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Weekly Update: 29th of May

Hodl Team
Hodl Team
29 May 2024
Welcome to our weekly update, where we provide insights into the latest developments in the digital assets market.

What happened between the 22nd and 29th of May?

  • The SEC has approved the listing of the eight Ether spot ETFs, however, the funds still need to be approved for trading, which might take a couple of weeks. Read more

  • The U.S. House of Representatives approved its first comprehensive cryptocurrency legislation, but it still needs to go through the U.S. Senate where it's uncertain if it will pass. Read more

  • The Hong Kong financial regulator, the Securities and Futures Commission, is in discussion with ETF issuers regarding staking services with licensed platforms. Read more

  • More than $7 billion worth of Bitcoin was transferred from Mt Gox’s wallet to an unknown address, causing fear of increased selling pressure in the future. Read more

The Ether spot ETF closes in

On the 23rd of May, the Security and Exchange Commission (SEC) approved a rule change that would pave the way for spot Ether ETFs. Currently, the rule change implies that various exchanges are allowed to list the eight Ether fund applicants; it doesn’t guarantee that all the funds will launch. The SEC still needs to approve the funds themselves and set a date on which trading may start. However, this only feels like a matter of time as the SEC wouldn’t approve this rule change if they decided to reject the filings. Some market observers see a possible chance of the ETFs launching as soon as mid-June, but it can take longer.

Crypto bill FIT 21 passes through the U.S. House of Representatives

On May 22nd, the U.S. House of Representatives approved the Financial Innovation and Technology for the 21st Century Act (FIN21) with a vote of 279-136. The passage of this crypto market structure bill marks the industry's most significant legislative accomplishment in Congress. In recent years, the U.S. has lagged in establishing crypto regulations, and this legislation aims to create a regulatory framework for the U.S. crypto markets. It sets consumer protections and designates the Commodity Futures Trading Commission (CFTC) as the leading regulator of digital assets and the watchdog of the non-securities spot market. This development is a setback for the SEC, which has attempted to position itself as the primary regulator for digital assets in recent years. However, the legislation still needs to pass the U.S. Senate, and observers are still determining if it will succeed.

The Hong Kong Ether ETFs may allow staking

In recent months, various U.S. asset managers added a staking component to their Ether spot ETF applications, potentially creating a yield-bearing ETF. However, this component raised too many questions for the SEC. Consequently, once the applicants removed the staking component, the SEC allowed the applications to proceed to the next phase. Therefore, investors in the U.S. likely won’t see a staking ETF anytime soon. Conversely, the financial regulator in Hong Kong, the Securities and Futures Commission, has held discussions with the city’s cryptocurrency ETF issuers regarding staking services with licensed platforms. This development may put pressure on the U.S., as a staking component makes these instruments in Hong Kong much more attractive

Dormant wallet of Mt. Gox causes fear among investors and traders.

In 2014, Mt. Gox, the world’s largest cryptocurrency exchange at the time, was hacked for 850,000 Bitcoin. Although 200,000 Bitcoin was eventually recovered, this incident initiated a lengthy legal process. After years of litigation, creditors received news in January 2024 that they would start receiving reimbursements, with the creditor repayment deadline set for October 31. On May 28, over 106,000 Bitcoin, worth approximately $7 billion, was transferred from Mt. Gox’s wallet to an unknown address. This spooked the market, as it potentially signaled the start of reimbursements, which could result in increased selling pressure. Consequently, Bitcoin experienced a small retracement of about 2%, dropping from around $70,500 to $67,500.

In other digital assets news

  • Layer-1 blockchain network Aptos reached an all-time high in user transactions by executing over 115.4 million transactions on May 25th. This sudden surge is attributed to a newly launched tap-to-earn game called Tapos Cat.

  • Cryptocurrency project Worldcoin faces multiple bans in various jurisdictions as privacy concerns grow. The project focuses on online ID verification through biometric data such as iris scans and this has alarmed regulators.

 

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