Eterna's Insights - May 2024

One Spot Closer to an Ethereum ETF in the US

On 23rd May 2024, the SEC approved 19b-4 proposals from Cboe, NYSE Arca, and Nasdaq, allowing spot Ethereum ETFs to begin trading in the US. This decision follows an unexpected acceleration in the approval process earlier in the week, where the SEC returned comments to expedite approvals. Bloomberg analysts Eric Balchunas and James Seyffart had initially predicted a 25% chance of approval but suddenly raised it to 75% following latest developments.

Despite this milestone, the SEC still needs to approve the S-1 filings by issuers before the ETFs can start trading. Analysts estimate this could take days to months.

Ethererum prices surged on the news, reflecting increased optimism about the ETPs' market debut.

Crypto Policy Enters the Presidential Race - More Washington Politics

At a Mar-a-Lago event, former President Trump encouraged crypto supporters to vote for him, criticising President Biden and the Democrats for their anti-crypto stance. Simultaneously, the House passed a resolution to overturn the SEC's Staff Accounting Bulletin 121, which limits banks from offering crypto custody services. The resolution, supported by a bipartisan vote, was then vetoed by President Biden. The SEC issued SAB 121 to address risks in crypto-assets, but critics argue it overreaches and hampers the industry.

The U.S. House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21), a major regulatory overhaul for cryptoassets. The bill, supported by 279 votes (including 71 Democrats), delineates the regulatory responsibilities between the SEC and CFTC, generally favouring the CFTC. It challenges the SEC's stance that most cryptoassets are securities. FIT21 mandates that token creators provide detailed disclosures about their projects and offers a legal framework for fundraising. It also requires crypto service providers to segregate customer funds, provide disclosures, and undergo regulatory examinations. The bill's passage marks the most bipartisan support for crypto legislation to date.

Although Biden expressed willingness to work with Congress on a balanced regulatory framework for digital assets, he has not threatened to veto the FIT21 Act, despite opposing it.

PayPal’s PYUSD launches on Solana

PayPal has announced the expansion of its PayPal USD (PYUSD) stablecoin to the Solana blockchain. This marks Solana as the second blockchain on which the Paxos-issued stablecoin is available, following its initial launch on Ethereum. Solana was chosen for its cost-effectiveness and high throughput, making it a preferred choice for stablecoin transfers and tokenised transactions.

Solana's token extensions offer additional fintech features, such as confidential transfers, transfer hooks for commercial payments, and memo fields for enhanced record-keeping, which further influenced PayPal's decision.

Mastercard Brings Credentials to Crypto

Mastercard has launched its Crypto Credential network to facilitate peer-to-peer (P2P) crypto transfers. This network simplifies crypto transfers by using aliases instead of complex blockchain addresses. It verifies on-chain interactions to enhance trust and protection and supports information exchange to comply with the Travel Rule for detecting financial crimes.

The announcement highlighted the first real-world use of the system. Beyond P2P transactions, potential use cases include NFTs, ticketing, and other solutions. The system is currently available on several exchanges in Europe and Latin America, including Argentina, Brazil, France, Guatemala, Mexico, Portugal, Spain, and Switzerland. The service is being rolled out on a first-come, first-served basis, with wider availability expected in the coming months for over 7 million users at participating exchanges such as Bit2Me, Lirium, and Mercado Bitcoin.

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Kakarot ZK-EVM Launches Testnet, Paving The Way For EVM-Compatibility On Starknet

Kakarot zkEVM has launched its testnet, aiming to bring Ethereum Virtual Machine (EVM) compatibility to Starknet. This advancement allows developers to deploy Ethereum-based decentralized applications (dApps) on Starknet, enhancing its scalability and security through zero-knowledge (zk) proofs. The testnet launch marks a significant step towards integrating Starknet with the broader Ethereum ecosystem, enabling more efficient and secure transactions.