The Ethereum ETF special: this is just the beginning

Why were the Ethereum ETFs suddenly approved last week?

Politics.

It all comes down to politics.

And I’ll show you exactly how it came about, and what it could mean for the future of the entire crypto industry in just a second – think many more crypto ETFs from different projects.

But first, let’s make sure we’re all on the same page.

This all started with the approval of the long-awaited Bitcoin ETFs on the 10^th of January this year.

(I covered the story extensively here: US Bitcoin ETFs banned in the UK)

The Bitcoin ETFs had it hard. It took 10 years to get them approved.

And in the end, what sealed the deal was Grayscale suing the Securities and Exchange Commission (SEC) and winning.

The SEC had long-ago approved Bitcoin “futures” ETFs (if you’re not familiar with what futures are, read this page on Investopedia) but it said Bitcoin “spot” ETFs were illegal.

The reason? The SEC said the actual Bitcoin market was easier to manipulate than the Bitcoin futures market – which makes no sense.

If the spot price gets manipulated, it will be reflected in the futures market.

As Grayscale pointed out in the court case, the spot and futures markets are 99.9% correlated.

The SEC disagreed, but provided zero evidence. 

Meanwhile Grayscale provided evidence to show that the markets were indeed 99.9% correlated.

Grayscale won the case and the judge even went as far as to say:

“The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products.” …

“The Commission’s unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decision making.”

A few months after this case, on the final day it was legally allowed to, the SEC granted all the spot Bitcoin ETF applications.

Which got the ball rolling on Ethereum ETFs.