Did the Government Just Enter a Free Market Casino?

The SEC approved the spot Ether ETF. This is monumental, but it has a catch. Here's all you need to know.

Hey, it’s Marc. ✌️

Here's what happened today:

  • The SEC approved the spot Ether ETF.

  • Ahead of the SEC’s decision, Erich Balchunas, a Bloomberg analyst, raised the odds on spot ETH ETF approval to 75%, giving the markets a pump.

  • Gold ETF have a $200B market cap, BTC ETF $40B. What is it going to be for ETH?

Why It’s Important

This is a massive step towards legitimizing crypto among institutional investors.

Even bigger: It could classify ETH as a commodity, NOT a security. 💡

Here's why:

  • Ethereum ETFs are being approved as "commodity-based trust shares" (CBTS).

  • A CBTS is a type of security issued by a trust that holds a specific commodity.

  • This regulatory classification distinguishes these ETFs from traditional ETFs over securities.

ETH as a commodity unlocks engineering of different financial products. 💰

This is monumental, but not for the reasons you think.

As Maja Vujinovic, investor and early crypto & payment pioneer, says:

“The FED hasn't lowered rates. The debt is exploding. Banks are buying negative yield in bonds. Taking ETF news face value? What's actually happening?

The bug of "free crypto casino", bit the bankers and maybe government too? They opened the pandoras box, not just with other coins but tokenization of assets, that will unlock trillions into the system.”

– Maja Vujinovic

There’s a Catch

The SEC still needs to approve issuer filings (S-1s) prior to launch.

Delaying this approval could delay the official launch by several weeks – or months

Also, a commissioner can challenge the vote in next 10 days.

This means the launch could be further delayed or even blocked if the challenge is successful.

What they’re saying: The inflow is expected to be significantly lower in comparison to Bitcoin ETF.

"Maybe you'll see 20% to one-third of the investment volume that flew to Bitcoin"Alexander S. Blume

Meanwhile: The US House of Representatives today passed the FIT21 Act, setting the stage for US crypto regulation to finally take shape.

"This is a sign for the Biden administration that "anti-crypto" is a losing platform this year" – Jake Chervinsky

Be smart: Entities like Coinbase or Blackrock can now accumulate large amounts of ETH, giving them significant influence over the network's governance and decision-making processes.

This isn’t possible with Bitcoin because it runs on proof-of-work (PoF).

The Big Picture

Ether ETF approval is a game-changer irrespective of the flow:

  • It offers a regulated, mainstream investment vehicle that directly holds Ethereum

  • It will boost Ethereum liquidity and enhance credibility in traditional finance (TradeFi)

  • It could classify ETH as a commodity

Could Coinbase or Blackrock control the protocol in the future?

That’s all for now, folks.

Tomorrow you’ll receive the regular Weekly Field Notes.

Talk soon,

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