Prior to spot Bitcoin ETFs gaining approval in January there was, as deadlines approached, a sense of expectation that the SEC would give the green light to the funds. Critically, the regulatory agency was engaging with applicants, and it was known that BTC was regarded as a commodity rather than as a security.
Compare that to this week’s spot ETH ETF approval, and it’s a very different story. Until the start of this week, the overwhelming expectation was that ETH ETFs were in line for rejection, amid reports that the SEC had not engaged with applicants, and with uncertainty around how ETH was categorized: as a commodity, like BTC, or as a security that was not properly registered.
As such, reports on Monday that the SEC was suddenly shifting towards approval caught the market entirely by surprise, and by Thursday, what had been almost unthinkable just a few days earlier actually occurred, with spot ETH ETFs gaining approval in the United States.
To say that this official turnaround was not priced in by the markets is an understatement, while from a broader context, what has occurred this week may have considerable long-term significance not just for ETH and its market value, but for the entire crypto industry, and what’s more, it ties in closely with American politics.
Democrats Broke Ranks on SAB 121
Just a week before the ETF U-turn, there was a vote in the Senate around an SEC accounting proposal called SAB 121. This proposal would impose strict rules on banks and other institutions holding cryptocurrencies for customers, but was criticized for discouraging companies from taking custody of digital assets, and thereby creating negative knock-on effects for the crypto industry.
However, the Senate voted in favor of an act to repeal SAB 121, and it did so by 60 votes to 38, with several Democrats, including Senate Majority Leader Chuck Schumer, breaking ranks with President Biden and Senator Elizabeth Warren–who are publicly opposed to crypto–to take what is in practice a pro-crypto stance.
It’s notable also that this rejection of SAB 121 came immediately after presidential contender Donald Trump had voiced explicit support for the crypto industry, and this week, the Trump campaign also announced that it was accepting donations in a range of cryptocurrencies. This action reinforced the crypto-friendly message, but the campaign then went further still by declaring that Trump supporters “will build a crypto army”, making direct reference to…
