Just a few weeks ago, news broke that the U.S. Securities and Exchange Commission (SEC) was preparing to sue Robinhood for allegedly violating securities laws with its crypto trading. Now, talk is swirling around the possible approval of a spot ETF for ETH.
Why the shift?
Many speculate that the regulators' sudden turn toward the digital asset market is related to the impending U.S. presidential election. Specifically, the party in power may be trying to appeal to younger voters by adopting a more lenient stance towards cryptocurrencies.
In pursuit of this strategy, the U.S. Senate has aligned itself with the House of Representatives, voting to repeal the Staff Accounting Bulletin No. 121. This bulletin had previously prohibited US banks from acting as custodians of their customers' digital assets.
However, it should be noted that the resolution lacked sufficient votes to override a potential veto. In addition, President Biden has expressed concern that such a repeal could compromise investor protection and the financial system's stability.
What's on the horizon?
The SEC will consider ETH-based ETF applications from Vaneck and Ark Invest this Thursday and Friday. Buoyed by the recent Ethereum price rally and general market optimism, traders anticipate a green light for these applications.
Still, launching a spot ETH ETF depends on approving two key documents: 19b-4 (relating to changes in stock exchange rules) and S-1 (the registration statement). While approval of Form 19b-4 is expected, approval of Form S-1 could be delayed.
Separately, the U.S. House of Representatives will vote on HR 4763 later this month. If passed, this bill would place digital assets under the jurisdiction of the CFTC, classifying them as commodities if they demonstrate functionality and decentralization.
Will the market rally gain momentum?
Currently, Bitcoin derivatives are showing moderate bullish sentiment, with demand for long positions in BTC increasing through monthly futures. On the other hand, the options market is not too bullish despite the recent price rally.
If the Biden administration has indeed shifted from an aggressive stance on cryptocurrencies to a more accommodating one that rivals Trump's approach, market sentiment could skyrocket, potentially pushing Bitcoin's price beyond $72,000.
However, prudent investors should conduct thorough research before making any financial commitment. They should always prioritize risk management and consider technical indicators.