Take shape: New US spot ETF plans
Spot bitcoin ETFs began trading on US exchanges in January. (Not to mention all the excitement that followed BlackRock’s entrance into this race).
Despite the fact that ether-based ETFs (and their launch in July) have not seen much interest, and were expected to see less since then, this was still a significant milestone. The iShares Ethereum Trust gathered assets of $1 billion fairly quickly.
ETFs are proving to be an excellent way for institutions to enter the crypto space. To sum up, new crypto ETFs filings are significant. Especially those that hold assets directly and not in a wrapper.
They need to be approved to change the game.
The preamble is what led to the filing we witnessed today. Bitwise, a crypto-focused asset manager, filed for an ETF based on XRP. Canary Capital filed for the same product as well, according to a website of Delaware Division of Corporation.
Bitwise decided to put out a press release — not exactly common after an S-1 filing. In it, the firm mentions XRP’s role in facilitating cross-border payments and remittances — adding that the XRP Ledger public blockchain typically processes transactions in seconds, with fees under a cent.
XRP is ranked seventh in the crypto-token market by its estimated $33 billion capitalization.
“We believe blockchains will usher in new, apolitical monetary assets and permissionless applications for the 21st century,” Bitwise’s CEO Hunter Horsley made a public statement.
In my article from last month, I explained that Grayscale’s XRP Trust’s launch did not necessarily indicate the arrival of an ETF. Grayscale’s product lifecycle is intended to end in an ETF, but for this to happen the SEC must allow it.
Blockworks was told by some that the SEC might have a hard time approving crypto ETFs (apart from BTC and ETH), given its precedent for wanting to see regulated futures markets first. No such market exists for XRP.
However, the Bitwise and Canary plans seem to support the increasing perception that US crypto regulation winds are shifting. But it might just be wishful-thinking.
Canary Capital’s spokesperson confirmed that there is indeed a Canary Capital. “encouraging signs of a more flexible regulatory environment.”
He added: “This year’s approval of the spot Ethereum ETFs, following the earlier spot bitcoin ETF approvals, signals positive momentum, especially considering how long it took for ETH futures products to be approved. We’re optimistic about the next phase of developments in the space.”
Neena Mihsra, Zacks Investment Research’s director of ETF Research, revealed that Bitwise was preparing an XRP ETF if Trump were to win the presidential election. After all, the former president had promised to “fire” Gary Gensler, if elected as SEC chair.
“If Harris wins and Gensler remains SEC chair, the filing has no chance of approval, despite [Harris’s] recent comments about supporting digital assets,” Mishra argued.
Matthew Sigel, from VanEck, expressed similar thoughts after filing for an ETF on solana in June. In his remarks, he had said that the filing of an ETF was basically a wager on Trump’s victory in November given Republican nominee Donald Trump’s recent rhetoric.
Sigel didn’t want to comment today on Bitwise S-1, noting: “We like SOL a lot more than XRP.”
Bitwise filed its filing as cryptocurrency enthusiasts wait to see if the SEC appeals the SEC’s ruling against Ripple. The court ordered Ripple to pay a $125 million penalty — far below the $2 billion the SEC had sought.
Last year, Judge Analisa Torres ruled that programmatic sales were not included in the definition of unregistered securities offerings. A delay in determining XRP’s legal status could impact planned ETFs.
Ultimately, ETF issuers want to be ready for any scenario — particularly given the edge asset managers often gain from launching a product first, Mishra noted.
“Bitwise, well known for its crypto expertise, will likely launch this product in the future,” I was able to understand what she said. “Politics will determine whether this happens soon or in a few years.”
— Ben Strack
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Crypto was mentioned a total of ten times during the vice-presidential debate last night.
Although we weren’t surprised by the debate, it was clear that Donald Trump had no other scheduled events before Nov. 5. Last night seemed to be the last chance for Americans to learn about digital asset regulations on a large national platform.
Still, there is plenty of time left for Trump and/or Harris — plus their running mates — to share more information about their respective crypto platforms (or stop into an NYC bar and pay with bitcoin).
The odds of 25bps are increased by more employment data
ADP announced Wednesday that private sector employers increased their employment by 143,000 positions in September, compared to 103,000 in August. ADP reported that this was a much higher number than the 128,000 predicted new jobs.
The hospitality industry ranked first with 34,000 jobs. The construction and education and healthcare services sectors added 26,000 and 24,000.
The report also stated that wage growth has slowed, as we noted in the JOLTS report from yesterday. ADP reported that the average 12-month increase in pay for those employees who have not quit their jobs was 4.7%. This is down from 4.8% last August.
JOLTS showed layoffs, discharges and quits were leading factors on a percentage-based basis. However, job openings were still increasing. Job openings — as a percentage of the overall US labor force — now sit at 4.77%, similar to where we were prior to the pandemic.
The data is released after Fed Chairman Jerome Powell said on Monday that the committee does not want to cut interest rates too quickly. “The lowering cycles will continue,” he said. “over time.”
Powell’s top priority is the health of the labor market, which we have discussed before in this newsletter, while he attempts to achieve a “soft landing”.
“We do not believe that we need to see further cooling in labor market conditions to achieve 2% inflation,” He said on Monday.
CME Group data show that the federal funds futures markets have a 63% likelihood of experiencing a 25-basis-point cut in November.
Powell wants to see wage growth that is closer to the level of 3 to 3.5 percent, as he said previously is compatible with a 2 percent inflation rate. Nevertheless, I tend to agree here with the futures market; these two latest reports do not convince me that there will be another aggressive reduction next month.
The latest CME Group crypto launch is the most successful to date
CME Group’s new Bitcoin Friday futures (BFF) are so far a smash hit — at least when considering day-one reception compared to its previously launched crypto derivatives offerings.
Every Friday, at 4pm ET, new bitcoin contracts of one-fiftyth the size are settled in cash according to the CME CF Bitcoin Reference Price (New York Version) The new contracts will be listed on Thursdays at 6 pm ET. Participants can then trade up to two closest Fridays.
CME Group reported Tuesday that 31 498 BFF contract traded in two separate contract weeks on Sept. 30, debut.
This number was explained by a company spokesperson. Prior to yesterday, the highest volume CME crypto launch was micro bitcoin futures. These contracts traded around 7,400 when they were introduced in May 2020.
A majority of the volume — at 69% — came from investors in the Europe, Middle East and Africa regions, CME data shows. North America and Asia Pacific combined to make up 19% and 12 % of volume.
In August, the derivatives market publicly planned out their launch. It was a simple concept: offer smaller contracts to encourage participation by more investors.
Retail traders and institutions alike “will be able to more accurately fine-tune their bitcoin exposure on a regulated exchange,” CME crypto product head Giovanni Vicioso stated in a press release at that time.
CME said that Galaxy Marex and Marex were the first to trade such contracts, on Sept. 29.
Harry Benchimol is the co-head for derivatives at Marex. He said that the weekly contracts were an effective hedging instrument and closer to perpetuals available on crypto platforms.
Then, he said, “CME Group is closing the gap between traditional financial and crypto markets.”
The interest is on the rise “both on screen and in the block market,” Vicioso told Blockworks Wednesday.
CME Group is clearly motivated to expand its range of crypto products. We’re curious to see how it develops its next crypto product.
Bulletin Board
- The federal court of appeals has allowed prediction market Kalshi’s US Congressional elections betting markets to reopen. This ruling came three weeks after a separate appellate court sided the CFTC in freezing the market temporarily.
- Dockworkers in 36 East Coast Ports continued their strike today as the pressure grows for Biden to use the Taft-Hartley Act. Biden said that he would not intervene.
- Permissionless 3 is just a week off! Get your tickets now to hear Felix host Forward Guidance live. We’ve heard that prices will be increasing in the near future.
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