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# SEC Paves the Way for Direct Investment in Ether ETFs

The Securities and Exchange Commission’s approval on Thursday has set the stage for trading in exchange-traded funds that directly invest in the cryptocurrency Ether, marking a significant milestone for the digital-asset industry.

## SEC Approves Proposal for Ether ETF Trading

In a groundbreaking move, the SEC has given the green light to venues operated by Cboe Global Markets Inc., Nasdaq, and the New York Stock Exchange to list products linked to the world’s second-largest cryptocurrency. This decision, which was unexpected just last week, eliminates a major obstacle for spot Ether ETF trading in the United States. Issuers now await a separate approval from the regulator, with no set deadline for the decision.

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## Investment Firms Compete for First-Mover Advantage

Leading investment companies such as VanEck, ARK Investment Management, BlackRock Inc., and Fidelity Investments are all vying to gain a crucial first-mover advantage in launching spot Ether ETFs. Their interest has been piqued by the significant inflow of funds into new Bitcoin ETFs following the SEC’s approval of these products earlier this year.

Shares of cryptocurrency exchange Coinbase saw a rise of up to 4.1% in after-hours trading, while Robinhood shares surged nearly 3% in response to the news. The crypto market’s reaction was relatively subdued, with Ether trading around $3819.80 in the immediate aftermath of the announcement.

# Implications of the SEC’s Decision

The SEC’s ruling on Thursday carries significant implications for US financial policy and regulatory oversight.

## Uncertainty Surrounding Ether’s Classification

SEC Chair Gary Gensler’s ambiguous stance on whether Ether qualifies as a security has raised concerns within the crypto community. There is apprehension that the agency may subject Ether and projects built on the Ethereum blockchain to stringent and costly investor-protection regulations.

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## CFTC’s Perspective on Ether

Contrary to the SEC’s stance, the Commodity Futures Trading Commission (CFTC) views Ether differently and does not consider it a security. The CFTC has allowed trading in Ether futures on CME Group Inc. for several years, indicating a divergence in regulatory opinions between the two agencies.

# Industry Celebrates SEC Approval

The SEC’s endorsement of the Cboe plan represents a significant victory for the digital asset industry, contrary to previous expectations of rejection by the deadline.

Investment firms anticipate that listing Ether ETFs will attract a fresh wave of capital from retail and institutional investors seeking exposure to the cryptocurrency market via ETFs rather than tokens.

# Crypto Legislation and Regulatory Landscape

With the recent legislative developments in the US, optimism is growing that the government’s crackdown on the crypto industry may be easing. Despite opposition from the White House and Gensler, the Republican-led House advanced comprehensive cryptocurrency legislation, garnering some Democratic support.

On the jurisdictional debate, experts such as Lee Reiners from Duke University suggest that the SEC’s approval of exchange bids for Ether ETFs reinforces the notion that Ether is classified as a commodity rather than a security.

Investment firms have made concessions to secure SEC approval, with Fidelity Investments committing to keep purchased Ether separate from staking programs to address concerns about security implications. Last year, the SEC filed a lawsuit against Coinbase for allegedly violating rules by offering staking services.

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