In a stunning reversal, the U.S. Securities and Exchange Commission (SEC) announced on Thursday that it has approved applications for spot Ethereum ETFs, effectively green-lighting Ethereum trading on Wall Street. 

Just one week ago, most financial experts and crypto industry leaders had written off such an outcome as increasingly unlikely. For one, the SEC had offered little indication that it planned to move forward with any spot ETH ETF applications prior to a looming May 23 deadline.

What's more, just weeks prior, a lawsuit filed by Ethereum software company Consensys against the SEC alleged that the regulator has secretly considered ETH to be an illegal, unregistered security for over a year. (Disclosure: Consensys is one of 22 investors in Decrypt.) If the SEC formally labeled ETH a security, then Ethereum ETFs would need to be approved via a different process than the one currently underway. 

Thus, in approving spot ETH ETFs today, the SEC has tacitly conceded that ETH is not a security in and of itself. Such an outcome is a major victory for crypto advocates, given ETH’s crucial role in underpinning the Ethereum network—upon which many of the industry’s most prominent projects and services are built.  

Crucially, however—in a bid to get over the finish line—several ETH ETF issuers dropped language from their applications this week regarding the staking of customer ETH. Ever since Ethereum transitioned to a proof of stake system in September 2022, ETH holders have been able to deposit their funds with the network to accrue rewards. The SEC has long taken the view that when a financial intermediary offers staking services, it is engaging in an illegally unregistered securities scheme.

Spot Ethereum ETFs—unlike ETH futures ETFs, which track derivatives contracts and were approved by the SEC in October—involve issuers actually buying and storing ETH on behalf of their clients. Now that spot ETH ETFs have gained approval, traditional financial institutions and investors will soon be able to gain exposure to ETH without holding any crypto themselves. 

Today’s historic action follows the SEC’s approval of eleven spot Bitcoin ETF applications in January. Since then, spot Bitcoin ETFs have attracted nearly $13 billion in net in-flows.

“I always called the spot Bitcoin ETF approvals, Bitcoin’s IPO,” Cody Carbone, chief policy officer at the crypto lobbying group Digital Chamber of Commerce told Decrypt. “This is ETH’s IPO. That is a massive stamp of approval.”

Editor's note: This story is breaking and will be updated with additional details.