In a major development for the cryptocurrency market, the U.S. Securities and Exchange Commission (SEC) approved spot Ethereum exchange-traded funds (ETFs) on Thursday. This decision reflects a shift in political sentiment that appears to have influenced the agency's stance on these financial instruments.

Matthew Sigel, Head of Digital Assets Research at VanEck, celebrated the approval, stating, "We expect the improved political backdrop will lead to further victories for digital asset investors and developers, via new laws and in the courts, that draw investment to bitcoin, ethereum, and other open-source blockchain software." VanEck, alongside BlackRock, Grayscale, and Fidelity, is among the firms that applied for the right to issue spot Ethereum ETFs.

Bitwise Invest also acknowledged the significance of the SEC’s decision, posting on X, "It’s a historic move that puts the spotlight on the second-largest crypto asset." Bitwise's application for a spot Ethereum ETF was also approved.

Until this week, the consensus was that spot Ethereum ETFs would struggle to gain SEC approval, despite the recent success of spot bitcoin ETFs. Spot bitcoin ETFs, launched in January, have already attracted billions of dollars in investment. Major financial institutions like BlackRock and Fidelity issued these ETFs, and hundreds of institutional investors have since bought shares.

Paul Grewal, Chief Legal Officer at Coinbase, the largest cryptocurrency exchange in the U.S., remarked that the SEC's approval confirms long-held beliefs within the crypto community. "This week, this day, has been a rollercoaster unlike any other I’ve seen," Grewal posted. "ETH is effectively deemed a commodity as we’ve always known it to be."

Sigel echoed Grewal's sentiments, stating, "The evidence clearly shows that Ethereum is a decentralized commodity, not a security. ETH’s status as a commodity has now been recognized in various circumstances, including the CFTC's regulation of ETH futures, public statements by commission officials, rulings by federal courts, and now, hopefully, this ETF."

Consensys, a prominent Ethereum dapp producer, welcomed the SEC’s decision but criticized the regulator's inconsistent approach to digital assets. "While Consensys welcomes today’s decision to approve ETH Spot ETFs as a step in the right direction, this seemingly last-minute approval is yet another example of the SEC’s troublesome ad hoc approach to digital assets," the firm wrote on X. "No other industry, market, or asset is subject to such deliberate regulatory abuse. It is unfair to market participants, antithetical to the rule of law, and handcuffing innovation."

Greg Moritz, Co-Founder and COO of Alt Tab Capitals, highlighted the broader implications of the approval. "There is massive demand for digital assets and for too long access to them has been restricted to either the technically savvy or the already wealthy," said Moritz. "We see the largest financial institutions in the world creating products to meet that demand and now we see a regulatory decision that embraces progress."

Julie Stitzel, Vice President of Policy at Digital Currency Group (DCG), noted the positive engagement from policymakers. "Engagement from policymakers on a spot Ethereum ETF approval demonstrates to Americans that lawmakers on both sides of the aisle are taking their concerns on financial innovation seriously," Stitzel said.

The SEC's decision follows the U.S. House of Representatives' vote of 279 to 136 on Wednesday to pass the Financial Innovation and Technology for the 21st Century Act (FIT21). This legislation aims to empower the Commodity Futures Trading Commission (CFTC) with greater authority and funding to oversee crypto assets classified as "digital commodities," marking another significant political victory for the cryptocurrency sector.