Ethereum celebrated the milestone of converting to the Proof-of-Stake (PoS) consensus mechanism a year ago. This transition, enacted on September 15, 2022, saw the network shifting from miners to validators. SEC Chair Gary Gensler expressed on the very day that all PoS-based coins might be regarded as securities, emphasizing that securities exclusively afford the advantage of yielding passive earnings.

In line with this stance, early in 2023, the regulator initiated pre-litigation proceedings against crypto firms in the US involved in staking, urging them to disallow users from staking coins. This development dampened Ethereum’s appeal to investors — evident from the withdrawal of 108 million USD from Ethereum funds by institutional actors over a year. In contrast, several altcoins witnessed an investment surge during this period.

Yet, the SEC’s argument showed signs of frailty in the recent court deliberations. Judges, while reviewing Grayscale’s appeal for the conversion of its Bitcoin trust fund to an ETF, criticized the regulatory body’s standpoint as “arbitrary and whimsical.” The ongoing trend suggests a potential SEC approval for Grayscale, post which, the firm plans to propose a similar transition for its Ethereum fund.

The SEC finds itself in a precarious position defending its perspective owing to the lack of clear demarcation criteria distinguishing cryptocurrencies as either commodities or securities. This ambiguity was apparent when Gensler failed to provide a coherent response to this issue during a congressional hearing.

Anticipating the green light for spot Bitcoin ETFs, several investment entities, including ARK Investment, 21Shares, and Hashdex, have begun forwarding applications for spot Ethereum. These applications coincide with the scheduled launch of the inaugural Ethereum futures ETFs in the US this October, a move expected to amplify American investors’ interest in altcoins significantly.

Internationally, Ethereum, especially staking, continues to garner attention. Presently, nearly a quarter of all circulated coins have been staked to secure passive incomes, a strategy that seems to overrule the existing reticence among US platforms.

Ethereum retains its dominance as a premier blockchain foundation for a plethora of projects. For instance, Coinbase’s newly initiated Base network, a second-tier entity, operates on the Ethereum infrastructure. This burgeoning endorsement for Layer-2 solutions is fostering a favorable environment for Ethereum. A testament to its growing stature was observable on September 13 when the daily active addresses eclipsed the one-million mark for the third time in its history.

Ethereum stands unrivaled as a tool for procuring passive revenue and spearheads the blockchain space in supporting smart contracts. The forthcoming advent of ETFs in the US promises to mitigate the repercussions of stringent regulations, potentially ushering a fresh phase of growth for the altcoin.