The SEC has approved CBOE’s proposed rule change to allow the listing and trading of our spot Ether ETF on its exchange, a major milestone that heralds more legal victories and will further drive increased investment in Bitcoin, Ethereum, and other blockchains.
We are pleased to announce that the SEC has approved our proposed rule change with our exchange partner, the Chicago Board Options Exchange (CBOE), pursuant to Section 19(b) of the Securities Exchange Act of 1934 to allow the listing and trading of a spot Ether ETF on CBOE.
We expect this trend to pave the way for more victories through new laws and courts, helping to attract more investment in Bitcoin, Ethereum, and other open-source blockchain software.
We applaud this decision as we believe the evidence clearly demonstrates that ETH is a decentralized commodity, not a security. ETH’s status as a commodity has now been recognized in a number of contexts, including the Commodity Futures Trading Commission’s (CFTC) regulation of ETH futures, public statements by Commission officials, federal court decisions, and now, hopefully, this ETF.
The high correlation between ETH spot prices and CME Ethereum futures prices, similar to Bitcoin’s correlation, demonstrates that the spot ETH market is tightly linked to the regulated futures market. This tight connection supports the listing of a spot ETH ETF, thereby enabling the market oversight required by the SEC. Furthermore, liquid, regulated ETH futures trading on CME and the approval of an ETF tracking these futures demonstrate to all neutral observers that Ethereum meets the same standards as Bitcoin for ETFs holding spot assets. The SEC approved the listing of a spot Bitcoin ETF based on these exact standards, and we have long believed that Ethereum deserves the same treatment.
Any claim that Ethereum’s move to proof-of-stake has turned it into a security, or that stake itself is a security transaction, is misleading and harmful to innovation. Proof-of-stake is simply an alternative consensus mechanism to proof-of-work mining — it does not fundamentally change the decentralized nature of Ethereum, nor does it turn ETH into a security issued by a central entity. In fact, since the 2016 DAO hack, Ethereum has become highly decentralized, with no centralized issuer or promoter controlling the material supply or the percentage of validators. The Ethereum Foundation’s ETH holdings have steadily declined to just 0.30% of the circulating supply, while Vitalik Buterin holds about 0.23%. The widespread distribution of ETH contradicts the idea that it is a security issued by a common enterprise.
We’ve also heard some argue that Ethereum’s transition to Proof-of-Stake (PoS) is a securities transaction. This misunderstands the decentralized nature of Ethereum’s governance. Ethereum’s transition to PoS was driven by social consensus, involving extensive community discussion, a transparent development process, and voting mechanisms within a decentralized network. This is in stark contrast to the traditional financial system, where decisions are made by centralized entities or a small group of registered stakeholders. Changes to Ethereum are proposed through Ethereum Improvement Proposals (EIPs), publicly debated, and adopted only with broad community support, ensuring that no central authority controls the network. This decentralized, community-driven process highlights that Ethereum remains a decentralized commodity, not a security, as its evolution reflects the collective agreement of diverse global actors. As the UK Prime Minister recently said on this topic: “We support open source. Open source drives innovation. It creates startups. It creates communities. Any restrictions on open source must have very high thresholds.”
Participants in traditional financial markets often fail to fully understand that Ethereum is not just a speculative asset, but the backbone of an ecosystem with a wide range of real-world uses, a fact that supports its vibrant decentralized application ecosystem. Ethereum supports more than 270 million unique user addresses and processes an average of 1.2 million transactions per day. Last year, the value of the Ethereum chain settled more than $2.8 trillion, while global remittances were only $860 billion, PayPal's transaction volume was $1.5 trillion, and Visa's network transaction volume was $15 trillion.
Ethereum has a strong developer community, with more than 2,300 active developers contributing to 113,000 different GitHub repositories each month. With the network effect of this decentralized community, Ethereum has become the foundation of a large ecosystem, including more than 3,000 applications covering areas such as financial services, games, and collectibles. Its smart contract capabilities support automated lending, decentralized exchanges, NFT markets, games that earn money while playing, and tokenization of real-world assets. Big companies such as Reddit, Ubisoft, Nike, and Visa have also launched projects based on Ethereum.
The common analogy for regulating Ethereum NFTs is that they are inappropriate to physical collectibles like baseball cards or Rolex watches - they both represent unique digital/physical scarcity and ownership. Like the Bored Ape Yacht Club NFT and the 1952 Topps Mickey Mantle rookie card, Ethereum NFTs can play the role of tokens and stores of value. However, governance structures like Ethereum support many innovations, including the tokenization of real-world assets, which is very different from physical collectibles. Limiting this functionality through misguided regulation will hinder the advancement of the technology and push talented entrepreneurs overseas.
The situation is further complicated by the inconsistent stances taken by different U.S. regulators. The CFTC has allowed Ethereum futures products to trade, despite the SEC’s recent refusal to clarify Ethereum’s status. The CFTC chairman has stated multiple times that Ethereum is a commodity. Even the SEC’s own guidance notes that over time, digital assets may become sufficiently decentralized to no longer be considered securities, but lacks key details. Adding to the contradiction, just last week, the U.S. Attorney’s Office for the Southern District of New York issued an indictment that referred to Ethereum as a “decentralized” blockchain, seemingly inconsistent with the SEC’s obvious designation as a security. Without a doubt, this regulatory inconsistency has fostered harmful uncertainty, in stark contrast to the SEC’s authorization for capital formation, and has caused significant pain in the market.
That’s why it’s so encouraging to see growing bipartisan support for digital assets in Washington, reflecting broad voter engagement, as exemplified by the recent repeal of SAB 121, a crypto-hostile accounting rule enacted through unorthodox means. We expect this trend to lead to further victories through new laws and courts, attracting investment in Bitcoin, Ethereum, and other open-source blockchain software.
