On the Margin Newsletter: Crypto ETF filings are only ramping up

With US ETH ETFs imminent, more firms are joining the paperwork party

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:

  • With US ETH ETFs still imminent, plans for SOL funds (and others) steal headlines.   
  • The Supreme Court’s Chevron decision and what it means for crypto.
  • This week’s macroeconomic wrap-up and what you may have missed.

Exchange-traded frenzy

The SEC’s January approval of spot bitcoin ETFs was a big hurdle cleared, as US crypto fund plans have only ramped up from there. 

You probably know about the imminent launches of US spot ETH funds. A source told Blockworks that issuers could hear from the SEC “at any point” about a listing date for those given the “light” last round of registration amendment revisions.

Industry watchers now wonder whether the agency will let those S-1s go effective prior to July 4, or if it will take a bit more time.

But in some ways that seems like old news, as US spot solana ETF plans have stolen some headlines.

VanEck — a firm already with a spot bitcoin ETF (and a planned ETH product) — led the charge on that front via a Thursday filing in the US. The proposal differs from a planned SOL fund submitted by 3iQ in Canada last week and could be tough to get past regulators at this point.  

Still, 21Shares joined the paperwork party by filing for a US solana ETF of its own on Friday. The company has a Solana Staking ETP trading in Europe with $850 million in assets. 

“While including a crypto token in a CME futures contract has legal precedent, it should not be the sole criterion for ETF eligibility,” 21Shares legal head Andrew Jacobson said in a statement.

It’s probably worth mentioning too that ETF powerhouse State Street Global Advisors said Wednesday it was partnering with Galaxy Digital to launch “the next generation of digital asset-based strategies.”

The firms together filed for three funds, including a Digital Asset Ecosystem ETF that would invest in crypto equities and futures contracts, as well as in ETFs that hold spot crypto or futures. 

SSGA’s entrance is certainly something to watch, particularly if they end up choosing to launch spot crypto products. The company has plenty of brand recognition and its physically backed gold ETF (GLD) is the largest of its kind, with roughly $62 billion in assets. 

Even before the SOL and SSGA fund filings, Hashdex revealed plans (on June 18) for a fund that would hold both BTC and ETH. 

Not to mention the SEC is still considering a planned spot bitcoin ETF that combines BTC exposure with carbon credit futures. Oh, and a separate fund proposed Wednesday would invest in futures and ETFs related to both bitcoin and gold.

Bottom line, the crypto-related ETF stack on the SEC’s desk is sizable — and likely to get bigger. 

US spot ETH and SOL ETFs may have seemed like an utter fantasy in early 2023. But BlackRock would enter the spot bitcoin fund race mid-year. Grayscale then won a lawsuit, the SEC cleared ether futures ETFs and, last month, approved the 19b-4s for spot ETH ETFs.  

To some, the SEC giving its blessing to a SOL ETF might feel like a pipe dream, and maybe it is (at least in the near-term). But it’s hard to deny we appear to be in a new era of crypto ETF innovation. 

If the SEC filings webpage isn’t among your bookmarked tabs, you might want to add it. 

Ben Strack

0

The number of crypto mentions during the Thursday debate between President Joe Biden and former President Donald Trump.  

Questions unsurprisingly focused on arguably more pressing issues like the economy, immigration, abortion, foreign policy, etc. 

Lies were told. Trains of thought were lost. Questions were successfully evaded.

Despite Trump seeming to embrace crypto in recent weeks and many Democrats showing more support for a space the party appeared to previously collectively oppose, the topic didn’t make the cut on last night’s stage. 

Crypto remains an important political issue to many, with 55% of voters surveyed by Grayscale expressing concern about elected officials not understanding the technology.

Chevron doctrine is Chevr-OFF 

In a 6-3 decision Friday, the Supreme Court reduced the authority of federal agencies. The ruling overturns the so-called Chevron doctrine, established by Chevron v. Natural Resources Defense Council in 1984. 

The doctrine has for the last four decades required courts to defer to the knowledge of federal administrators and agency leaders. 

Those opposed to the precedent argue that it allows federal agencies to extend their reach beyond what Congress grants. Supporters say the doctrine allows experts to fill in gaps around specific issuers and help protect their respective interests. 

​​“Because the Supreme Court has overturned the Chevron doctrine, courts are deemed to be the proper forum for deciding matters of law — including statutory and regulatory ambiguities,” Dorsey & Whitney partner Joseph Lynyak said. “However, courts around [the country] may be inundated with private parties who may now litigate and relitigate an agency interpretation, including creating conflicting decisions by lower courts.”

The ruling is especially interesting to the crypto industry, which has long maintained that agencies like the SEC are overstepping their authority by attempting to establish rules, usually through litigation and enforcement actions

“​​In the absence of specific legislation granting and clearly outlining regulatory authority over crypto, federal regulators are attempting to adapt their existing statutory authorities to cover crypto-related activities,” crypto advocacy group The DeFi Education Fund said Friday. “This approach is problematic because these authorities are ill-suited for the task, their application is unclear, and their authority is questionable.”

We’ll be curious to watch over the weekend how agencies and lawmakers continue to respond to the decision.

Casey Wagner

Did You Notice

We made it to Friday! Here’s a recap of this week’s economic events and what they mean: 

  • The headline economic figure this week was definitely Friday’s PCE reading. It’s the Fed’s preferred inflation gauge and it came in right along with expectations. Prices are still increasing (2.6% annually in May), but more slowly than they have been in over three years. The report was enough to give Fed fund futures markets renewed hope that a September rate cut might just be in the cards after all. 
  • As we talked about in Tuesday’s newsletter, the metric to be watching right now is jobs data. Initial jobless claims dropped 6,000 to a seasonally adjusted 233,000 for the week ended June 22, the Labor Department said Thursday. There was a public holiday that week — which tends to impact the data — so take it with a grain of salt. Recurring applications however rose to the highest level since 2021. If unemployment increases, it could push the Fed to cut earlier than expected. 
  • In a shock to no one, headlines headed into next week’s holiday weekend are going to be dominated by last night’s first presidential debate. We will need at least two more business days to digest all the memes. In all seriousness, the main questions now are: 1. When will Trump announce his running mate, and who will it be? and 2. Are Democrats going to try for an eleventh-hour switch-up and replace Biden? 

Casey Wagner

Bulletin Board

  • The SEC filed a suit against Consensys Friday, making good on a promise from months ago when the agency served the crypto firm a Wells notice. The SEC alleges the company failed to register as a broker and offered and sold unregistered securities. 
  • Though we already mentioned crypto did not surface during last night’s presidential debate, industry players are still showing support for Trump. Kraken co-founder Jesse Powell took a page from the Winklevoss twins’ book by saying Friday he donated $1 million to Trump’s campaign. This is, of course, over the individual contribution limit, so maybe Powell donated to a super PAC — or else he’s probably getting a refund. 
  • Thanks for reading along this week; we hope you have a great weekend! If you’re looking for more OTM content to tide you over until Monday, check out our weekly roundup podcast episode tomorrow morning on YouTube (or wherever you get your podcasts).

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

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