ETH ETF Season 🚀
Ethereum Futures ETFs ready to steal the show. MicroStrategy wants more Bitcoin (not new). Nifty's says goodbye. MetaMask's origin story challenged in court. Elizabeth Warren to tackle crypto tax gap.
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The excitement surrounding Bitcoin exchange-traded funds (ETFs) may have calmed down, but now Ethereum futures ETFs are stealing the spotlight.
With five new applications filed on August 1 and another submitted last week, the first Ethereum futures ETF could hit the market by October 2023, pending SEC approval.
An ETF tracking Ethereum futures would invest in futures contracts of the second-largest cryptocurrency, traded on the CFTC-regulated Chicago Mercantile Exchange (CME), rather than holding the underlying asset directly. However, given the SEC's recent crackdown on the crypto industry and its attempt to classify most cryptocurrencies as securities, the future of these ETFs remains uncertain.
Let's take a closer look at the high-profile Ethereum futures ETF applications currently in play:
Grayscale Investments: Grayscale Ethereum Futures ETF
Filed: 08/01/2023
SEC Response: 10/16/2023
Listing Exchange: Not specified
Actively managed fund seeking exposure to Ethereum futures contracts via a Cayman Islands-based subsidiary.
Plans to hold approximately 100% of its net assets in Ether futures contracts, with significant holdings of cash and cash equivalents.
Volatility Shares: Ether Strategy ETF
Filed: 07/27/2023
SEC Response: 10/11/2023
Listing Exchange: CBOE BZX Exchange
Proposed ETF aims to invest up to 25% of its assets in cash-settled Ether futures contracts on the CME.
It may also invest in reverse purchase agreements and shares of other investment companies, but not directly in Ethereum.
Targets an Ether futures ETF that will invest in cash-settled contracts referencing ETH trading on the CME.
Bitwise: Ethereum Strategy ETF
Filed: 08/01/2023
SEC Response: 10/16/2023
Listing Exchange: NYSE Arca
ETF plans to invest in cash-settled front-month ETH futures contracts, avoiding direct exposure to Ethereum's current spot price.
Up to 25% of assets will be channeled through a subsidiary based in the Cayman Islands.
The rest of the assets (75%) will be invested in U.S. Treasuries, U.S. government obligations, and cash equivalents.
Roundhill: Roundhill Ether Strategy ETF
Filed: 08/01/2023
SEC Response: 10/16/2023
Listing Exchange: Not specified
Actively managed fund seeking capital appreciation through CME-listed front-month Ether futures contracts.
Plans to invest up to 25% of its assets in a wholly owned subsidiary in the Cayman Islands.
VanEck: VanEck Ethereum Strategy ETF
Filed: 08/01/2023
SEC Response: 10/16/2023
Listing Exchange: Not specified
ETF planning to have economic exposure to approximately 100% of its total assets in ETH.
May invest in equity securities of ETH-related companies if unable to achieve the target exposure.
Significant holdings of cash and fixed income investments are expected to provide liquidity and collateral for ETH futures.
Proshares: Short Ether Strategy ETF and ProShares Ether Strategy ETF
Filed: 08/01/2023
SEC Response: 10/16/2023
Listing Exchange: Not specified
Short Ether Strategy ETF seeks daily investment results corresponding to the inverse (-1x) of the S&P CME Ether Futures Index.
ProShares Ether Strategy ETF aims for capital appreciation primarily through managed exposure to CME-listed Ether futures contracts.
Both ETFs aim to qualify as regulated investment companies, with investments in subsidiaries based in the Cayman Islands.
The SEC is giving them another shot?
Sources reveal that the regulator is now open to considering these exciting products publicly. While it's not a guaranteed approval, it's definitely a step in the right direction. Bloomberg Intelligence analyst, Henry Jim, thinks it's a smart move for ETF issuers to jump on the bandwagon, just in case ether ETFs blast off like rockets.
Back in May, the SEC had asked firms to hold off on their ether futures ETF plans, but things have changed, and now the green light seems possible.
Big names like Grayscale and Bitwise Asset Management had plans for ether ETFs, but things got shaky. Grayscale even amended their filing, making it seem like they were backing away.
Direxion and Roundhill Investments were also in the game, but they hit the breaks too. But with the SEC's new openness, things might change.
Meanwhile, Bitcoin ETFs have 65% chance👇🏻
TTD MicroStrategy ⚡
Here's the latest from MicroStrategy.
They're planning a stock sale to raise a whopping $750 million. And guess what they might do with the money?—buy even more Bitcoin!
Since MicroStrategy started its Bitcoin buying spree in August 2020, Bitcoin has soared by a whopping 145%.
What do they have now?
Q2 earnings💰
MicroStrategy holds 152,800 Bitcoin as of July 30.
Q2 earnings report shows $22.2 million net income, a huge improvement from a $1.1 billion net loss in the same period last year.
Digital asset impairment loss reduced to $24.1 million in Q2 2023, compared to $917.8 million in Q2 2022.
MicroStrategy CFO Andrew Kang reveals the addition of 12,333 Bitcoin in Q2 2023, the largest increase in a single quarter since Q2 2021.
MicroStrategy's total Bitcoin holdings are worth $4.5 billion at current prices.
The firm plans to sell up to $750 million in stocks for Bitcoin and other corporate purposes.
The Filing 📁
In their filing to the Securities and Exchange Commission, MicroStrategy spilled the beans about their sales agreement with three companies—Cowen and Company, Canaccord Genuity, and Berenberg Capital—to sell their class A common stock. The proceeds from this sale could be used for various things, including acquiring more Bitcoin and boosting their working capital.
The goal is to "accumulate as much Bitcoin as" they can.
Michael Saylor, the co-founder of MicroStrategy, is confident that his firm will continue to be a hot pick for investors to get their hands on some Bitcoin, even if spot ETFs get the green light in the future.
He compared his company to a "sportscar," while the spot ETFs would be like "supertankers" in the crypto world.
"We can tap into leverage because we're an operating company, which an ETF couldn't do so we view it as being beneficial to the entire ecosystem." He said.
TTD NFTs 🐝
Nifty's, the social network turned creators portal, says goodbye but embraces the future of Web3 community.
Nifty's bids farewell
Nifty's, the once-popular platform offering NFTs based on iconic franchises like "Space Jam" and "Game of Thrones," has announced its shutdown. Despite securing deals with big names in entertainment and raising $10 million in funding, Nifty's faced challenges in the market and limited resources.
The company pivoted to develop a new platform but couldn't attract additional backers. However, Nifty's didn't leave its NFTs behind; it decentralised its NFT media and redistributed them on the Polygon blockchain.
Amazon Prime + Mojo Melee
Amazon Prime and NFT game Mojo Melee team up to pamper subscribers with freebies.
Amazon Prime is spoiling its subscribers with a special NFT treat. The gaming giant has partnered with Mojo Melee to give away free NFTs and in-game currency. Subscribers will receive an NFT for champion character Gwyn Rockhopper and 885 in-game currency, usually earned at a higher level. Mojo Melee, a casual "auto battler" game blending chess and real-time strategy elements, can be played via web browsers and Android apps.
Bandai Namco's pet game
RYUZO, the AI-powered virtual pet game, hatches NFT-based creatures for players to care for and train.
Gaming giant Bandai Namco teams up with Oasys to launch RYUZO, an innovative virtual pet game powered by AI and NFTs. Players hatch digital RYU creatures from NFT eggs, and their personalities and abilities evolve through user engagement. Like Tamagotchi for the modern era, players can feed, race, and train their RYUs, with AI making them even smarter over time. Bandai Namco, known for iconic franchises like Pac-Man and Tekken, brings its expertise to the NFT gaming world with this exciting venture.
TTD Evaders 🦹🏻♂️
The United States Senators are on the move. Elizabeth Warren and Bernie Sanders are teaming up to tackle the infamous "crypto tax gap."
They claim that crypto tax evaders are siphoning off billions from the government.
In a letter to the IRS and the Treasury on August 1, these senators warned the top officials that they need to act fast on new tax regulations.
They're talking about a whopping $50 billion gap that's putting the IRS and Treasury at risk of losing $1.5 billion in tax revenue for the 2024 financial year.
There's this $1.2 trillion infrastructure bill that passed back in August 2021, which aimed to beef up the tax reporting requirements for businesses acting as crypto brokers. It's been almost two years, and the new tax rules are still not out.
Elizabeth Warren, the crypto critic extraordinaire, even formed an "anti-crypto army" for her Senate re-election campaign. Meanwhile, Bernie Sanders might be quieter on the crypto front, but he's got Elizabeth's back in signing those letters for tighter restrictions.
TTD Metamask 🦊
Ethereum's famous crypto wallet - Metamask - is heading to court. Maybe.
Joel Dietz, a crypto OG, claims that Consensys stole his idea for the in-browser wallet.
Dietz accuses Aaron Davis, whom he hired to code Vapor in 2015, of betraying him and conspiring with Consensys to create MetaMask.
MetaMask, now the world's most widely used crypto wallet, was founded by Aaron Davis and Dan Finlay in 2016, according to Consensys.
The Birth of Vapor: Picture this: It's 2014, and Joel Dietz is brewing up a brilliant idea for an in-browser crypto wallet. He pitched it to the Ethereum big shots, Vitalik Buterin and Gavin Wood, and they gave him the green light. Vapor was on its way to greatness, but alas, funding struggles led to its untimely demise.
MetaMask Steps into the Scene: Just when Vapor thought it was game over, Consensys swooped in with MetaMask! The Chrome extension that made crypto transactions a breeze became a massive hit. But wait, hold the phone! Dietz claims he was the mastermind behind the idea, and Consensys didn't give him due credit.
The Legal Showdown: Joel Dietz is taking Consensys to court, alleging that they suppressed his role in MetaMask's creation. He's confident the evidence will shine a light on his founding partnership, and some colleagues might just step in to verify his claims.
Consensys is having none of that. A spokesperson told Blockworks
“Joel Dietz is an individual we understand to have been falsely marketing himself as the founder of MetaMask in an attempt to sell tokens or gain investment from unsuspecting investors globally. Joel Dietz is not a founder of MetaMask, has no relation to MetaMask or any of its technology and we look forward to the court promptly disposing of these frivolous claims.”
TTD Surfer 🏄
Google Cloud has become a validator on the Celo Network, a layer-1 blockchain that aims to provide a mobile-first experience for Web3 users.
Legislators in New York are proposing bills to protect writers and actors by preventing production companies from using AI in place of human performers.
Australian regulator alleged eToro users with no understanding of CFD product risks could still buy them on the platform.
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