After 279 members of Congress voted to pass a comprehensive market structure bill that could change how digital assets are regulated in the United States, markets are still processing one of the most eventful weeks in the history of crypto policymaking.
Some people in the crypto industry are very happy about the vote and the fact that the Biden administration seems to have changed its mind about both spot ether exchange-traded products and the need for major changes to the crypto regulatory system.
Find me on X @crobmatthews to share your thoughts on this week’s episode and the many events in Washington, D.C., that crypto investors should keep an eye on.
Let’s hope they’re not ‘insane fascists’
In the past few weeks, the crypto industry has won two historic victories in Washington, D.C.: two votes from both parties in Congress calling for more business-friendly rules, and preliminary approval from the Securities and Exchange Commission for a spot ether ETF (ETHUSD, -0.26%).
On top of that, the Biden administration showed renewed interest in working with crypto firms to make their own rules official, which could make it harder for the SEC to control crypto firms like Binance and Coinbase COIN, -3.41%.
In the event that the bill were to become law, the Commodity Futures Trading Commission would be in charge of regulating crypto instead of the SEC.
Not all crypto fans are happy, though. A lot of them think that the policies that are being supported even by the regulatory-skeptical Republican Party are really just a wolf in sheep’s clothing.
Bruce Fenton, who used to be the executive director of the Bitcoin Foundation, said on X, “Crypto folks are getting pulled under the rug again.” It was “this time by Congress.”
“No, the U.S. government isn’t suddenly pro-freedom and pro-crypto,” he said.
Bitcoin BTCUSD, +0.72% was created after the 2008 financial crisis. Sceptics of the government, like Fenton, were among the first people to use it because it was decentralised, had a limited supply, and promised to get around the traditional financial system, which seemed to know everything and be very powerful.
Fenton told MarketWatch that there are many “well-meaning people in our space” who believe they can create the ideal rule that will fully address our issues.
“I just don’t agree with that,” he said. “Our main goal should be to get rid of the rules that are already in place.”
Fenton’s view is different from that of big crypto companies and industry groups, who have pushed for new rules that are specific to the industry.
He said, “These groups don’t have a good track record.” “They’re full of low-income rent seekers who see this as a way to advance their career, whether they’re lawyers or just people who want to work and hang out with other people.”
In an X post last week, Gabriel Shapiro, the founder of the software-as-a-service company MetaLeX and a well-known crypto lawyer, agreed.
Because crypto fans don’t like the SEC, they were fooled “so badly on this FIT21 thing,” he said. “We’re just giving the CFTC entire control over this and hoping they’re not crazy fascists.”
The Ether Horse Race
Many people in the know were surprised when the SEC approved an ether spot ETF last week. However, the SEC still needs to approve registration statements from issuers before the funds can be sold to the public.
An ETF analyst at Bloomberg Intelligence named Eric Balchunas said on the ETF Prime podcast on Tuesday that the SEC will take about a month to approve those statements and let the products trade.
In the same way that issuers tried to get bigger when they launched bitcoin spot ETFs earlier this year, he predicted a “carbon copy horse race” that would see up to $2 billion flow into the market in the first few weeks.
Ark Invest CEO Cathy Wood, who wants to get into the horse race, was surprised by the SEC’s change of heart on the matter. She said at a CoinDesk Consensus panel discussion on Wednesday, “we were sure it was going to be denied” until last week.
The money manager doesn’t believe that the interest in crypto ETFs will spread much beyond bitcoin and ether.
“These two and maybe Solana could be there,” Wood said. “I don’t think the wirehouse platforms will want to do more than one big strike to let their clients trade in this new class of assets.”
Since last week, the price of ether has gone down about 0.7%. However, it has gone up more than 17% in the last month.
Former FTX exec gets 7.5 years in the Salamer
Ryan Salame, an FTX executive who became co-CEO of the company’s branch in the Bahamas, was given a 90-month prison sentence on Tuesday for planning to give illegal money to political campaigns as part of Sam Bankman Fried’s effort to buy votes.
Salame admitted to the charges in September of last year and agreed to give up $1.5 billion.
A Snapshot Of Crypto
Bitcoin BTCUSD, 0.72% has lost about 4.7% in value over the last week and was trading at around $67,000 on Wednesday afternoon. Traders’ interest in ether may have slowed the growth of the world’s most popular cryptocurrency.
In the past week, Shiba Inu SHIBUSD, -4.00% has been one of the better performing altcoins, rising nearly 4%. This is because Kabosu, the Japanese dog that inspired DogeCoin DOGEUSD, -3.02% and then Shiba Inu, died at the age of 18.
This week was rough for Avalanche, which dropped about 10%. Solana SOLUSD, -1.37% dropped 8.3%, and Cardano ADAUSD, -0.05% dropped 6.3%.
