Regulation
Ether falters after ETF nod, Bitcoin briefly slips below $68,000
Key points
- Bitcoin and Ether fell on Tuesday after sharp gains last week.
- Ether rallied last week amid optimism over the SEC’s approval of a spot ether ETF.
- The regulator has laid the groundwork for spot ether ETFs by changing the rules allowing such products to be listed, but it could be months before a spot ether ETF is available for trading.
- The US House of Representatives has passed a bill that will provide greater clarity and divide regulatory jurisdiction for cryptocurrencies. The bill is before the Senate and does not have the support of President Joe Biden.
- Former US President Donald Trump has doubled down on his support for cryptocurrencies by saying he will pardon the convicted founder of darknet marketplace Silk Road.
After last week’s brief but sharp price jumps, bitcoin (Bitcoin) and ether (ET) headed lower on Tuesday.
Bitcoin briefly slipped below $68,000 after trading above $70,000 early last week. Meanwhile, ether rose about 25% in 24 hours, amid optimism surrounding the approval of spot exchange traded funds (ETFs). However, the surge was short term despite the regulatory green light for the product.
Other big news includes increasing mentions of cryptocurrencies by US presidential candidates as they try to woo voters, a British judge’s scathing opinion on why Craig Wright’s claim to be bitcoin’s creator, Satoshi Nakamoto, doesn’t holds and a prison sentence for a former FTX executive.
Regulators Set the Stage for Spot Ether ETFs
The US Securities and Exchange Commission (SEC) on Thursday unexpectedly paved the way for listing of spot ether ETFs on American stock exchanges. Ether, the cryptocurrency that powers the Ethereum network, is the second largest cryptocurrency by market capitalization behind bitcoin.
Despite the SEC’s decision marked a significant regulatory changethe listing of these ETFs by companies such as BlackRock (BLK), Grayscale and Fidelity may still be months away. Products must first receive approval for their S-1 Registration Documentswhich could take until July or August, according to Galaxy Digital.
Should they receive the final green light, a key question is whether ether ETFs will generate similar demand to the historic launch of spot bitcoin ETFs in the US, which have amassed around $13.5 billion in inflows, according to Farside Investors.
While some are optimistic that the new listings will attract retail and institutional investors, others remain cautious, pointing out that Ether’s market is smaller and less recognized than Bitcoin’s. Furthermore, the lack of access to staking for the ether held by the ETF represents a significant limitation for investors.
The House moves on the cryptocurrency regulation law
The cryptocurrency industry scored a significant victory in Washington last week when the House of Representatives voted overwhelmingly in favor of the Financial Innovation and Technology for the 21st Century Act (FIT21).
The bill proposes to elevate the Commodity Futures Trading Commission (CFTC) to the primary supervisor of digital assets, granting it exclusive authority over cash or spot markets for digital commodities, while the SEC would regulate digital assets with non-decentralized blockchains. This clear division of regulatory responsibilities is what the cryptocurrency industry has long sought.
Despite the strong House vote, 279-136, the bill faces a challenging path in the Senate, where approval is uncertain. President Joe Biden has opposed FIT21, citing insufficient consumer and investor protections.
Former President Trump Doubles Down on Support for Cryptocurrencies
In an attempt to appeal to libertarian voters and position himself as a pro-cryptocurrency candidate, Donald Trump has called for the commutation of Ross Ulbrichtthe phrase. Ulbricht, the convicted operator of the Silk Road online marketplace, is serving a life sentence for running a platform where illegal drugs and other illicit items were purchased using bitcoin.
During a speech at the Libertarian Party convention, Trump promised: “If you vote for me, I will commute Ross Ulbricht’s sentence on day one. He’s already served 11 years. We’ll bring him home.”
This move reflects Trump’s strategy of broadening his base of support ahead of his rematch with President Joe Biden in November, seeking to neutralize the threat of third-party candidates such as Robert F. Kennedy Jr.
Trump’s public embrace of cryptocurrencies is a major departure from his past comments when he laid out his strong preference for the US dollar over bitcoin.
The judge rules that Craig Wright is a scammer
According to WIRED, a UK High Court judge ruled that he is a computer scientist Craig Wright he lied extensively and committed large-scale forgeries in an attempt to prove that he was Satoshi Nakamoto.
In a detailed ruling published on May 20, Judge James Mellor found that Wright fabricated numerous documents to support his false claims and used the courts to perpetrate fraud.
“I am entirely satisfied that Dr. Wright lied to the Court extensively and repeatedly,” Mellor wrote.
This ruling marks the end of a six-week trial initiated by the Crypto Open Patent Alliance (COPA), which sought to declare that Wright is not the creator of Bitcoin to prevent him from pursuing various lawsuits against Bitcoin developers and other parties.
Despite Wright’s intention to appeal, his credibility has been significantly damaged.
What to expect from the markets this week
Regulators and cryptocurrency market observers will be keeping a close eye on the fate of the FIT21 bill as it heads to the Senate.
Additionally, another former executive of the defunct cryptocurrency exchange FTX has been convicted. The former co-CEO of the exchange’s Bahamian entity, Ryan Salame, received 90 months in prison for violating campaign finance laws and conspiring to operate an unlicensed money transmitter.
There was also a big problem on Tuesday. Bitcoin infrastructure company Riot Platforms (REVOLT) said it plans to acquire bitcoin mining company Bitfarms in a part-cash, part-stock deal. Riot’s takeover offer is $2.30 per Bitfarm share, a 24% premium to the one-month volume-weighted average share price as of May 24, for a total asset value of $950 million. dollars. Riot already owns a 9.25% stake in Bitfarms and claims the deal would result in the “world’s largest publicly traded bitcoin miner.”