On July 23, 2024, 21Shares co-founder and CEO Honey Rashwan appeared on Bloomberg Crypto to talk with Sonali Basak and Tim Stenovec about Ethereum price action on the day nine U.S.-listed spot Ethereum ETFs began trading, who these ETFs are designed for, use cases for Ethereum, and the potential for future staking rewards integration into these ETFs.
Ethereum Price Dynamics and Market Conditions
Rashwan started by looking at the current price movement of Ethereum, which has been falling for three days in a row.
Rashwan attributed this to the timing of the launch of the Ethereum spot ETFs, noting that while the influx of volume into the ETFs was significant, it had already been partially priced in. He compared this situation to the launch of the Bitcoin spot ETFs, which occurred in more favorable conditions. Rashwan explained that global macroeconomic events and the summer period also impacted Ethereum’s performance. Despite these short-term fluctuations, Rashwan expressed optimism about the overall cryptocurrency market, and Ethereum in particular, over the next six to 12 months.
Target Audience for Ethereum Spot ETFs
When asked about the target audience for Ethereum spot ETFs, Rashwan emphasized the broad appeal of these financial products. He said that 21Shares, as the world’s largest issuer of crypto ETFs, caters to both retail and institutional investors. Rashwan explained that retail investors often prefer ETFs due to the complexity of setting up their own wallets and managing the associated infrastructure. Institutional investors, including family offices and independent asset managers, also find value in the regulated structure and custody solutions provided by ETFs. While insurance and pension funds have not yet fully embraced crypto investments, Rashwan expressed confidence that this will change over time.
Ethereum Use Cases
Rashwan elaborated on the unique use cases of Ethereum that differentiate it from Bitcoin. He described Bitcoin as “digital gold” that serves as a hedge against weak fiscal and monetary policies. In contrast, Ethereum is known for its practical applications, particularly in the decentralized finance (DeFi) space. Rashwan highlighted that the Ethereum blockchain is the foundation for various financial applications, including smart contracts and stablecoins. He noted that stablecoins, mostly built on platforms like Ethereum, have had a significant impact: Visa processed $10 trillion in transactions, and stablecoins processed $9.3 trillion in transactions last year.
Future integration of staking rewards
One of the key topics discussed was the potential integration of staking rewards into Ethereum ETFs. Rashwan acknowledged that staking rewards are not yet included in these new ETFs, but assured that it is a question of “when,” not “if.” He explained that the process of adding staking rewards involved educating regulators and ensuring that they are comfortable with the concept. Rashwan noted that 21Shares has successfully launched spot ETH ETPs without staking rewards in other regions and plans to update these products over time. He expressed confidence that he will convince the U.S. Securities and Exchange Commission (SEC) to approve staking rewards, drawing parallels to the lengthy approval process for Ethereum spot ETFs.
The Political Landscape and Regulation of Cryptocurrencies
The conversation also touched on the potential impact of the upcoming U.S. presidential election on cryptocurrency regulation. Rashwan said that the day-to-day operations of regulators will remain largely unchanged regardless of the election outcome. However, he emphasized the importance of cryptocurrency becoming a mainstream topic in political discourse, reflecting its growing importance among Americans. When asked about potential differences in cryptocurrency regulation under a Trump or Harris administration, Rashwan noted that bipartisan support for crypto-related legislation suggests positive outcomes regardless of the election outcome. He reiterated that cryptocurrency makes sense for America and is here to stay.
At the time of writing (21:30 UTC July 23), ETH is trading at around $3,479, up 0.6% on the day.
Main image from Pixabay
