capital, noted:
“The SEC’s shift on Ethereum ETFs likely reflects a broader political recalibration — a move to prevent losing votes over what might seem like niche regulatory disputes.”
This political momentum was further amplified by the House of Representatives’ passage of the FIT 21 Act (Financial Innovation and Technology for the 21st Century Act), which passed 279–136. The bill grants the CFTC expanded authority and funding to regulate digital commodities, reinforcing the legal framework for treating Ethereum and similar assets as commodities rather than securities.
Julie Stitzel, DCG’s Vice President of Policy, stated:
“Lawmakers’ engagement in the approval process sends a strong signal: bipartisan support for financial innovation is real and growing.”
Institutional Demand Builds Rapidly
The regulatory clarity has reignited institutional interest in Ethereum as a strategic asset class.
Paul Grewal, Chief Legal Officer at Coinbase — the largest U.S. crypto exchange — said:
“This moment confirms what we’ve long believed: Ethereum is fundamentally a commodity. The rollercoaster ride was worth it.”
With Bitcoin ETFs already attracting over $15 billion in net inflows since January 2025, institutions are now eyeing Ethereum as the next logical diversification target.
As Sigel added:
“Improved political tailwinds will lead to more wins for digital asset investors — driving capital into Bitcoin, Ethereum, and open-source blockchain ecosystems.”
Market Outlook: Will ETH Surpass $5,000?
Analysts are overwhelmingly bullish on Ethereum’s price trajectory following the ETF approval.
Price Predictions from Leading Firms:
- Standard Chartered: Forecasts ETH to reach $8,000 by year-end**, and **$14,000 by late 2025.
- Bernstein: Projects a 75% surge to $6,600, mirroring Bitcoin’s post-ETF rally.
- QCP Capital: Estimates a 60% rise, with short-term targets at $4,000** and **$5,000 later this year.
- Zhu Su (former Three Arrows Capital): Predicts ETH will hit $5,400 post-approval.
- Lyra CEO Nick Forster: Market-implied odds show a 20% chance ETH reaches $5,000 by June 28**, and **$5,500 by July 26.
Standard Chartered’s Geoff Kendrick elaborates:
“We expect between 239 million and 915 million ETH to flow into spot ETFs within 12 months — equivalent to $15 billion to $45 billion in capital inflows, depending on price.”
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Why This Approval Matters Beyond Price
Beyond immediate price speculation, the SEC’s decision carries deeper implications:
- Legitimacy for Ethereum: The approval cements Ethereum’s status as a foundational digital asset — decentralized, battle-tested, and technologically robust.
- Precedent for Altcoins: If Ethereum qualifies as a commodity, other large-cap, decentralized networks (e.g., Solana, Cardano) may follow.
- Supply Constraints: Unlike Bitcoin ETFs, Ethereum’s issuance is not capped. However, net issuance has declined due to EIP-1559 fee burning — creating deflationary pressure when demand spikes.
- Institutional Onboarding: Firms already invested in Bitcoin via ETFs are likely to allocate to Ethereum as part of diversified crypto portfolios.
ConsenSys CEO Joseph Lubin explained:
“The surge in demand from ETF-driven investment could outpace supply growth — especially given reduced issuance and growing burn rates — pushing prices higher.”
Frequently Asked Questions (FAQ)
Q: What does SEC approval of Ethereum spot ETFs mean?
A: It means that regulated investment funds can now directly hold and trade Ethereum on U.S. exchanges, offering institutional and retail investors secure exposure without managing private keys.
Q: When will Ethereum spot ETFs start trading?
A: Likely within several weeks after S-1 filings are finalized. No official launch date has been set yet.
Q: Will these ETFs include staking rewards?
A: No. To comply with SEC requirements, current filings exclude staking features. Future changes would require new regulatory submissions.
Q: How could this affect Ethereum’s price?
A: Analysts project significant inflows — potentially $45 billion — which could drive ETH above $5,000 in 2025, with longer-term targets reaching $14,000.
Q: Is Ethereum now officially classified as a commodity?
A: While not formally declared by statute, regulatory actions — including CFTC oversight and SEC’s ETF approval — strongly treat ETH as a commodity in practice.
Q: Could other altcoins get spot ETFs?
A: Possibly. Ethereum’s approval sets a precedent for other decentralized networks that avoid centralized control and staking-linked securities concerns.
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The approval of Ethereum spot ETFs isn’t just a financial milestone — it’s a validation of blockchain innovation in mainstream finance. With political support strengthening, institutions mobilizing, and capital poised to flow, Ethereum stands at the edge of its most transformative phase yet.