Crypto regulation in the world: weekly digest #104
USA
VanEck and 21Shares asset management firms have officially filed applications with the U.S. SEC to launch Solana-based exchange-traded funds. Both VanEck and 21Shares submitted their S-1 forms to the SEC in late June 2024. The SEC now has a 240-day window to make a decision on these applications once they acknowledge receipt.
The recent proposal for a Solana (SOL) ETF by VanEck and 21Shares has sparked significant interest in the cryptocurrency community, highlighting the potential for broader institutional adoption of digital assets beyond Bitcoin and Ethereum. A Solana ETF, if approved, could have several profound impacts on the crypto market including increased institutional investor’s interest in cryptocurrencies and further development and adoption within the Solana ecosystem. Same as BTC-ETF, the ETF based on Solana would provide a regulated and familiar investment vehicle for institutional investors, potentially driving substantial capital inflows into SOL ecosystem. Approval of a Solana ETF would also signal regulatory acceptance, potentially elevating Solana's status alongside Bitcoin and Ethereum in the mainstream financial world.
However, the SEC has historically been cautious about approving crypto ETFs, citing concerns over market manipulation and lack of regulated markets. Unlike Bitcoin and Ethereum, Solana lacks a regulated futures market, which has been a key consideration in previous ETF approvals. In addition, past outages on the Solana network may raise concerns about its stability and reliability as an ETF underlying asset.
Meanwhile SEC should approve ETH-ETF on July 14, 2024, but this event didn’t happened. Since then there have been no significant updates about this topic. However, it's worth noting that the approval of Bitcoin ETFs has set a precedent that could potentially influence the SEC's decision on Ethereum and other cryptocurrency ETFs.
While a Solana ETF presents exciting possibilities for the crypto market, its approval remains uncertain. The outcome will likely depend on evolving regulatory attitudes and the broader development of the cryptocurrency ecosystem. As the market continues to mature, the potential for diverse crypto ETFs remains a key area of interest for investors and industry observers alike.
Germany
Germany's recent sale of state-owned Bitcoin has drawn significant attention in the cryptocurrency market. The German state of Saxony is rapidly selling off a large cache of confiscated Bitcoin, which was initially worth nearly $3 billion. The sell-off like that is part of standard procedure for liquidating assets seized in criminal investigations, rather than a strategic investment decision. The German authorities are obligated to sell these confiscated assets within a certain period.
While the sale has coincided with a 15% correction in Bitcoin's price over the past month, its impact on the market may be less severe than initially feared. Some experts believe that fears about the looming sell pressure may have been exaggerated, with Bitcoin's decline exceeding the potential price impact if all the selling materializes. Also the price correction coincides with other events, such as the U.S. government moving $240 million worth of Silk Road-related BTC and the Mt. Gox exchange starting repayments to creditors.
While some critics argue that Germany should have held onto the Bitcoin as an economic reserve or to develop a cryptocurrency strategy, the government's actions are in line with standard procedures for handling seized assets.
However Mt.Gox is set to begin repayments to creditors in July 2024, after years of delays and the final deadline for repayment is set to October 31, 2024. If the majority of creditors choose to sell immediately their received Bitcoin, these could put downward pressure on the cryptocurrency's price. From the other side, some may choose to hold onto their Bitcoin, especially given its significant appreciation since the Mt.Gox collapse. The actual selling of funds will likely occur over an extended period, depending on individual creditor decisions.
Suriname
Maya Parbhoe, a presidential candidate for the 2025 election in Suriname, has proposed adopting Bitcoin as legal tender if elected. This proposal is inspired by El Salvador's move to make Bitcoin legal tender in 2021.
El Salvador's experience with Bitcoin as legal tender has been mixed. The country became the first in the world to adopt Bitcoin as legal tender in September 2021. While this move attracted international attention and investment in the country's digital infrastructure, it has also faced challenges, including volatility in Bitcoin's value and concerns from international financial institutions.
Another country that decided to adopt BTC as a legal tender was the Central African Republic. However, their experience has been less publicized than El Salvador's. The CAR's adoption of Bitcoin was seen as an attempt to reduce dependency on the CFA franc and potentially attract investment, but it has faced significant hurdles due to limited internet access and technological infrastructure in the country.
It's important to note that Suriname's potential adoption of Bitcoin as legal tender is currently only a campaign proposal and not an official government decision. If implemented, it would make Suriname the third country in the world to take such a step, potentially setting a precedent for other nations considering similar measures. However, the actual implementation and impact would depend on various factors, including the country's economic situation, technological readiness, and international relations.
