In this week’s crypto highlights, we explore the potential impact of U.S. spot Ether ETFs on crypto markets, recent price recoveries among digital assets, and other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.
Market spotlight: U.S. spot Ether ETFs debut is widely anticipated on July 23
After two months have passed since their approval by the U.S. Securities and Exchange Commission (SEC), it seems the wait is almost over for the potential launch of spot Ether exchange-traded funds (ETFs).
According to Bloomberg analyst Eric Balchunas, the SEC requested final S-1 form submissions from spot Ether ETF applicants, which must include details on the fees issuers plan to charge for their crypto funds. In updated filings, asset managers disclosed the following fees:
- Seven out of 10 funds feature time-based and AUM-based fee waivers, with several managers offering temporary zero fees. This resembles the situation associated with the launch of spot Bitcoin ETFs.
- Grayscale maintained its 2.5% fee, which is significantly higher than other asset managers.
- The SEC approved the launch of Grayscale’s mini ETH and ProShares’ ETF, although the latter has not yet provided the necessary fund details. The agency also reportedly granted “preliminary approval” to BlackRock, Franklin Templeton, and VanEck.
Balchunas anticipates that the SEC will officially approve the S-1 forms on July 22 after trading hours, allowing the spot Ether ETFs to begin trading on July 23. Sources at two issuers also confirmed this information to industry media. It is also widely expected that all spot Ether ETFs will launch simultaneously, mirroring the SEC’s approach with spot Bitcoin ETFs. There remains a possibility that the regulator could reverse its decision, although this seems unlikely at this stage.
In its “State of Ethereum” report, Grayscale highlighted that Ether exchange-traded products (ETPs) outside the U.S. typically accumulate 25-30% of the assets in Bitcoin ETPs. This suggests that U.S. products may attract up to $4 billion in net inflows over the first four months if the trend holds. Citi is a bit more bullish, forecasting 30%-35% of Bitcoin ETFs’ net inflows, or around $5 billion over the first six months.
While these projections may seem modest, the crypto community remains optimistic about Ether’s short-term performance. Kaiko reported that Ether could outperform Bitcoin after the launch of ETFs, while Bitwise anticipates that Ether may reach $5,000 by the end of this year.&
However, keep in mind that Grayscale’s ETHE currently has $10 billion in AUM. Due to high fees, the market will likely see capital flowing out of Grayscale’s product in the first weeks or months after the ETFs’ potential debut. This outflow, similar to what occurred with its Bitcoin ETF, could put significant pressure on Ether markets. Consequently, Ether’s performance might be limited until the migration of funds from Grayscale’s ETF concludes.
Other noteworthy market events
The SEC dropped its investigations into Paxos and Hiro Systems
On July 11, Paxos, a stablecoin issuer, announced that it had received an official notice from the U.S. Securities and Exchange Commission (SEC), indicating that the agency would not pursue enforcement action against the company in its investigation of Binance USD (BUSD). This decision was likely influenced by a recent court ruling in favor of Binance, which determined that BUSD sales did not constitute a securities offering.
Despite this outcome, uncertainties remain about the SEC’s stance on whether stablecoins are considered securities. SEC Chair Gary Gensler previously likened stablecoins to money market funds and other types of securities.
Around the same time, the SEC concluded another investigation, involving the Bitcoin scaling network Stacks, and its original developer, Hiro Systems. The closure of this investigation is a notable relief for Hiro Systems, which had been under scrutiny despite claims from Stacks (formerly Blockstack) network contributors that their token sale was “SEC-qualified.”
FTX and CFTC agreed to a $12.7 billion settlement
Bankrupt crypto exchange FTX and the U.S. Commodity Futures Trading Commission (CFTC) agreed to a $12.7 billion settlement, bringing an end to a 19-month-long lawsuit. As part of this agreement, the CFTC will receive nothing, as long as FTX adheres to its reorganization plan. Consequently, FTX will pay up to $12.7 billion to creditors, depending on the available funds.
The settlement is broken down into $8.7 billion in restitution, and $4 billion in disgorgement. The latter will be “subordinated to the prior payment of claims of all creditors,” according to the filing. A hearing on the settlement is scheduled for August 6 in the Bankruptcy Court for the District of Delaware.
Squarespace exploit could put over 200 DeFi front ends at risk
On July 11, several decentralized finance (DeFi) apps were targeted in a domain registry attack. The attacker successfully took over the DNS registry for Compound Finance, and made an unsuccessful attempt to do the same with Celer Network. The breach was discovered when security researchers found that the Compound interface was redirecting users to a malicious site equipped with a drainer app designed to steal users’ tokens.
Initial investigations indicated that the attacker was focusing on domain names hosted by Squarespace, putting any DeFi app using its domains at risk. Ido Ben-Natan, co-founder and CEO of Blockaid, estimated that approximately 228 DeFi protocol front ends could be vulnerable. These include Pendle Finance, dYdX, Polymarket, Satoshi Protocol, Nirvana, and LooksRare, among others.
One sentence news
- Uniswap publicly launched its wallet browser extension on Google Chrome.
- Goldman Sachs is reportedly planning to launch three tokenization projects by the end of the year.
- ApeCoin announced the launch of its “Testnet Curtis,” which will pave the way for the mainnet.
- South Korean lawmakers proposed a delay in crypto tax implementation until 2028.
- Stripe expanded its crypto integration into the European market, enabling shoppers to buy cryptocurrencies, including Bitcoin, Ether, and Solana, using a credit or debit card.
- Core Starknet developer, StarkWare, submitted a proposal to enable staking on the network.
Notable price performances
This week has been overwhelmingly positive for crypto markets, pushing up the total crypto market cap by over $250 billion:
- The BTC price jumped by over 11%, following the end of the German government’s selling pressure, as well as strong consecutive inflows in U.S. spot ETFs.
- Bitcoin-associated tokens, STX and SATS, experienced 12% and 50% gains respectively, after the SEC dropped its investigation into Hiro Systems.
- The WLD price surged by over 45%, after Tools for Humanity, the developer behind Worldcoin, extended the lock-up period for WLD tokens allocated to team members and investors.
- XRP saw an almost 30% price jump, after CME and CF Benchmarks announced the launch of indices and reference rates for the asset.
- The MKR price soared by 30%, amid MakerDAO’s tokenized treasury plan and increased interest from top RWA players.
- Memecoins temporarily reclaimed its status as one of the best-performing sectors, with WIF, PEPE, and FLOKI showing over 20% price increases.
Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.
Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.
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