Notably, the eToro settlement spells out that the agency will cease offering crypto except for three digital assets: Bitcoin, Bitcoin Cash, and Ethereum.

While regulators have long admitted that Bitcoin and its spinoff Bitcoin Cash should be supervised as commodities, and not under the jurisdiction of the SEC, the Gary Gensler-led agency has waffled on the question of whether Ethereum should be treated as a security. Along with the approval for Ethereum ETFs in July, Tuesday’s settlement is the strongest signal yet that the SEC has relented on the jurisdictional turf war.

To regulate or not to regulate

Under Chair Gensler, who started his tenure in early 2021, the SEC has pursued a bruising campaign of lawsuits and settlements against the crypto industry, escalating after the collapse of high-profile projects including Terraform Labs and FTX in 2022. Attorneys have lobbed enforcement actions against every sector of the crypto industry, from major exchanges such as Coinbase and Binance to DeFi and NFT projects.

Central to the SEC’s cases is the question of whether crypto assets should be regulated as securities, similar to stocks and bonds, or commodities, similar to gold and oil. Aside from Bitcoin, which previous regulators have agreed is sufficiently decentralized, Gensler has argued that the vast majority of cryptocurrencies should be treated as securities.

While SEC attorneys have named a number of leading cryptocurrencies as securities in lawsuits, including Solana and even the stablecoin BUSD, they did not take a firm legal position on Ethereum, the second-largest cryptocurrency by market cap. In Congressional testimony, Gensler refused to provide a clear answer on the agency’s view, leading to controversy over companies like Prometheum that have sought to fill the regulatory vacuum.

In March, Fortune reported that the SEC had issued subpoenas related to an investigation over Ethereum, and the agency appeared close to declaring Ethereum to be a security over the summer through an enforcement action against the developer Consensys. But under withering scrutiny from lawmakers, the SEC appeared to retreat. The agency’s change of heart included the approval of Ethereum ETFs (though it would not allow firms to offer staking—a key provision that some legal observers say would make Ethereum resemble a security offering).

By fining eToro for offering trading services for crypto assets offered and sold as securities—but allowing it to continue offering trading for Ethereum—the SEC appears to finally be conceding that Ethereum should not be treated as a security, at least without staking services.

Spokespeople for the SEC and eToro did not immediately respond to a request for comment.