The Ether token experienced a significant surge this week, fueled by speculation that regulatory scrutiny from US authorities on the blockchain ecosystem supporting the second-largest digital asset might be easing. On Wednesday, Ether rose as much as 2.5% before stabilizing at $3,535 by 10:45 a.m. in Singapore. This rally also provided a modest boost to Bitcoin and several smaller cryptocurrencies.

Ether, the native cryptocurrency of the Ethereum blockchain, plays a crucial role in the crypto-based financial services sector. The US Securities and Exchange Commission (SEC) had been investigating whether Ether should be classified as an unregistered security, a designation that could potentially reduce its demand.

In a recent post on X, Consensys, an Ethereum developer, announced that the SEC’s Enforcement Division had notified them of the closure of its investigation into Ethereum 2.0. This decision followed a letter from Consensys on June 7, requesting the SEC to confirm that the approval of Ether exchange-traded funds (ETFs) in May, based on Ether being a commodity, would lead to the closure of the Ethereum 2.0 investigation.

The SEC has not yet responded to Consensys’ claims, which were made outside of regular business hours. In April, Consensys sued the SEC to prevent potential regulation of Ethereum. Last month, the SEC approved proposals from Cboe Global Markets Inc., Nasdaq, and the New York Stock Exchange to list ETFs investing directly in Ether. Additional approvals are still needed before firms like BlackRock Inc. and Fidelity Investments can launch these products.

While Bitcoin is generally viewed as a commodity, the SEC maintains that most other tokens are unregistered securities requiring its oversight. However, SEC Chair Gary Gensler has been unclear about whether Ether falls into this category, creating anxiety among crypto enthusiasts about the potential regulatory impact on Ether and related projects.

In March, Bloomberg News reported that the SEC had requested information from companies about their interactions with the Ethereum Foundation as part of a broader review of Ether. The Ethereum Foundation, described on its website as a nonprofit organization, is dedicated to supporting Ethereum and its associated technologies.

This development signals a possible reduction in regulatory pressures on Ethereum, potentially paving the way for greater market confidence and continued growth of the Ether token.