The US Securities and Exchange Commission (SEC) has approved the selling of spot Ether Exchange-Traded Funds (ETFs), in what is being considered an unexpected decision.

The Nasdaq, NYSE, and CBOE exchanges submitted recommendations to the SEC, which called for modifications to the current regulations to permit Ethereum Exchange-Traded Products (ETPs) and ETFs. These suggestions were approved.

After a drawn-out procedure that saw the price of Bitcoin reach an all-time high, the SEC approved Bitcoin ETFs and ETPs in January of this year. The approval of spot Ether ETFs comes after that.

Even if the legislation allowing for the trading of spot Ether ETFs has been changed, trading will not start right now. The SEC must first approve each issuer's unique ETF registration statement, which includes information on investor disclosures.

The length of the SEC's approval procedure is still unknown.

Reaction of industry to Ethereum ETFs

Many in the industry are surprised by the quick approval of spot Ether ETFs, considering the SEC's longstanding antipathy against cryptocurrency and the protracted clearance process for spot Bitcoin ETFs.

Head of Partnerships at Coincover, Alex Saleh, responded to the SEC's first-stage approval of Ethereum ETFs by saying, "This is a welcome surprise given the challenges of the Bitcoin ETF approvals and the SEC's historical hostility towards crypto."

Since the US has the biggest ETF market globally, other countries often follow suit. Although a second round of clearance is still required before Ethereum ETFs can be launched, it would signal a significant endorsement of the role that digital assets will play in our financial system and pave the way for the introduction of more of these products.

Furthermore, the SEC's action may be a response to the spot Bitcoin ETFs' trading performance thus far, as cryptocurrency is quickly gaining popularity with conventional investors who are willing to take greater risks in an otherwise difficult investing environment during the last two years.

Alex goes on: "As exposure to Ethereum would be opened to a wider pool of investors, the SEC's move is another sign of the growing appetite for crypto ETFs and could introduce fresh demand pressure on Ethereum spot prices."

"The cryptocurrency community is experiencing an exciting time, but like with any new financial product, there are hazards. There will inevitably be volatility, and if Ethereum ETFs become widely used, fund managers will likely accumulate significant Ethereum holdings using a variety of custodial strategies. This will be an easy target for assaults, hackers, and potential mistakes made by people.

"We expect higher standards for risk mitigation and security capabilities, so ETF managers need to give security first priority."

However, not everyone has responded to the SEC's most recent statement in the same way. While Bitpanda Co-founder and CEO Eric Demuth welcomes the development, he deems it "well overdue," while Alex Saleh views the introduction of spot Ether ETFs as a nice surprise.

He states: "We are witnessing another significant area of the crypto sector opened up for institutional investors, in spite of the SEC's position that ETH is in some way a security.

It's another indication of how the cryptocurrency market is evolving and a move in the right direction toward treating cryptocurrencies equally with other asset classes.

"With this certification, there will be more US institutional investors, reduced volatility, and greater proof of cryptocurrency's long-term viability in the financial industry.

But let's face it: Nothing would have changed about ETH's and the cryptocurrency industry's bright future, even if it had been rejected.