Ethereum
SEC wants to define Ether as a security, Bitcoin rebounds
Key takeaways
- The Securities and Exchange Commission (SEC) is reportedly building a case to classify ether as a security.
- Bitcoin rebounded on Monday, crossing $70,000 for the first time in the last five days.
- Last Tuesday, bitcoin saw its biggest one-day price drop since the collapse of crypto exchange FTX.
- BlackRock has launched a tokenized fund on the Ethereum network, backed by traditional assets such as US Treasuries.
- After seeing inflows from spot Bitcoin exchange-traded funds (ETFs) turn into outflows last week, analysts are now monitoring the viability of a spot ether ETF approval by the end of May.
What happened in the crypto markets last week?
The crypto market shook off some of last week’s jitters and moved back into the green on Monday. Bitcoin rebounded past $70,000 and gains were seen in crypto tokens and crypto-related stocks.
After hitting a series of all-time highs in previous weeks, Spot Bitcoin exchange-traded fund (ETF) inflows dried up and the price of bitcoin recorded its biggest one-day drop in more than two years. In the meantime, ether found itself at the center of attention after reports that the Securities and Exchange Commission (SEC) was seeking to classify it as a security.
Despite this negative news, global investment firm BlackRock has unveiled a new tokenized fund on the Ethereum network.
SEC Reportedly Targeting Ethereum
The SEC continues an investigation to classify ether (ETH), the native cryptocurrency of the Ethereum network, as security, Fortune reported. Companies that received subpoenas related to this investigation said the SEC was demanding financial documents and records regarding their dealings with the Ethereum Foundation, which is the Switzerland-based nonprofit that oversees the blockchaingovernance and development.
The investigation appears to have gained momentum after the completion of Ethereum’s transition to a proof-of-stake model in September 2022. The SEC perceives this network change as akin to an investment contract, which could potentially qualify ether as security falling within the jurisdiction of the agency.
Notably, this development could indicate a derailment of the crypto industry’s hopes for the SEC’s approval of the spot. Ether ETF in the near future. That said, a number of spot ether ETF applicants have indicated they would be willing to accept the crypto asset’s designation as a security, according to a report from Forbes.
Bitcoin Sees Biggest One-Day Drop Since FTX Crash
Bitcoin (BTC) recovered over $70,000 Monday morning, following sharp declines last week. The largest cryptocurrency fell below $62,000 on March 20, after optimism around spot Bitcoin ETFs pushed the price to multiple highs, with the most recent surpassing $73,000 less than a week prior .
Last week’s sharp drop was particularly notable, as it was over 8% and the largest one-day drop for the crypto asset since November 2022 in the middle of the collapse of the now-defunct crypto exchange FTX.
“It appears that volatile price activity has been more concentrated during U.S. business hours,” Kaiko Research said Monday, adding that “the current spike in volatility follows a period of high volume and volatility unusually weak, making recent fluctuations more pronounced.”
According to BitMEX Research, net outflows from spot Bitcoin ETFs reached all-time highs during the sharp price decline. Outflows peaked on Tuesday last week at around $326 million, and the next day’s numbers were little better, with investors withdrawing around $261 million.
According to Bloomberg analyst James Seyffart, last week’s outflows were likely due to a bankruptcy case involving crypto lender Genesis. The previous week, Bitcoin ETF spot inflows reached all-time highs.
BlackRock launches tokenized fund on Ethereum
black rock (BLACK) unveiled its tokenized asset fund built on the Ethereum blockchain. The BlackRock USD Institutional Digital Liquidity Fund, represented by the BUIDL token, is entirely backed by cash, U.S. Treasuries, and repurchase agreements.
Token holders will receive daily yield payments facilitated by the Ethereum network. Other key participants in the project include Securitize, BNY Mellon, Anchorage Digital Bank NA, BitGo, Coinbase Global (PIECE OF MONEY), and firewalls. BlackRock also made an undisclosed investment in transfer agent Securitize.
BlackRock also offers a spot ether ETF app under review at the SEC, and CEO Larry Fink previously discussed the promise of tokenization in a July 2023 interview with Fox Business shortly after the company’s bitcoin ETF spot filing was filed. investment.
What to expect in the markets this week
Although Bitcoin has somewhat recovered from last week’s lows, analysts are waiting to see if one-time Bitcoin ETF inflows can turn positive again. Notably, BlackRock’s iShares Bitcoin Trust (I BITE) closes the gap with Grayscale Bitcoin Trust (GBTC) in terms of total assets under management (AUM) and could soon become the largest spot bitcoin ETF.
As is often the case, bitcoin’s rise brings other cryptocurrencies and crypto-related stocks with it. Ether was trading up around 7% on Monday, while Solana (GROUND) gains almost 10%. Stock of Microstrategy Inc. (MSTR) rose about 20%, while shares of Coinbase rose more than 8% in afternoon trading Monday.
Elsewhere, falling odds of Ether spot ETFs being approved by the end of May, given by analysts and prediction markets, are worrying those who want to see Bitcoin’s bull run spread to the rest of the market of cryptography. Additionally, it is unclear whether staking would be permitted in a potential spot ether ETF, as outlined in a recently revised application for an ETF submitted by Fidelity.