SEC Adoption of Ether ETFs Highlights Changing Political Fortunes of Cryptocurrency

The newly opened door to ether ETFs is part of a larger story that has dominated cryptocurrency markets over the past week: the political tides in the sector appear to be moving in its favor. The Securities and Exchange Commission’s approval Thursday evening of a rule change that would pave the way for the creation of ether ETFs caught most market observers off guard. Approval expectations were low at the start of the week, but completely and suddenly reversed last Monday, sending ether up 20%. The SEC’s decision follows a vote in the House of Representatives on May 8 to overturn a controversial SEC accounting policy, known as SAB 121, which requires banks to treat digital assets on their books as assets. passive. The White House said the same day that President Biden would veto the bill, and in any case, the Senate rejected the proposal on May 16. Meanwhile, on May 9, former President Donald Trump said he would soon begin accepting campaign donations in crypto. “While the news regarding the Ether ETF is undoubtedly positive, the real excitement lies in the underlying reason for the SEC’s sudden change,” said Rachel Lin, CEO and co-founder of the decentralized trading platform. of SynFutures derivative products. “Until recently, the SEC and a faction of the US administration had apparently pursued an anti-crypto policy to stifle the sector. However, there appears to be a growing political awareness within the administration that crypto -currency is an issue that could influence the election. » Historic victory Then last week, a day before the SEC approved the rule change allowing ether ETFs, the House passed a crypto infrastructure bill. called FIT 21 (the Financial Innovation and Technology Act for the 21st Century), which would clarify when crypto falls under the ambit. the jurisdiction of the SEC in relation to the Commodity Futures Trading Commission. Many are hailing FIT 21 as a historic victory for the industry. “There is a sea change in policy right now,” Owen Lau, senior analyst at Oppenheimer, told CNBC. “People are starting to realize that being anti-crypto is bad policy.” The Beltway consensus is that FIT 21 is unlikely to come up for a Senate vote, but Lau said its passage in the House lays the groundwork for the next Congress to be in session next January. “We are getting closer to regulatory clarity,” he added. “The problem with the status quo is that there are no rules.” As a result, “there is a lot of unpredictability in this space that can push capital, talent and projects out of this country.” Alex Thorn, head of research at Galaxy Digital, pointed out that there isn’t much time in the legislative calendar for passing industry-friendly bills, with the summer holidays looming and presidential elections in the fall. Still, he didn’t completely sideline the Senate by resuming existing efforts, such as the Lummis-Gillibrand Responsible Financial Innovation Act, co-sponsored by Democratic Sen. Kirsten Gillibrand (NY) and Republican Sen. Cynthia Lummis ( WY), aimed at creating a comprehensive regulatory framework for crypto assets. “I would be surprised if FIT 21 or something like it becomes law this year,” Thorn said. “The politics is what is most interesting. This portends a radical change in [the] A democratic leadership approach in this industry, and that can only help crypto. »

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