Investment giant Fidelity has updated its application for a spot Ether (ETH) exchange-traded fund (ETF). The new filing shows that FMR Capital, an affiliate of Fidelity, invested $4.7 million to buy 1,250 Ether (ETH). This update was submitted to the United States Securities and Exchange Commission (SEC) on June 21.

Fidelity’s Investment in Ether ETF

Fidelity amended its Form S-1 Registration Statement, required for public sale investments. The new filing reveals that FMR Capital purchased 125,000 shares at $38 each to seed the fund’s basket with $4.7 million, which was used to buy 1,250 Ether. The price of Ether at the time was around $3,506.

No ETH Staking for Fidelity’s ETF

Fidelity also confirmed it will not engage in ETH staking. Staking was removed from the company’s initial proposal on May 21. The filing stated, “The Trust will not participate in the proof-of-stake validation mechanism of the Ethereum network (i.e., the Trust will not ‘stake’ its ether) to earn additional ether or seek other means of generating income from its ether holdings.”

SEC’s Rule Change and Approval Process

The SEC has approved a rule change that allows the listing and trading of eight spot Ether ETFs from major asset managers. These include VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. However, these ETFs still need SEC approval for their S-1 forms before they can start trading.

Analyst Predictions for Ether ETF Filings

Bloomberg analyst Eric Balchunas expects more asset managers to update their Ether ETF filings on June 21. He predicts that the funds will debut on July 2. Balchunas wrote on X, “We will see a bunch of amended S-1s filed today, prob later this afternoon. Then ball’s in SEC’s court to let issuers know about any final changes and effectiveness (aka final approval). We holding the line with July 2nd as our over/under for eth ETFs launch date.”

Bitwise and Pantera Capital’s Involvement

Bitwise has also updated its proposal with the SEC. On June 19, Bitwise included a potential $100 million investment in the ETF from Pantera Capital upon its trading launch.

Hashdex’s Combined Bitcoin and Ether ETF Proposal

Hashdex, another asset manager, is seeking regulatory approval for a combined spot Bitcoin (BTC) and Ether ETF on the Nasdaq exchange. On June 18, Hashdex proposed this idea. Earlier, Hashdex had dropped plans to offer a sole Ether ETF.

Ethereum Options Data and Market Trends

Ethereum options data shows bears’ plan to keep ETH price under $3,600. On June 28, $4 billion worth of Ethereum options are set to expire. The balance of forces is centered around $3,500. Ether’s recent consolidation around this price has diminished the market’s expectation for a monthly options expiry above $4,000.

Monthly ETH Options Expiry

A total of $3.5 billion in monthly ETH options is scheduled to expire on June 28 at Deribit, the leading exchange. This is followed by $286 million at OKX and $142 million at Binance. However, as the SEC continues to review the S-1 filings from ETF providers, the likelihood of bullish bets surpassing $4,000 remains low.

Impact of SEC Chair Gary Gensler’s Confirmation

Ether bulls did not anticipate the delay between the regulatory approval of the spot ETF and its actual trading commencement. SEC Chair Gary Gensler confirmed this uncertainty. This delay has weakened the momentum for optimistic bets for the June 28 options expiry.

Conclusion of SEC Investigation into Ethereum

Ether bears were surprised after a major regulatory concern for investors was addressed on June 19. The SEC concluded its investigation into whether Ether could be classified as a security. This decision means Consensys is no longer under scrutiny for potential ETH sales.

Open Interest for June 28 Options Expiry

The open interest for Deribit’s June 28 monthly options expiry stands at $3.5 billion. However, the actual outcome is expected to be lower. Prices above $4,000 and below $3,000 are seen as unrealistic.

Put-to-Call Ratio and Market Scenarios

The 0.62 put-to-call ratio indicates an imbalance between the $2.2 billion call (buy) open interest and the $1.3 billion put (sell) options. If Ether’s price stays around $3,500 at 8:00 am UTC on June 28, only $257 million worth of these put options will be relevant. This discrepancy happens because the right to sell Ether at $3,300 or $3,400 becomes irrelevant if ETH trades above these levels at expiry.

Bulls’ Target and Potential Gains

Below are the four most likely scenarios based on current price trends. The balance of potential gains for each side is outlined as follows:

• Between $3,200 and $3,400: There are 13,000 calls versus 97,200 puts. The net result favors the put options by $280 million.
• Between $3,400 and $3,600: There are 43,900 calls versus 41,600 puts. The outcome is approximately balanced between call and put options.
• Between $3,600 and $3,800: There are 104,200 calls versus 24,400 puts. The net result favors the call options by $300 million.
• Between $3,800 and $3,900: There are 141,600 calls versus 9,600 puts. The advantage for call options increases to $500 million.

This rough calculation assumes that call options are used primarily for bullish bets and put options for neutral-to-bearish positions. However, this simplification does not account for more intricate investment strategies.

Unless there is an unexpected approval of a spot ETF before June 28, the likelihood supports a balanced result around $3,500. This should be viewed as a victory for the bears, especially considering that Ether was trading above $3,800 just two weeks prior.

Tornado Cash Developer Sentenced to Prison for Writing Privacy Software

On May 14, Alexey Pertsev, a lead developer of Tornado Cash (TC), was found guilty of money laundering by a Dutch court. He was sentenced to sixty-four months in prison. Tornado Cash is a privacy-preserving protocol for the Ethereum blockchain. It allows users to deposit funds and withdraw them to different addresses, making it hard for others to track financial activity. Since TC is noncustodial, users control their own money, and developers like Pertsev can’t control how people use the TC smart contracts.

Why Tornado Cash Was Targeted

Because of its privacy features, Tornado Cash was sanctioned by the Office of Foreign Assets Control (OFAC) in August 2022. The U.S. government banned its use by U.S. citizens, citing money laundering and terrorist financing concerns. Shortly after, Pertsev was arrested in the Netherlands. Roman Storm and Roman Semenov, other lead developers of TC, were also arrested by U.S. authorities in August 2023 for money laundering and sanctions violations.

Impact of Pertsev’s Sentence

Pertsev’s sentence sets a dangerous precedent. It threatens developers’ freedom to write open-source code and users’ ability to transact privately. The judge claimed Pertsev was guilty because TC can be used by others for money laundering. This ruling implies that any privacy-preserving software, like Tor or Signal, could lead to similar charges against their developers.

Privacy-Preserving Financial Tools

The court argued that it is common knowledge that privacy-preserving financial tools can be exploited by criminals. However, this logic is flawed. Just because cars can be used recklessly doesn’t mean car manufacturers are responsible for accidents. Similarly, Pertsev shouldn’t be punished for how others use his software.

The judge also suggested that Pertsev should have made the software more compliant with the law. However, TC allows users to prove their funds are from legal activities and prevents deposits from known sanctioned addresses. Even so, technically savvy users can bypass these measures and interact directly with the smart contract, which the court said made Pertsev’s situation worse.

Government Control and Financial Surveillance

Regulators want developers to create software that the government approves of. This control over software development is a threat to free speech. The government’s actions against TC resemble historical instances where authorities punished creators for their work. For example, the Inquisition punished intellectuals for writing books that challenged the Church, and Nazis destroyed art they deemed “degenerate.”

Today, Western governments jail people for writing software they don’t like. Open-source software boosts freedom and helps people avoid financial surveillance, which threatens government control.

The Role of FATF

The sentence against Pertsev also mentioned the Financial Action Task Force (FATF). FATF is an international organization that sets standards to prevent illegal activities like money laundering. Countries must follow FATF’s recommendations or face sanctions. These recommendations often push for more financial surveillance, treating all transactions as suspicious by default.

If financial privacy is seen as a risk, writing privacy-preserving software is viewed as a threat to regulatory control. This is why the definition of “money laundering” is being expanded to include developers like Pertsev, who merely wrote software that others can use independently.

The Importance of Privacy-Preserving Software

The theory of the division of powers states that the executive, legislative, and judiciary branches must be separate to ensure checks and balances. However, Pertsev’s sentence shows that the judiciary can end up enforcing the will of the other branches. The Bank Secrecy Act, which established most anti-money laundering laws in 1970, came just before the fiat monetary system began.

In a fiat system, money’s value depends on public trust in political institutions. To maintain this trust, governments need to prevent people from opting out of the system. Without financial surveillance, the current fiat system might collapse. Pertsev’s arrest aims to make an example of him and scare people away from using privacy-preserving software.

Supporting Privacy and Open-Source Development

Governments fear privacy because a privacy-conscious population can challenge their power. The best response to this is to continue using and supporting privacy-preserving software. Liberty should never be taken for granted. It must be protected by supporting developers who create privacy tools and by using these tools to maintain financial privacy without government permission.

The fight for privacy is crucial. We must support open-source developers and continue to use privacy-preserving software to protect our freedom. Alexey Pertsev’s case is a reminder that the battle for financial privacy and freedom is ongoing.

Spot Ethereum ETFs Poised for $4 Billion Inflow

Introduction to Ethereum ETFs

Experts anticipate a significant investment of between $3.1 billion and $4.8 billion in Ethereum spot ETFs soon after their launch. The U.S. Securities and Exchange Commission (SEC) has recently approved these ETFs, marking a significant step in cryptocurrency regulation. This approval is expected to draw a larger pool of investors to the market.

The Growing Interest in Ethereum Investments

Institutional investors are showing a growing interest in Ethereum, similar to the early days of Bitcoin ETFs. Just as Bitcoin ETFs attracted massive investments, Ethereum ETFs are also expected to bring stability and growth over the long term. Currently, Ethereum makes up 28% of the global assets under management in the cryptocurrency sector, establishing it as a major player in the market.

Ethereum’s Institutional Appeal

According to research by K33 Research, the influx of money into Ethereum ETFs in the first five months could be substantial. They predict an acquisition of 750,000 to 1 million ETH, which would account for about 0.65% to 0.85% of all Ethereum currently available. This influx highlights the increasing role of institutional funds in the cryptocurrency market, managing around 3.3% of ETH’s circulating supply.

Comparison with Bitcoin’s Success

Ethereum ETFs are setting up to mirror the success seen with Bitcoin spot ETFs, which have accumulated about $13.9 billion since their inception. Ethereum’s spot ETFs are expected to draw in around $4 billion shortly after they start. This is in stark contrast to the modest reception that Ethereum futures ETFs received under less favorable market conditions.

SEC’s Role in Boosting Ethereum ETFs

The SEC’s recent approval is a game-changer for Ethereum ETFs. It not only adds credibility to Ethereum as the second-largest digital asset but also makes it easier and more regulated for investors to enter the market. This is likely to boost investor confidence and encourage more people to invest in Ethereum ETFs.

Market Implications of Ethereum ETFs

The entry of these ETFs is predicted to have a profound impact on the market. They are expected to bring in large amounts of capital and introduce long-term investment strategies, which are essential for the maturity of the asset class. Additionally, advancements in technology like roll-up technology and Ethereum Improvement Proposal (EIP) 4844 are improving Ethereum’s scalability and network resilience, making it even more attractive to investors.

Technological Enhancements and Future Prospects

Ethereum continues to advance with new technologies that make the network more efficient. These improvements are crucial for handling more transactions and accommodating more users as the network grows. With the structure of ETFs, Ethereum is not just a cryptocurrency but a promising financial asset that offers a regulated way for investors to get involved.

Ethereum ETFs and Institutional Investors

Institutional investors play a pivotal role in the stability and growth of Ethereum. By bringing substantial capital and a strategic approach to their investments, these investors help in maturing the market. Their involvement signifies a shift towards more stable and long-term growth in the cryptocurrency sector.

Looking Ahead: The Bright Future of Ethereum

The excitement around Ethereum is palpable, similar to the enthusiasm seen with Bitcoin ETFs, which saw an impressive $58 billion come in within just five months of their launch. If Ethereum spot ETFs follow a similar path, they could push Ethereum to new heights. This would not only bolster Ethereum’s market position but also help stabilize and grow the broader market.

Get Ready for Ethereum’s Rise

As Ethereum ETFs prepare to launch, the anticipation among investors and market watchers is high. With a robust framework in place and the backing of institutional investors, Ethereum is on the path to achieving remarkable growth and stability. Stay tuned as we continue to follow this exciting development in the world of cryptocurrency.

BlackRock Updates S-1 Filing

BlackRock, a major asset management firm, recently updated its S-1 filing with the U.S. Securities and Exchange Commission (SEC). This update shows significant progress toward launching a spot Ethereum (ETH) exchange-traded fund (ETF). This news has excited the crypto community and experts who see this as a big step forward.

Industry Experts Predict July Launch

Many industry experts are predicting that Ethereum ETFs could launch as early as July. These experts believe the updates in BlackRock’s S-1 filing are crucial for moving forward. This filing update aligns with similar moves by other asset managers like VanEck.

BlackRock’s Stance on Staking Activities

In the updated document, BlackRock clearly states that the Trust will not engage in any “Staking Activities.” This means it will not use its ETH for Ethereum proof-of-stake (PoS) validation or generate income from such actions. As a result, the Trust will not receive any staking rewards or earnings from these activities.

This is an important point because not participating in staking could cause an investment in the Shares to deviate from what would have been obtained by purchasing and holding ETH directly. BlackRock’s stance mirrors VanEck’s recent S-1 filing update, which also clarified that none of its affiliated parties would participate in staking activities.

DTCC Lists Fidelity’s Spot Ethereum ETF

In another development, the Depository Trust & Clearing Corporation (DTCC) has listed Fidelity’s spot Ethereum ETF on its website under the ticker FETH. This listing adds another layer of legitimacy and anticipation for these ETFs. However, the official launch still depends on the SEC’s approval of the S-1 forms.

Expert Insights on Launch Timelines

Industry experts have shared their insights on when these Ethereum ETFs might launch. James Seyffart, an ETF analyst at Bloomberg, is optimistic. He stated that the SEC and issuers are actively working towards the launch of spot Ethereum ETFs. He noted that the current engagement on the S-1 filings suggests a launch could happen within weeks.

Eric Balchunas, another ETF analyst at Bloomberg, agrees. He suggested that while an end-of-June launch is possible, a more conservative estimate would be July 4. He also mentioned that an accelerated approval is unlikely unless there is a significant political push to speed up the process.

BlackRock Moves Closer to Launching First Spot Ethereum ETF

BlackRock’s amended S-1 form for its spot ether ETF reveals that a “Seed Capital Investor” purchased the initial shares. This is seen as a positive sign by Bloomberg analyst Eric Balchunas, who predicts a potential June launch. The updated filing stated that on May 21, 2024, the Seed Capital Investor purchased 400,000 Shares at a price of $25.00 each. The net asset value of the Trust was $10,000,000. Pending regulatory approval, the assets within the ETF can be redeemed for either cash or ether.

Comparing VanEck’s S-1 Update

VanEck, another prominent asset management company, has also updated its S-1 filing. This update came right after the SEC’s preliminary approval for multiple spot Ethereum ETFs. VanEck clarified that none of its affiliated parties would participate in “Staking Activities.” This filing specifies that these entities will not use any portion of the Trust’s ETH to generate staking rewards.

VanEck also launched an advertisement shortly after the SEC’s announcement. This 37-second video emphasizes Ethereum’s potential and questions its role in creating a less centralized, open-source economy. The ad resonated well with the crypto community, gathering nearly 440,000 views within 12 hours of its release.

SEC Approval and Future Steps

Despite these positive developments, the official launch of these ETFs remains uncertain. The SEC approved the 19-4b filings for several potential spot Ethereum ETF issuers, including VanEck, BlackRock, Fidelity, Grayscale, and others. However, issuers still need to secure approval for their S-1 forms to officially launch these ETFs.

Industry experts speculate on the timeline for S-1 approvals and the subsequent launch of spot Ethereum ETFs. Nate Geraci, President of ETF Store, suggested that the SEC might “slow play S-1s.” James Seyffart, an ETF analyst at Bloomberg Intelligence, predicted it could take weeks or more to finalize the S-1 approvals and launch the ETFs.

As we reported earlier that discussions between SEC staff and issuers regarding S-1 forms have started, but there is still “work to do” before these forms are approved. It remains to be seen if other potential spot Ethereum ETFs will make the same move as VanEck.

Impact on the Financial and Crypto Markets

As these developments unfold, the financial and crypto communities are closely watching. The coordinated efforts of major asset managers and the SEC’s engagement indicate a pivotal moment for Ethereum investment vehicles. The launch of these ETFs is expected to have a significant impact on the market, offering more opportunities for investors and boosting the overall crypto market sentiment.

BlackRock has already seen success with its Bitcoin ETF, iShares Bitcoin Trust, which has become the world’s largest publicly traded bitcoin fund. The potential launch of their Ethereum ETF could replicate this success in the Ethereum market, attracting more mainstream investors to cryptocurrency.

BlackRock’s updated S-1 filing and the anticipation of the first spot Ethereum ETF launch mark a significant development in the crypto investment landscape. With industry experts predicting a potential launch by July, the financial world is eager to see how these ETFs will shape the future of Ethereum investments.