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The U.S. crypto industry has complained loudly about a lack of regulatory clarity, but one firm sees it differently. Digital assets platform Prometheum has taken the contrarian view that a clear legal path already exists to trade cryptoa stance that has drawn the ire of others in the industry.

On Friday, the New Yorkbased company put its theory to the test by launching its long-planned custody services for Ethereum. The move is notable because Prometheum is doing so in a way that classifies the token as a security under the supervision of the Securities and Exchange Commission. The custody launch appears to validate the position of agency chair Gary Gensler, who has countered the broader crypto industrys position by saying the existing regulatory regime is adequate and effective.

It eliminates a lot of the arguments that things cant be done under existing laws, said Aaron Kaplan, the co-CEO of Prometheum Inc., the parent company of the entity launching Ether custody. It marks the first time thatan investment contract digital asset security is being custodied and treated under the securities laws.

Founded by the brothers Aaron and Benjamin Kaplan, Prometheum existed in relative obscurity before bursting onto the crypto scene in mid-2023 with the announcement that it had procured a first-of-its-kind broker-dealer license that would allow firms to custody digital asset securities.

While much of the blockchain industry argues that the vast majority of cryptocurrencies should not be treated as securities under the jurisdiction of the SEC, Prometheum made a novel alternate claim. It argued that its special-purpose broker-dealer distinctionalong with a license for a separate entity to operate an alternative trading platformwould allow it to offer trading for cryptocurrencies under existing SEC regulations.

Prometheums wager, along with a contentious appearance by Aaron Kaplan at a House Financial Services Committee hearing on digital assets, drew withering critique from industry leaders, who argued that Prometheums approach would not work, and that it would not be able to launch products or find customers.

For months, Prometheum declined to name which crypto assets it would treat as securities and offer on its platforms, until February, when it announced that it would soon make Ethereum available for custody. While the launch does not constitute its full trading offering, custody is a necessary first step to facilitating trading, as customers need to have a venue to hold the assets they buy and sell. By operating both the custodian and the trading system under separate entities with approval from the SEC and the Financial Industry Regulatory Authority (FINRA), an independent industry oversight body, Prometheum claimed it had found a compliant path where competitors like Coinbase had failed.

Again, the announcement was met with vitriol, with crypto advocates fearful that the launch would mean the SEC viewed Ether as a securitya position the agency has not yet made, but has repeatedly telegraphed, and that would have far-reaching consequences for the sector. Those worries were exacerbated when the SEC issued a Wells notice against the Ethereum developer Consensys in late April that seemed to confirm the industrys fears.

Prometheums launch of Ether custody services, however, was delayed beyond its target of Marchuntil Friday. Kaplan told Fortune that Prometheum Inc., the subsidiary of Prometheum that holds the broker-dealer license, soft-launched the product with a small group of companies and planned to fully launch custody services by the first week of June. Full trading, he said, would come within a quarter. He declined to provide further details on the companies included in the pilot.

After months of threatening to upend the crypto industrys long-held belief about the possibility of trading Ether under SEC guidance, Prometheums custody launch represents the first test of the companys strategy.

It took a little longer than we anticipated, said Kaplan. But we didnt really have the option of doing it a different way.

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Controversial blockchain firm Prometheum launches long-awaited Ethereum custody - Fortune

US lawmakers are imploring the SEC to approve spot Ethereum ETFs.

In anticipation of an forthcoming decision on a spot Ethereum ETF, a bipartisan group of House lawmakers, including Majority Whip Tom Emmer and New Jersey Democrat Josh Gottheimer, have sent a letter to SEC Chair Gary Gensler urging the commission to approve spot Ethereum ETFs and other digital assets. This would provide investors with regulated, transparent, and safe access to cryptocurrency.

JUST IN: US lawmakers urge SEC to approve spot Ethereum ETFs, Politico reports.

We urge the commission to maintain a consistent and equitable approach when reviewing upcoming applications for other digital asset-backed ETPs, the letter read.

Recent legislative measures, such as the approval of the Financial Innovation and Technology for the 21st Century Act (FIT21), could expedite the ETF approval process. Despite Genslers public opposition to FIT21, the legislative push signals a growing support for regulated digital asset investment products.

The lawmakers letter also mentioned other digital assets alongside Etherehum, suggesting the possibility for other cryptocurrencies to apply for spot ETFs.

It is interesting to me that they say "other digital assets" vs only mentioning Ether. Will be interesting to see how far and how quickly the ETF industry pushes envelope (which is something its good at). Wouldn't be surprised if they pounce on SEC vulnerability and file all

Certain analysts believe that Solana (SOL) could be next in line for an ETF if Ethereums is approved. A spot Solana ETF would likely attract substantial demand, second only to Bitcoin (BTC) and Ethereum (ETH).

Earlier this year, a Bitcoin ETF increased attention and investment for a spot Ethereum ETF.

The impending spot Ethereum ETF decision has created a buzz around the crypto community. Some analysts project that an ETF approval would boost the price of ETH by 60%, per QCP capital.

Key players such as BlackRock Inc. and five other issuers Fidelity, VanEck, Invesco/Galaxy, Ark Invest, and Franklin Templeton have recently amended their ETF filings with the Securities and Exchange Commission (SEC) in anticipation of ETF approval.

If an Ethereum spot ETF is denied, it could lead to lawsuits, mirroring the reaction following the initial rejections of spot Bitcoin ETFs.

The SECs decision is expected to be announced around 4:00 p.m. EST on Thursday

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House lawmakers send letter to Gary Gensler urging SEC to approve spot Ethereum ETFs - crypto.news

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Tomorrow is the final deadline for the approval of VanEcks spot Ethereum exchange-traded fund (ETF) in the US, and expectations are high. Bloomberg ETF analyst James Seyffart shared that an approval movement is happening, despite regulatory indicators pointing out to the contrary direction until Monday.

As a result, Ethereum (ETH) leaped up to 21% in less than 48 hours and stood just 22% from its all-time high of $4,878.26, according to data aggregator CoinGecko. Bitcoin (BTC) leaped 96% in two months before the approval of the first spot Bitcoin ETFs in the US and reached its all-time high two months later.

James Davies, co-founder and CPO at Crypto Valley Exchange, highlights that Bitcoins case was different. In that instance, though, everything came together ETFs, bitcoin halving, and global inflation easing significantly and lined up to drive Bitcoin. Ethereum has already had the crypto cycle and global market sentiment increase, he shares.

Although Davies sees Ethereum ETF inflows having a substantial impact, propelling ETH to new all-time highs, it may be hard for Ethereum to replicate BTCs movement after the funds approval. It does, however, present a great steady growth story for the rest of 2024.

Ruslan Lienkha, chief of markets at YouHodler, also shares the view that an Ethereum ETF might trigger a sharp ETH price increase. Moreover, this movement might not be fully priced, with significant upside yet to be seen. If so, it will be a powerful impetus for the whole crypto market and a stimulus for other coins growth, added Lienkha.

Bitfinexs analysts believe that a spot Ethereum ETF approval could play out just like the spot Bitcoin ETF approval, which was a sell-the-news event before a long-term bullish outlook was triggered, causing a multi-month rally. As for inflows, they expect a similar level compatible with ETHs market cap.

The current move from sub $3000 to $3800 is a result of the market pricing in the higher odds of an ETF approval. It is important that market participants often front-run and price in odds as absolute implying that 75% odds of approval by Bloomberg analysts could potentially be priced in as 100%.

Marko Jurina CEO at Jumper.Exchange, pointed out that BTC rose nearly 65% following the trading of spot Bitcoin ETFs in the US. Thus, a similar movement would propel ETH well beyond its previous all-time high. Zentner also believes that the approval might trigger a crypto market growth for the second half of 2024.

Despite the optimism regarding the Ethereum ETF approval, there is still a slight chance of rejection. Moreover, as highlighted by Seyffart, a good part of investors are misunderstanding the current movement since approval doesnt translate to immediate trading. Both of these scenarios might then upset investors.

Nevertheless, in the light of recent developments, those events are now being priced out, says James Davies, from Crypto Valley Exchange. On the other hand, Jumper.Exchanges Marko Jurina believes that both negative possible events are already priced in.

When the spot BTC ETFs first came to market, there was actually a brief sell-off where some took profits before the rally resumed. Additionally, given the volatile nature of the market, good and bad news gives ample opportunity for market makers to create more violent price swings, so blood on the streets is definitely possible. More problematic for the ETH community (if no approval) would be the loss of a narrative as a catalyst, Jurina added.

Moreover, a slight drop followed by a consolidation period is also a possibility, shares Ruslan Lienkha from YouHodler. Ethereum ETF approval is just a matter of time. The SEC will approve it sooner or later after the status clarification of ETH, and it matters little if it is recognized as a commodity, security, or something else. As for now, fundamentally, nothing will change for ETH. It will remain the second crypto in the industry even without ETFs.

Even if an unlikely rejection happens, Bitfinex analysts describe a layered scenario, which could end in a hard rejection or a soft rejection. A hard rejection would include ETH being considered a security, while a soft rejection would be limited to ETF proposals.

The former could be very bearish leading to a retrace of the entire move up currently. The latter could lead to more speculation continuing over a future approval on re-appeal, Bitfinex analysts concluded.

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Experts speak out on how high Ethereum could go with an ETF approval - Crypto Briefing

(ETH) price shot higher over the last 48 hours, driven by favorable regulatory developments that boost the chances of an ether exchange-traded fund (ETF) being approved soon.

Nevertheless, the chances of a major "buy the rumor, sell the fact" reaction for ETH seem lower compared to , according to a recent Citi report.

Bitcoin dropped 17% after ETF approval due to the hype and leveraged bets. In contrast, the potential approval of an ETH ETF has been less expected, leading to less extreme pre-positioning, the report says.

Upon the release of these reports, ETH futures open interest (OI) and funding rates were subdued compared to previous months. However, OI has started to increase, indicating rising anticipation of a potential ETF approval.

Net flows into Bitcoin ETFs have been a major driver of returns since their launch in January, explaining much of the cryptocurrency's performance. This trend is likely to continue with the introduction of ETH ETFs, indicating that overall crypto ETF flows will remain important for returns.

Reports indicate that robust conversations are ongoing behind the scenes between regulators and ETF providers, which include nine fund providers with applications pending at various stages. Past approvals for Bitcoin ETFs suggest that simultaneous launches for ETH ETFs are likely.

Historical data from Citi shows that net flows into spot Bitcoin ETFs materially influence cryptocurrency returns. For instance, net BTC ETF inflows totaled $12.9 billion through May 20, translating to a roughly 6% rally in Bitcoin per $1 billion of flow. Assuming similar market-cap-adjusted flows for ETH, estimated inflows could range between $3.8 billion to $4.5 billion, potentially driving ETH prices up by 23-28%.

Several factors could impact these estimates, including differing demand for ETH compared to BTC, rotation from BTC to ETH among existing ETF holders, outflows from existing ETH funds upon conversion, and rapid positioning build-up ahead of SEC approval.

In the long term, Citi analysts said that Bitcoin and Ethereum are expected to remain highly correlated, driven by macroeconomic factors. Despite differing on-chain activity and potential use-cases, such as Bitcoin's role as "digital gold" and Ethereum's smart contract functionality, sentiment, adoption, and further use-case development remain crucial for both cryptocurrencies.

"We expect the major tokens to remain highly correlated and continue to be driven by macro forces over the longer term," Citi memo concludes.

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Citi discusses Ethereum ETF: Buy the rumor, sell the fact? - Investing.com

Amid increasing speculation about the possible approval of a spot Ether exchange-traded fund (ETF) in the United States on May 23, global investment manager VanEcks ETF has been listed by the Depository Trust and Clearing Corporation (DTCC) under the ticker symbol ETHV.

The DTCC is an American financial market infrastructure provider that offers clearing, settlement and transaction reporting services to financial market players. A listing on DTCC is considered a crucial step before final approval from the U.S. Securities and Exchange Commission (SEC).

VanEcks ETF is currently designated inactive on the DTCC website, meaning it cannot be processed until it receives the necessary regulatory approvals. However, VanEck is not the first Ether (ETH) ETF listed by the DTCC. Franklin Templetonsspot ETH ETF was listed on the platform a month ago.

The DTCC said that the ETF list includes both active ETFs that may be processed by the DTCC and ETFs that are not yet active and, therefore, cannot be processed.

Another report suggested that SEC officials contacted Nasdaq, the Chicago Board Options Exchange and the New York Stock Exchange to update and change existing spot Ether ETF applications.

Related: Crypto insiders anxious and divided as spot Ether ETF decision date looms

The significant change in the SECs stance over the past week is speculated to be linked to the White House.

Crypto lawyer Jake Chervinsky noted in a post on X that policy is driven by politics, and for months, crypto has been winning the political battle. He also speculated that former president Donald Trumps endorsement of cryptocurrency compelled the administration of President Joe Biden to shift its policy.

May 23 is the final deadline for the SECs decision on the VanEck spot Ether ETF application. After months of speculation about a probable denial of spot ETH ETFs, the SEC took action earlier this week.

The SEC firstasked financial managers to amend and refile their 19b-4 filings on their proposed spot Ether ETFs. Some analysts saw the move as a positive sign, swinging the potential chance of approval to 75% from 25%.

Magazine: What do crypto market makers actually do? Liquidity, or manipulation

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Ethereum ETF confirmed? VanEck spot Ether ETF listed by DTCC - Cointelegraph