The U.S. Securities and Exchange Commission's (SEC) recent approval of spot Ethereum (ETH) products has reignited the debate over whether ether should be classified as a commodity or a security. The SEC's decision has left many in the crypto community wondering about the regulatory status of ether, with opinions divided on the matter.

The ambiguity over the SEC's jurisdiction on ether has persisted, with SEC Chair Gary Gensler refraining from explicitly categorizing ether as a security. However, ConsenSys, a leading blockchain technology company, alleged in a complaint last month that the SEC has considered ether to be a security.

In contrast, the Commodity Futures Trading Commission (CFTC), the SEC's sister agency, has a different stance. CFTC Chair Rostin Behnam has consistently asserted that ether is a commodity.

The confusion deepened when the SEC approved 19b-4 forms for eight Ethereum ETFs last Thursday. These approvals allow issuers to proceed, provided their S-1 registration statements become effective before trading commences. Legal experts are divided on whether this approval signifies any change in ether's regulatory status.

Paul Grewal, Chief Legal Officer at Coinbase, described this as a pivotal moment in the ongoing debate over ether's classification. "The SEC has long been ambiguous about whether ETH is a security, a non-security, a commodity, or something else altogether," Grewal stated in an interview with The Block.

Grewal highlighted that the use of form S-1 suggests that these funds, by definition, do not include assets with more than 40% of their portfolio in securities. "This implies that ETH is not considered a security by the SEC," he added.

Coy Garrison, former counsel for SEC Commissioner Hester Peirce, agreed that the approval of spot Ethereum ETFs supports the view that ether is a commodity. "The SEC's order approving these products references them as 'commodity-based trust shares,' which wouldn't be appropriate if ETH were a security," said Garrison, now a partner at Steptoe LLP.

Despite these interpretations, the SEC's approval does not conclusively determine ether's status. The SEC could still argue that ether is a security based on specific transaction circumstances, noted Grewal and other experts. "The SEC might claim that the acceptance of ETH in the ETF process does not preclude a future determination that it is a security," commented Ashley Ebersole, general counsel at 0x Labs.

Martin Auerbach of Withersworldwide added that the contents of the ETF do not necessarily need to be securities, citing gold-based ETFs as an example. This leaves the possibility open for the SEC to classify ether as a security in the future.

Further complicating the issue is the classification of staked ether, which may differ from regular ether. The SEC has pursued several legal actions suggesting that staked ether could be considered an investment contract, thus qualifying as a security, according to a recent report by Galaxy Digital Holdings.

In conclusion, while the SEC's approval of spot Ethereum products has brought some clarity to ether's status, the regulatory picture remains complex and unresolved. The debate over whether ether is a commodity or a security continues, with future regulatory actions likely to shape the final determination.