Ether ETFs approved by Gensler's SEC, while Grayscale adds Near and STX investment thrusts, Bybit refutes insolvency, and Jupiter debuts GUM on Solana.
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Ethereum Spot ETFs Approved in the US by Gensler's SEC

Ethereum Spot ETFs Approved in the US by Gensler's SEC

Date:
May 24, 2024
| Issue
#
286

This is the end of the most intense crypto week of 2024 so far. The headline news is, of course, the approval of the Ethereum spot exchange-traded fund (ETF) in the United States. After years of debate and classifying ETH as a security, Garry Gensler’s SEC has finally given institutions the green light to adopt another cryptocurrency besides Bitcoin.

Now, non-crypto natives will have easier exposure to Ether's growth, while the rest of us can benefit from a clearer regulatory framework. In addition, we have several key updates from both the U.S. and Asia that will guide this bull cycle. Let’s explore the details.

Ethereum Spot ETFs Approved In The U.S. By Gensler's SEC

The U.S. Securities and Exchange Commission (SEC) has approved eight spot Ethereum ETFs in a surprising move, with forms approved for BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton. However, trading can only begin once the ETF issuers’ S-1 registration statements become effective, a process that could take weeks or even months.

This unexpected approval, which seemed unlikely due to a previous lack of engagement between the SEC and issuers, has led to speculation about political influences. As the Grayscale Ethereum Trust converts into an ETF, its discount shrunk from -24% to -6%, allowing holders to exchange their shares for the cash value of the underlying ether. However, Ethereum ETFs may struggle to match the success of Bitcoin ETFs, with estimates suggesting they may attract 10 to 15% of the assets that Bitcoin ETFs receive.

Grayscale Launches Investment Trusts For Near and Stacks

Grayscale has launched two new investment trusts, offering exposure to Bitcoin layer-2 Stacks and Near Protocol. These trusts, available to accredited investors, augment Grayscale’s portfolio which includes cryptocurrencies like Solana, Chainlink, and Decentraland. Grayscale’s private placements, the initial stage of its product life cycle, aim for ETF uplisting, a feat achieved only by its Bitcoin Trust so far.

Stacks, a layer-2 network on Bitcoin, facilitates the development of decentralized finance applications and has seen a surge in institutional demand. Near Protocol, a high-speed blockchain dedicated to decentralized cloud computing, recently initiated a research and development lab for AI. Both Stacks and Near are acknowledged for their innovative solutions to blockchain scalability issues, propelling wider adoption and progress in the crypto ecosystem.

Bybit Refutes Insolvency Rumors, Shares Proof-of-Reserves

Rumors circulated on May 22 about Bybit, a top crypto exchange, being hacked and insolvent, which were amplified by memes and posts on X. Some users joked about withdrawing their funds, while others sought to understand the situation. Speculation arose that a bug in a proof-of-reserves graph from Arkham Intelligence might have sparked the rumors, as it appeared that Bybit’s wallets were being drained.

However, Bybit clarified on May 23 that the rumors were false, with CEO Ben Zhou stating that none of the rumors had any factual support. Zhou also shared Bybit’s proof of reserves and a Nansen dashboard showing all Bybit wallets and their assets, indicating that the platform holds more than 100% of user deposits and over $11 billion in crypto assets. However, it was noted that this does not represent a comprehensive statement of Bybit’s actual assets or reserves.

Jupiter’s Giant Unified Markets Initiative Launches on Solana

Jupiter, a DeFi app and DEX aggregator announced its “Giant Unified Markets” (GUM) initiative this week, aiming to bring all assets to Solana and index them on Jupiter. The initiative will allow forex, stocks, real-world assets, and crypto to transact in the same “state machine” for fractions of a cent. Jupiter plans to work with its GUM Alliance partners, including market makers and real-world asset projects, to create liquid markets for more assets on Solana and integrate those markets into Jupiter.

The goal of GUM is to create the first unified market with sufficient critical mass of assets, liquidity, and users. The initiative has been praised as a “brilliant” campaign to align market makers and tokenized asset issuers, addressing the chicken-and-egg problem of onboarding tokenized assets.

Data of the day

Since the recent news of a 75% chance for Ether ETF approval, analysts, investors, and enthusiasts have been speculating wildly about ETH's potential price movement post-announcement. While no one can predict the price with certainty, CCData offers a good data-driven approach by drawing parallels to Bitcoin's ETF.

Their model considers potential gains based on a percentage of BTC's ETF inflows. Assuming Ethereum will be able to attract 50% of Bitcoin funds ETF flows, their report forecasts a $6.5 billion inflow into ETH, resulting in an estimated 30% price increase.

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More breaking news

  • The CBDC Anti-Surveillance State Act, a Republican-led bill, was passed by the House of Representatives in a 216 to 192 vote, driven by concerns over government surveillance of financial transactions. Central bank digital currencies (CBDC) are the 'evil nemesis' of cryptocurrencies
  • Hong Kong’s Securities and Futures Commission is in discussions with crypto ETF firms to potentially allow staking for spot Ethereum ETFs, a stark contrast to the U.S. where issuers are removing staking features from their applications due to SEC considerations.
  • Senator Cynthia Lummis aims to build a "pro-crypto army" in U.S. Congress, echoing former President Donald Trump's call for a "crypto army" to support his 2024 presidential campaign. This is in opposition to Senator Elizabeth Warren's "anti-crypto army" stance.
  • Coinbase is re-introducing support for XRP in New York, allowing customers to buy and sell the token again after it was withdrawn four years ago due to a legal dispute over Ripple's status as a security. Coinbase's official stated that they have heard what people want and are working on it.
  • Xapo, a Gibraltar-regulated bank, has become the first fully licensed institution to enable Bitcoin deposits via the Lightning Network, building on its previous introduction of Lightning-powered small payments in collaboration with Lightspark.

For the latest updates on digital asset markets, follow us on X @Datawalletcom.