ETH ETF staking proposals highlight a bigger issue

plus: how good is inflation data, GENIUS relief, Bitcoin and refugees

“You have brains in your head. You have feet in your shoes. You can steer yourself in any direction you choose.” – Dr. Seuss ||

Hi all, and happy Friday!! A late send today as I had a schedule squeeze this morning – a fun one, though, I was asked to go live on the BBC Business show to talk about the progress in crypto regulation and its impact.

Some topics I was hoping to get to but will push to next week include ETH metrics; why big banks are unlikely to issue stablecoins (I touched on this yesterday, but there’s more); why JPMorgan’s JPMD is not a stablecoin; and what’s going on in Hong Kong?

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IN THIS NEWSLETTER:

• GENIUS: A big day

• ETH ETF staking proposals highlight a bigger issue

• Inflation and data quality

• Bitcoin and refugees

If you’re not a premium subscriber, I hope you’ll consider becoming one! You get ~daily commentary on markets, tokenization, regulation and other signs that crypto IS impacting the macro landscape. As well as relevant links and music recommendations ‘cos why not.

WHAT I’M WATCHING:

GENIUS: A big day

Phew, it passed!

The GENIUS Act, which sets a regulatory framework for dollar-backed stablecoins, has now passed both the Senate and the House, and should be on President Trump’s desk for signing today.

This is the biggest deal in crypto so far this year, up there with the change in the SEC – it’s the first crypto-focused law in the history of the United States, home to the largest financial market in the world. Just the symbolism alone is worth getting excited about.

And the fact that it is now a law rather than an agency ruling means that future Administrations will not be able to easily overturn its provisions. Should any try, by then stablecoins will be so deeply embedded in the global financial landscape, it would be futile.

What’s more, the framework will almost certainly boost stablecoin use and experimentation, with more issuers, more onramps, more applications and more platforms increasing volumes and usability while feeding more innovation.

This will benefit the whole crypto ecosystem in several ways:

It will boost market liquidity overall. Crypto markets are typically liquid anyway, but stablecoins make it easier to invest in crypto assets. There tends to be a wider range of trading pairs, settlement is faster and cheaper, and so more stablecoins in the hands of more investors should lead to more crypto trading activity and more liquid markets.

It will benefit the traditional payments landscape. Stablecoins enable faster and more transparent cross-border transfers, which means a standard activity for the majority of businesses can take less time and hold up less capital. This also applies to the billions of individual users around the world hit by high remittance costs and unstable savings vehicles – easier access to dollars not only enables them to transfer money to friends and family more cheaply, it also gives them access to online services that don’t include their local currencies in their baskets.

What’s more, stablecoins offer potential innovations: programable payments, for example, is not new, but embedded programmability could broaden the reach and the flexibility.

In sum, GENIUS Act is a first but an essential step towards kickstarting the mainstreaming around the world of onchain token use. A major milestone was reached yesterday – but it’s by no means the last.

ETH ETF staking proposals highlight a bigger issue

Yesterday, BlackRock filed a proposal to include the distribution of staking rewards for its ETH spot ETF. It’s behind on this, several other issuers filed similar proposals a while ago. The first final deadlines are in October whereas, if normal schedules are followed, the iShares fund proposal wouldn’t be decided on until next April. But, it’s unlikely that the SEC would make BlackRock wait that long once the decision is already taken.

This gets to the heart of a bigger issue with SEC ETF decisions. It’s likely that the SEC will authorize staking distribution for all ETH spot ETFs at once. But some asset managers are pushing for a first in, first out process, with the first to file getting to launch first. Last month, VanEck, 21Shares and Canary Capital sent a letter to the SEC arguing that bulk approvals hurts competition as the “first movers” get no advantage, especially if the big funds come in late once they’ve seen there’s likely traction and then get the bulk of the inflows merely due to their size.