A highlight from ETH Futures ETFs Get Set to Trade as Government Shut Down Looms

The Breakdown


Welcome back to The Breakdown with me, N .L .W. It's a daily podcast on macro, Bitcoin and the big picture power shifts remaking our world. What's going on, guys? It is Friday, September 29th, and today we are talking ETF approvals. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us in the Breakers Discord. You can find the link in the show notes or go to bit .ly slash breakdown pod. All right, friends, lots of action to wrap up your week. We're going to talk a little bit of ETF announcements and then we're going to get into the government shutdown and, of course, give you all of the information that you need. Now we start with the SEC in the world of ETFs. That organization has been busy over the past few days making decisions on a variety of different crypto applications. Now, there are currently three major batches of crypto ETF applications that are being considered. On Thursday, four Spot Bitcoin ETFs were delayed, including the BlackRock application. Two additional Spot Bitcoin ETFs were already delayed on Tuesday. Announcements delaying the rest of the similar applications are expected to follow today and are likely to be published by the time the show is released. The next deadline for the SEC to consider approving Spot Bitcoin ETFs is on January 10th. That's an important one because it's the final deadline for the ARK21 shares application, so it will require an explanation from the SEC rather than just a simple delay. The second batch are the Ethereum Spot ETFs, which were also delayed. On Wednesday, the SEC deferred their decision on products from VanEck and ARK21 shares. The next deadline for regulatory consideration falls on December 26th. The SEC can delay further on these products with the final deadline falling in May. Now, overall, the delay of Spot crypto ETFs has not been particularly surprising. As much as people have wanted the legal decision from the Grayscale suit to force the SEC's hand, that court order is still able to be appealed, and there is nothing really compelling the SEC to move forward with Spot ETFs for the time being. Now, the more interesting developments surround Ethereum futures -based ETFs. Throughout August, at least 24 applications were filed, including some products offering short Ethereum exposure and combined long exposure to Bitcoin and Ethereum within a single fund. Throughout the week, there have been rumblings that the SEC was preparing to approve futures -based Ethereum products, asking investment firms to update their documents by Friday afternoon. The rumor was that ETFs could begin trading as soon as Tuesday. On Thursday morning, VanEck debuted two 30 -second advertisements for their Ethereum futures product, which would trade under the ticker eFute. VanEck are going with the tagline Enter the Ether and commenting on the ad, Eric Valkunas, the senior ETF analyst at Bloomberg said, Now, later in the day, VanEck updated their prospectus for the fund. The ETF will only charge 66 basis points in fees. This is below the dominant pro -shares Bitcoin futures ETF, which is ticker symbol BITO, which charges 95 basis points. The lowest fee product seems to be Roundhill at just 19 basis points. Also on Thursday, Valkyrie announced that they would begin buying Ethereum futures on Friday in anticipation of altering the strategy of their existing Bitcoin futures ETF. The fund will now hold half Bitcoin futures and half Ethereum futures. The new strategy will be formally adopted on Monday under the existing ticker symbol BTF. Later yesterday as well, Valkyrie's chief investment officer, Stephen McClurg, said that both VanEck and pro -shares had been given the green light to launch their dedicated Ethereum futures ETFs on Monday. A pro -shares spokesperson said no one is in a position to launch ahead of us but declined to elaborate further on timing. Now, part of the reason that the SEC may be trying to move up all these delays and announcements is the looming threat of a government shutdown. Indeed, a government shutdown is at this point all but certain to begin on Sunday after House Republicans failed to come to a suitable agreement during a tense closed -door meeting on Thursday night. The House passed several versions of an appropriations bill that would authorize government spending on Thursday, but reportedly none have any chance of passing the Senate. The Senate are working on a bipartisan proposal for short -term funding, but this measure is unlikely to be passed by House Republicans. Tensions have flared between House Speaker Kevin McCarthy and House Freedom Caucus member Matt Gaetz, who is playing a major role in pushing the government into a shutdown. The dispute is around demands to slash government spending with a more specific demand that war efforts in Ukraine are defunded. Now, a government shutdown would end all funding of non -essential government programs until an appropriations bill can be passed. The length of a shutdown would be unknown. However, most government agencies are making plans to shutter for multiple weeks if not well into November. The impact of a shutdown will be largely felt by government workers who will not receive paychecks, as well as the recipients of government benefits. Social Security and Medicare continue to operate as usual during a shutdown, but the patchwork of other social programs will be paused. Now, when it comes to the macro environment, one of the other implications is that a shutdown would halt the collection of economic data. The next Fed meeting isn't until the end of October, but if the shutdown stretches out for a substantial period, the Fed could be faced with making a decision without key economic reports gauging inflation, employment, and growth. That would, of course, leave the Fed flying blind as they attempt to bring the economy in for a soft landing.

Coming up next