Ethereum Drops 0.72% as SEC Approves Rule Change for ETFs

Ethereum's latest price was $4175.99, down 0.72% in the last 24 hours. On September 19, 2025, the U.S. Securities and Exchange Commission (SEC) approved a significant rule change for Ethereum-based exchange-traded funds (ETFs). The Grayscale Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF transitioned from a non-generic listing rule to a more streamlined generic rule. This change allows both funds to continue trading without requiring individual SEC approvals, marking a shift in how these funds are regulated. Previously, both ETFs needed separate approval orders from the SEC to be listed. Under the new rule, the SEC will no longer need to review each listing on a case-by-case basis. This adjustment aligns the Grayscale Ethereum ETFs with other commodity-based trust shares that qualify for generic listing standards. The change is intended to make trading Ethereum-based products more transparent and efficient. The move follows a broader policy shift by the SEC to approve generic listing standards for commodity-based trust shares. These standards now allow qualifying products to be listed without needing separate approval orders, which was previously required for each case. As a result, Ethereum-based ETFs like Grayscale’s can now operate under clearer, more predictable regulatory rules. Notably, this change ensures that both Ethereum funds are no longer subject to the delays associated with individual approvals. The SEC’s approval of this rule change reflects the broader trend of easing regulations for crypto-related financial products. While these products now benefit from a more efficient approval process, other crypto assets are still awaiting extended review periods, as seen with the recent delay in the decision regarding Grayscale’s Cardano ETF. Despite the positive outcome for Grayscale’s Ethereum ETFs, the SEC has emphasized that these funds must still adhere to strict oversight. The funds must comply with all safety protocols outlined in the generic listing rules, including measures to prevent fraud and market manipulation. The SEC retains the power to halt or amend the rule change if deemed necessary, ensuring that the funds continue to meet regulatory expectations. In an unusual move, the SEC did not impose the standard 30-day waiting period for the rule change to take effect. The immediate effectiveness of the amendment ensures that the Grayscale Ethereum ETFs can continue their operations without interruption. This quick implementation reflects the SEC’s belief that the change is beneficial to the public and does not pose significant regulatory risks. While the SEC continues to review other crypto assets, this shift represents a key step in the evolving landscape of crypto-related financial products.

Vitalik Buterin, the co-founder of Ethereum, has endorsed Base’s layer-2 (L2) model, highlighting its use of centralized sequencers for enhanced user experience while relying on Ethereum for decentralized security. Buterin’s endorsement comes at a time when there is ongoing debate about the classification of layer-2 networks. Base, developed by Coinbase, operates as an L2 solution on top of Ethereum, utilizing centralized components to improve user experience while maintaining Ethereum’s decentralized security foundation. Buterin emphasized that Base does not custody user funds, thereby eliminating the risk of theft or withdrawal restrictions. This endorsement is significant as it addresses concerns about the centralized nature of sequencers in layer-2 networks. Sequencers handle transaction ordering, and there has been debate about whether their centralized control aligns with regulatory definitions of exchanges. Coinbase chief legal officer Paul Grewal countered the exchange analogy. Grewal asserted that layer-2 networks serve as general infrastructure, comparable to cloud services like Amazon Web Services. He noted these systems process and group transactions, executing smart contracts without facilitating security trades. Jesse Pollak, a co-founder of Base, specified that sequencers arrange transaction sequence but do not pair orders like matching engines in exchanges. Users retain the option to submit transactions through Base or directly on Ethereum, preserving decentralization. Pollak likened the sequencer to a coordinator optimizing flow in a dedicated lane. This discussion underscores the evolving regulatory landscape for layer-2 networks and their role in the Ethereum ecosystem.

Recent developments highlight significant advancements and challenges within the Ethereum ecosystem. A key trend involves Digital Asset Treasuries (DATs) actively accumulating ETH while exploring staking and decentralized finance (DeFi) activities to generate additional yield. These entities strategically maintain a higher multiple-of-net-asset-value (mNAV), bolstering their ability to raise capital for further ETH acquisitions. Ethereum maintains dominance in stablecoin issuance, supporting the largest share of the sector's total supply. However, network constraints like slower block times and elevated transaction costs currently hinder its full potential to scale stablecoin adoption. Continued efforts to improve underlying network capabilities are crucial to prevent competing blockchains from capturing significant stablecoin market share. Significant progress is evident in Layer-2 scaling solutions, which are increasingly utilizing Ethereum's blob data posting mechanism. The Pectra upgrade's increase to the blob inclusion target has resulted in Ethereum mainnet blocks consistently carrying more blobs. This enhancement allows Layer-2s to process substantially higher transaction volumes without proportionally increasing user fees, thereby improving throughput and reducing costs across the entire Ethereum Layer-2 ecosystem. The role of stablecoins within the broader digital financial landscape continues to expand, now underpinning over $230 billion in circulating supply and accounting for more than 60% of on-chain transaction volume globally. This evolution marks a shift from their initial use primarily as trading instruments towards becoming a fundamental infrastructure layer. Strategic institutional interest underscores Ethereum's position, evidenced by significant financial commitments such as BlackRock's substantial $500 million ETH investment earlier in the year. This major allocation by a leading traditional finance institution represents a significant vote of confidence in Ethereum's long-term viability and its institutional adoption trajectory.