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SEC set to greenlight Ethereum Futures ETF
TradFi institutions turn their attention to Ethereum as the SEC reportedly set to approve another crypto fund.
The Securities and Exchange Commission (SEC) appears poised to approve a number of Ethereum Futures ETFs in the coming months, with several high-profile institutions registering applications to release ETH-tracked funds. The list of twelve interested parties includes crypto fund staples ProShares, Valkyrie and Bitwise.
The SEC plays a massive role in the perception and adoption of cryptocurrency, given its position as a financial regulator in one of the world’s major markets. The body hasn’t exactly been an ally to cryptocurrency or blockchain projects in the past after ramping up legal battles against Ripple (XRP), Binance and Coinbase in 2023. However, the pending approval of an Ethereum Futures ETF comes at a time where Investors are eagerly awaiting a decision from the SEC over several spot ETF applications. The outcome of these applications, including one from Blackrock, the biggest investment manager in the world, may lead toward more lenient and progressive policies.
The first of these potential ETFs – Valkyrie’s Bitcoin and Ether Strategy ETF – is speculated for an October launch, based on the application date and the SEC’s own deadlines to respond to applications. However, this date is tentative, and several proposed crypto-based funds have already seen delays this year. Nevertheless, the SEC’s potential changed outlook on Ethereum (ETH) futures contracts in a fund bodes well for future regulation.
The SEC has historically been much more willing to accept futures ETFs than their spot counterparts after they began allowing Bitcoin Futures ETFs in 2021. Futures ETFs are bundles of contracts that enable fund managers to buy/sell Bitcoin at a pre-determined price on a pre-determined date. However, they are generally focused on the case equivalent value rather than making the buy or sell, as these funds do not hold any Bitcoin as the underlying asset and aim to track the price of Bitcoin through these contracts. On the other hand, a spot ETF holds the underlying asset 1:1 (in the case of the pending approvals, BTC) and tracks its price that way. Â
Although the news of the reported likely approval of Ethereum futures ETFs is undoubtedly positive, Futures ETFs tend to have little impact on the price of a crypto given these funds have no holdings from the actual crypto market, hence why more focus is being put on the Bitcoin spot applications. Â
Coinbase layer 2 network overtakes Ethereum in daily transactions
Ethereum has been momentarily overtaken by Coinbase in network activity thanks to the deafening hype around Friend.tech.
Ethereum has long been the king of decentralised finance (DeFi). The network is renowned for hosting thousands of popular dApps and possessing a sprawling, interactive ecosystem for investors to navigate. However, the reign has – temporarily – ended thanks to the emergence of Coinbase’s new layer 2 network, BASE. Data acquired from analytics company Artemis Terminal had daily transactions on BASE sitting at 1.37 million for August 22nd. Meanwhile, Ethereum’s Mainnet lagged behind, recording just over 1 million daily transactions. It also temporarily overtook Arbitrum and Optimism in daily transactions.
Base has been developed and incubated by the United State’s biggest crypto exchange, Coinbase. It is primarily designed as an Ethereum scaling solution to reduce network congestion and tackle rising gas fees. For now, Coinbase retains centralised control over the Layer 2 blockchain. However, they claim the protocol will steadily become decentralised as it evolves.
Most Layer 2 chains offer several advantages but don’t tend to see heightened mainstream activity compared to their underlying network. So why is Coinbase’s new product making such a splash?
It’s simple – Friend.Tech. The new social media platform has lit a fire under the crypto community and is bathing in celebrity endorsements and widespread hype. The app, linked to Twitter (sorry… we mean X…), allows users to buy and sell stakes in their friend’s social media profiles. In just its first few weeks of infancy, Friend.Tech has seen over $50m in trading volume, as friendship groups battle it out to see who can make the most successful tweets and status updates.
Ex-OpenSea employee sentenced to three months for NFT insider trading case
Nathaniel Chastain has been imprisoned in one of the first official instances of insider trading in the crypto industry.
OpenSea is the one-stop shop for all things NFT. But the marketplace has become embroiled in an insider trading scheme after one of its ex-employees, Nathaniel Chastain, was convicted of fraud and money laundering. The case, stretching back to June last year, is one of the first official sentences handed down for insider trading in the digital asset market.
As an employee on the popular NFT marketplace, Chastain was responsible for picking which digital collectibles would be featured in prominent positions on OpenSea’s landing page. Naturally, assets given greater airtime were more likely to be purchased, artificially inflating their price. By promoting NFTs he already owned (or planned to own), the FBI and Department of Justice accused Chastain of making off with more than $50,000 in illegal profits.Â
Interestingly, OpenSea and the crypto community have known about Chastain’s actions for quite some time. The indicted would cover his tracks by switching between multiple wallets and accounts on the platform before flipping NFTs that were set to appear on the front page in the coming days. As always, Twitter detectives were on the case before anyone else, with one user connecting these seemingly independent wallets back to Chastain. As soon as OpenSea found out about the misconduct, they fired him and stripped him of his equity, said to be worth millions.Â
Although the crypto industry is unfortunately rife with pump-and-dump schemes, insider trading from big-name companies is much rarer. Chastain joins Ishan Wahi, who pleaded guilty to wire fraud earlier this year and was sentenced to two years imprisonment. Wahi, a manager at the popular US crypto exchange Coinbase, was investing in crypto tokens in the days leading up to their release on Coinbase.
