The Latest News - ETH ETF is Approved
Hello McFinancers! There has been a lot of news this week in the crypto markets.
The latest in financial news: The Ethereum ETF was approved by the SEC this week, the House of Representatives approved FIT21, Stripe incorporates USDC payments into their platform, and the House of Representatives reintroduced an act to remove federal taxes on the sale of gold/silver.
Ethereum ETF Is Approved
Over the past week, the US Securities and Exchange Commission (SEC) approved the 19b-4 forms for eight different spot Ethereum ETFs. This approval allows for the creation of these ETFs, which now await the final green light on their S-1 forms before they can be traded. Notably, companies updated their 19b-4 forms to exclude the staking component of the ETFs. Which would have provided a dividend to investors. While the spot Bitcoin ETFs were hugely successful, investors shouldn’t expect the same kind of returns as Bitcoin. There are differences in both Bitcoin and Ethereum’s technology and their use case that can affect investor understanding and incorporation.
Before Monday, the approval of Ethereum ETFs was unexpected. However, news of companies updating and refiling their applications caused Ethereum’s price to surge by over 20% this week. Until now, Ethereum investors have been disappointed with its performance compared to the significant gains seen in Bitcoin and other cryptocurrencies. This recent development has renewed investor confidence in Ethereum, sparking increased activity and investment in projects on Ethereum and its Layer 2 chains.
FIT21 Passes The House
Over this past week, the House of Representatives has passed the Financial Innovation and Technology for the 21st Century (FIT21) Act. This act is intended to help provide clarity on what cryptocurrencies (aka digital assets) are considered commodities and which ones are considered securities. The main difference between a digital commodity and digital security will be how decentralized and functional the project is. So all cryptocurrencies would start as digital securities and be under the SEC but can transition to digital commodities under the CFTC if they become decentralized. Examples of digital commodities would be Bitcoin and Ethereum.
While this act now goes to the Senate for its revision and eventual vote, it does show a trend in US politics. You can see how politicians are starting to embrace crypto and its use case and also see that some Democrats are voting against their party. Especially among younger Democrat politicians. It will be interesting to see campaigns and political discussions involving crypto and to see how various political candidates feel about crypto.
Stripe Incorporates USDC
Stripe has announced plans to integrate USDC into its payment options, marking its first foray into cryptocurrencies in six years. From 2014 to 2018, Stripe experimented with Bitcoin for payments and payouts but discontinued it due to Bitcoin's volatility. In 2022, Stripe began offering USDC payouts to select customers but did not accept USDC payments. Now, Stripe will both accept and payout in USDC. This is a big step toward cryptocurrency integration and use cases among everyday users.
The adoption of USDC and other stablecoins by more companies is driving significant growth in the stablecoin market. Circle (the issuer of USDC) and iFinex (the issuer of Tether) have amassed billions in market capitalization, backed by US dollars or dollar equivalents. These companies invest heavily in US bonds, benefiting from the interest while providing liquidity to the bond market. Increased investment in stablecoins could thus positively impact the US bond market as more funds flow into these securities.
Gold/Silver Tax-Free
U.S. Representative Alex Mooney has reintroduced legislation to eliminate federal income taxation on gold and silver coins and bullion. Currently, the IRS classifies these metals as "Collectibles," subjecting them to a high long-term capital gains tax rate of 28%, similar to items like artwork and baseball cards. The Monetary Metals Tax Neutrality Act aims to rectify this by ensuring no gain or loss is recognized on the sale or exchange of precious metals primarily valued for their metal content. Many activists have argued that it is inappropriate to tax the only form of money named in the U.S. Constitution. With many states already eliminating sales tax on precious metals, there is a growing trend to also remove state income taxes on these assets.
This change in the mentality of gold and silver from money to investment assets can be argued to have happened when President Nixon took the US off the gold standard in 1971. Now it seems many politicians at the state and federal level are looking to return to the idea of gold and silver as money as a hedge against inflation.
Join Today!
Join our newsletter to get more investing insight:
More updates on the market with an analysis of what it means for investors to help you stay ahead.
Training Videos to help teach you about investing in the stock market, crypto, real estate, commodities, alternative investments, or business.
How-To Guides to help walk you through new things.
Access to all published books by McFinance for FREE.
Monthly investing ideas.
* Investing can be unpredictable and volatile. Investors should always do proper due diligence to determine if assets are right for them. We are not licensed tax or financial professionals.
Comments
Post a Comment