Regulation
Ether fumbles after ETF signals, Bitcoin briefly slides below $68,000
Key takeaways
- Bitcoin and ether fell on Tuesday after strong gains last week.
- Ether surged last week amid optimism that the SEC would approve an ether spot ETF.
- The regulator paved the way for ether spot ETFs by changing the rule allowing the listing of such products, but it may take months before an ether spot ETF is available for trading.
- The United States House of Representatives has passed a bill that will provide more clarity and divide regulatory jurisdiction for cryptocurrencies. The bill is moving through the Senate and does not have the support of President Joe Biden.
- Former US President Donald Trump has doubled down on his support for crypto by saying he would pardon the convicted founder of darknet marketplace Silk Road.
After brief but strong price increases last week, bitcoin (BTC) and ether (ETH) fell on Tuesday.
Bitcoin briefly fell below $68,000 after trading above $70,000 early last week. Meanwhile, ether surged about 25% in 24 hours amid optimism surrounding the approval of spot exchange-traded funds (ETFs). However, the surge was of short time despite the regulatory green light for the product.
Other big news includes increasing mentions of crypto by US presidential candidates as they seek to woo voters, a British judge’s scathing opinion on why Craig Wright’s claim that Satoshi Nakamoto is the creator of Bitcoin does not hold and a prison sentence for a former FTX executive.
Regulators lay the groundwork for Spot Ether ETFs
On Thursday, the U.S. Securities and Exchange Commission (SEC) unexpectedly opened the way to list 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.
Although the SEC’s decision marked a significant regulatory changethe listing of these ETFs by companies like BlackRock (BLACK), Grayscale and Fidelity could still be months away. Products must first receive approval for their S-1 Registration Filingswhich could take until July or August, according to Galaxy Digital.
If given the final green light, a key question is whether ether ETFs will generate demand similar to the historic launch of spot bitcoin ETFs in the United States, which have accumulated around $13.5 billion in inflows, according to Farside Investors.
While some are optimistic about the new listings attracting retail and institutional investors, others remain cautious, noting that the ether market is smaller and less recognized than that of bitcoin. Additionally, the lack of staking access for ether held by ETFs presents a notable limitation for investors.
House Moves Forward on Crypto Regulation Bill
The crypto 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 make the Commodity Futures Trading Commission (CFTC) the primary overseer of digital assets, granting it exclusive authority over spot or digital commodity markets, while the SEC would regulate digital assets with non-decentralized blockchains. This clear division of regulatory responsibilities is what the crypto industry has long sought.
Despite a strong 279-136 vote in the House, the bill faces a difficult path in the Senate, where approval is uncertain. President Joe Biden opposed FIT21, citing insufficient consumer and investor protections.
Former President Trump doubles down on his support for crypto
In an effort to appeal to libertarian voters and position himself as the pro-crypto candidate, Donald Trump called for the switching of Ross Ulbrichtthe phrase. Ulbricht, the convicted operator of the Silk Road online marketplace, is serving a life sentence for operating a platform where illegal drugs and other illicit items were purchased using Bitcoin.
In a speech to the Libertarian Party convention, Trump promised: “If you vote for me, on day one, I will commute Ross Ulbricht’s sentence. He has already served 11 years. We will bring him home.”
The move reflects Trump’s strategy to broaden 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 crypto is a stark departure from his past comments when he expressed his strong preference for the U.S. dollar over bitcoin.
Judge rules Craig Wright a fraud
According to WIRED, a UK High Court judge has determined that an IT worker Craig Wright has lied a lot and committed large-scale forgery in his attempt to prove that he is Satoshi Nakamoto.
In a detailed judgment released on May 20, Justice 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 profusely and repeatedly,” Mellor wrote.
The ruling marks the end of a six-week lawsuit initiated by the Crypto Open Patent Alliance (COPA), which sought to have Wright declared not the creator of Bitcoin in order to prevent him from pursuing various lawsuits against the developers of Bitcoin and other parties.
Despite Wright’s intention to appeal, his credibility has been significantly damaged.
What to expect in the markets this week
Regulators and cryptocurrency market observers will closely monitor the fate of the FIT21 bill as it moves through the Senate.
Additionally, another former executive of the defunct crypto exchange FTX was sentenced. Former co-CEO of the Bahamian entity of the exchange, Ryan Salame, was sentenced to 90 months in prison for violations of campaign finance laws and conspiracy to operate an unlicensed money transmitter .
On Tuesday, a big deal was also brewing. Bitcoin infrastructure company Riot Platforms (RIOT) said it wants to acquire bitcoin mining company Bitfarms in a part-cash, part-stock deal. Riot’s offer is worth $2.30 per Bitfarm share, a 24% premium to the stock’s one-month volume-weighted average price as of May 24, for a total value equity of $950 million. Riot already owns a 9.25% stake in Bitfarms and says the deal would create the “world’s largest publicly traded Bitcoin miner.”