May 31, 2024
Talking Heads Are Changing the Crypto Conversation in Washington
Dear Subscriber,
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| By Juan Villaverde |
Had you told me last year that crypto would be a pivotal issue in America’s political conversation, I probably would have laughed.
Yet here we are.
Just last week, the SEC approved the listing of spot Ethereum (ETH, “A-”) ETFs, sending shockwaves through the crypto market.
Last Monday alone, Ethereum soared over 20%, propelled by rumors regulators were finally warming up to Ethereum-based ETFs. Though ETH has traded sideways since.
That is likely because the SEC approved the potential for an ETH ETF to be listed on exchanges … but it did not approve a specific ETF application. Actual funds won't begin trading for a few more weeks, pending final clearances.
Still, the approval heralds a bullish era, potentially paving the way for more spot-based crypto ETFs soon.
Grayscale, known for its Bitcoin (BTC, “A”) ETF, already has a ChainLink (LINK, “B+”) based closed-end fund.
Could this be transformed into a proper ETF? And might Solana (SOL, “B”), a clear market darling, be next after that?
These questions are stirring considerable excitement, and providing a significant boost to crypto, particularly altcoins.
And interestingly, at the center of these developments is U.S. politics. More specifically, though less obviously, the upcoming U.S. presidential election.
While crypto exists outside the traditional financial framework, regulatory consistency and clarity will play a large part in how quickly and thoroughly mainstream adoption will roll out.
Previous election years saw political figures indifferent or dismissive of crypto. Now, however, it’s becoming more central to their platforms.
Just look at the kerfuffle caused by the Financial Innovation and Technology for the 21st Century Act, or FIT21.
This bill aims to create a new legal framework for digital currencies and prohibits the issuance of a central bank digital currency, or CBDC. It would also remove the possibility of classifying a crypto as a security. If that happened, it would shut the SEC out of future regulatory decisions.
In an era where cross-party cooperation is at an all-time low, FIT21 notably passed the House with bipartisan support. It seems no one wants to be publicly anti-crypto right now.
Though we’ll have to wait and see if that continues as the bill now faces a Senate vote.
Naturally, SEC Chair Gary Gensler testified to his objections to FIT21, bolstered by the Biden Administration. In a letter from the White House, the administration made clear it did not support FIT21 but was willing to pursue alternative legislation.
That’s rather consistent with Biden’s stance on crypto so far — cautiously intrigued.
It’s no wonder that presidential candidate Donald Trump, responded.
Trump has previously displayed a range of reactions to crypto, from barely lukewarm at best to outright hostility at worst. But in a clear effort to distinguish himself from his opponent, he recently advocated for America becoming a "crypto hub" for innovation.
No matter how you view it, the U.S. political landscape is evolving when it comes to crypto.
No longer is it a dirty word, as debates on if and how it can be a legitimate financial sector are becoming more public and influential on a candidate’s platform.
This shift is likely to spur broader adoption of crypto technologies. Not just in the U.S., but globally.
Coupled with increasing global liquidity, this change in attitude by U.S. regulators almost guarantees crypto prices will climb higher for the rest of 2024 and likely into 2025.
Despite a recent period of sluggish growth, the direction of travel for crypto is undeniably upward … from here on out!
Best,
Juan Villaverde
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