Inside Story of How ‘Politics’ led to SEC approval of ETH ETF

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As a researcher with a background in political science and a strong interest in finance and technology, I find Aristotle’s words about man being a political animal particularly relevant when it comes to understanding the recent approval of spot Ethereum Exchange Traded Funds (ETH ETFs) by the U.S. Securities and Exchange Commission (SEC). The power of political lobbying and bipartisan support in shaping regulatory decisions has once again been demonstrated, as Ethereum becomes the second cryptocurrency after Bitcoin to have spot ETFs in the United States.

Ancient Greek philosopher Aristotle had once said, “Man, by nature, is a political animal.”

A man’s true potential is realized through participation in societal activities, including politics, as society and civilization existed prior to his existence.

Around 350 BC, Aristotle’s influential political thoughts continue to resonate in today’s American political landscape. A significant milestone was reached last Thursday when the Securities and Exchange Commission (SEC) gave its approval for spot Ethereum Exchange Traded Funds (ETH ETFs). This marks a pivotal moment in crypto history. The push for this decision came from a united front of the US political lobby, with backing from both Republican and Democratic parties, ultimately persuading the SEC to adopt a more lenient stance on cryptocurrencies.

Ethereum’s implementation of this step now makes it the second cryptocurrency, following Bitcoin, to offer spot Exchange-Traded Funds (ETFs) in the United States. This development is considered a significant milestone and an enticing investment prospect within the crypto market.

After much consideration and anticipation, the SEC’s decision regarding ETH ETFs hinges on upcoming political events in the US. Some experts believe that the approval process may have been influenced by intense lobbying efforts from the crypto industry and its supporters, particularly during this election year.

A 180 degree turn in Speculations 

Just a few days ago, I faced doubts about the approval chances of a cryptocurrency project, as per Bloomberg’s analysis. They assigned a mere 25% probability, attributing this to the inflexible stance of the Securities and Exchange Commission (SEC).

In a short time frame,analysts bumped up their optimistic forecast for SEC approval to 75%, leading to a significant increase in Ethereum’s price tag at $3,800 and Bitcoin reaching an all-time high of $71,000. The media coverage of these speculations caused a 18% price surge for Ethereum. Similarly, Bitcoin experienced a new peak due to these developments. The shift in analysts’ perspectives at Bloomberg was predominantly influenced by the political landscape in the US, specifically the upcoming presidential elections in 2024.

Bipartisan Love for Crypto is key to SEC approval

Democrats and Republicans have found common ground in the crypto sector, with both parties showing a willingness to collaborate. Over the past week, two pro-crypto bills, the Financial Innovation and Technology for the 21st century (FIT21) Act and Deploying American Blockchains Act of 2023, received bipartisan support in the House of Representatives. The FIT21 Act was passed with a vote of 279-136, despite concerns from the Securities and Exchange Commission (SEC) that it could create new regulatory loopholes. Remarkably, the Democratic Party did not issue a whip on these bills, enabling individual representatives to cast their votes in favor.

Cynthia Lummis, Republican Senator from Wyoming, and Kirsten Gillibrand, Democrat Senator from New York, have teamed up to introduce the “Responsible Financial Innovation Act.” This legislation aims to establish boundaries for the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) regarding their regulatory authority over the crypto industry.

It’s SEC versus Republicans and Democrats on Crypto

As a researcher looking back over the past month, I’ve witnessed an intense back-and-forth between the Securities and Exchange Commission (SEC) and the political lobby of the United States. The latter has been pushing for less stringent regulations on the crypto sector, leading to confrontations with the traditionally conservative federal agency.

As an analyst, I’d rephrase it as follows: The SEC continues to have President Joe Biden’s backing, with his administration pledging a veto on the Senate’s proposed overturn of SAB 121. It remains uncertain whether this veto will actually be enforced given the surging popularity of the crypto market within the US.

Presidential Elections and Crypto 

Donald Trump, the previous American president and leading Republican Party nominee, has publicly expressed his backing for cryptocurrencies during his re-election campaign. In contrast to his earlier dismissive stance towards crypto, labeling it as a “scam,” Trump is now reaching out to the community by urging their support in the upcoming election. He encourages crypto enthusiasts to consider casting their votes in his favor.

As a financial analyst, I’d rephrase that as follows: The day after optimistic reports about the Securities and Exchange Commission (SEC) emerged, the Trump presidential campaign initiated a cryptocurrency donation platform for fundraising purposes.

Trump has expressed his intention to expand the use of cryptocurrencies should he be re-elected, indicating a potential crypto-friendly presidency. He’s even suggested accepting campaign contributions in digital currencies. This shift in Trump’s position is perceived as an effort to win over voters with libertarian leanings who are displeased with the Biden administration’s approach to cryptocurrency regulations.

As a researcher studying recent developments in the cryptocurrency sphere, I’ve noticed an intriguing turn of events. Republican Senator Cynthia Lummis from Wyoming has announced her intention to assemble a pro-crypto coalition within the halls of Congress. This revelation follows closely on the heels of Democrat Senator Elizabeth Warren’s call for stricter regulations in the crypto sector, fueled by concerns over money laundering and other illicit activities.

As a researcher, I’ve observed that the Biden administration has taken a firm stance against crypto platforms up to this point. The Democratic party’s approach to pro-crypto legislation has been more cautious than some might have hoped. The recent high-profile arrests and actions taken against crypto moguls and their platforms by various agencies are reflective of this administration’s unyielding position towards the crypto industry.

Recently, there’s been a shift in the Biden administration’s stance towards cryptocurrency. Some Democratic senators have gone against their party’s tradition by advocating for supportive crypto legislation.

Conclusion

As a crypto investor, I find it intriguing to ponder over the potential impact of the growing crypto community on the upcoming election. Will our collective passion for digital currencies sway voters towards Trump or Biden? Time will tell. However, one thing is certain: the recent approval of the spot ETH ETF has put the SEC, under Biden’s administration, in a reactive position as cryptocurrencies gain increasing popularity.

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2024-05-24 10:44