Capping what appears to be a reversal of fortunes, spot Ethereum ETH +1.27% ETFs were approved by the U.S. Securities and Exchange Commission on Thursday, a move that comes after shifting political sentiments appeared to influence the agency's view of the new financial instruments.

"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's Head of Digital Assets Research Matthew Sigel posted to X immediately after the announcement.

Along with BlackRock, Grayscale and Fidelity, VanEck is one of the firms that applied for the right to issue spot Ethereum ETFs.

"It’s a historic move that puts the spotlight on the second-largest crypto asset," Bitwise Invest posted to X. The firm also had a spot Ethereum ETF application approved.

Before this week, the widely held opinion was that spot Ethereum ETFs would fail to secure the SEC's approval despite the recent success of spot bitcoin ETFs. After being approved and launching in January, they have generated billions of dollars in investment. Traditional financial institutions like BlackRock and Fidelity issued spot bitcoin ETFs, and hundreds of institutional investors have bought shares in the funds in recent months.

Representing the largest cryptocurrency exchange in the U.S., Coinbase Chief Legal Officer Paul Grewal said the SEC's approval confirmed what many in crypto have long believed.

"This week, this day, has been a rollercoaster unlike any other I’ve seen," he posted online. "ETH is effectively deemed a commodity as we’ve always known it to be."

Sigel agreed with Grewal's statement.

"The evidence clearly shows that ethereum is a decentralized commodity, not a security," he said. "ETH’s status as a commodity has now been recognized in a variety of circumstances, including the CFTC's regulation of ETH futures, public statements by commission officials, rulings by federal courts, and now, hopefully, this ETF," VanEck's Sigel wrote.

Though Ethereum dapp producer Consensys echoed those sentiments, the firm pointed out SEC's "troublesome" stance toward 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," Consensys 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."

Still, Alt Tab Capitals Co-Founder and COO Greg Moritz said the approvals would further widen investors' exposure to investments tied to crypto.

“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."

Shifting political winds

Professionals who have been working to sway the minds of lawmakers also celebrated the announced approval.

"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," said Julie Stitzel, Vice President of Policy at DCG.

Many crypto advocates also considered Wednesday's House vote 279 to 136 a political victory. The Financial Innovation and Technology for the 21st Century Act, also known as FIT21, should give the Commodity Futures Trading Commission more power and funding to help it oversee crypto assets classified as “digital commodities.”

(Updates with comment from Consensys.)