On 23 July 2024, 21Shares Co-Founder and CEO Hany Rashwan appeared on “Bloomberg Crypto” to talk to Sonali Basak and Tim Stenovec about Ethereum’s price action on the day that nine US-listed spot Ethereum ETFs started trading, who these ETFs are for, Ethereum’s use cases, and the potential for future integration of staking rewards into these ETFs.
Ethereum’s Price Action and Market Conditions
Rashwan began by addressing the current price action of Ethereum, which had been down for three consecutive days.
Source: TradingView
Rashwan attributed this to the timing of the spot Ethereum ETF launches, noting that while the influx of volume into the ETFs was significant, it had already been partially priced in. He compared this situation to spot Bitcoin ETFs’ launch, which occurred under more favorable conditions. Rashwan explained that global macroeconomic events and the summer period had also impacted Ethereum’s performance. Despite these short-term fluctuations, Rashwan expressed optimism about the overall crypto market, particularly Ethereum, over the next 6 to 12 months.
Target Audience for Spot Ethereum ETFs
When asked about the target audience for spot Ethereum ETFs, Rashwan highlighted the broad appeal of these financial products. He stated that 21Shares, as the largest global issuer of crypto ETFs, caters to a mix of retail and institutional investors. Rashwan explained that retail investors often prefer ETFs due to the complexities 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 framework and custody solutions provided by ETFs. While insurance and pension funds have yet to fully embrace crypto investments, Rashwan expressed confidence that this would change over time.
Ethereum’s Use Cases
Rashwan elaborated on the unique use cases of Ethereum, distinguishing it from Bitcoin. He described Bitcoin as “digital gold,” serving as a hedge against poor fiscal and monetary policies. In contrast, Ethereum is known for its practical applications, particularly in the realm of decentralized finance (DeFi). Rashwan emphasized that Ethereum’s blockchain is the foundation for various financial applications, including smart contracts and stablecoins. He noted that stablecoins, primarily built on platforms like Ethereum, had a significant impact, with Visa processing $10 trillion and stablecoins settling $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 were not yet included in these new ETFs but assured that this was a matter of “when,” not “if.” He explained that the process of adding staking rewards involved educating regulators and ensuring their comfort with the concept. Rashwan pointed out that 21Shares had successfully launched spot ETH ETPs without staking rewards in other regions and planned to upgrade these products over time. He expressed confidence in convincing the U.S. Securities and Exchange Commission (SEC) to approve staking rewards, drawing parallels to the lengthy process of getting spot Ethereum ETFs approved.
Political Landscape and Crypto Regulation
The conversation also touched on the potential impact of the upcoming U.S. presidential election on crypto regulation. Rashwan said that the daily operations of regulatory bodies would remain largely unchanged regardless of the election outcome. However, he highlighted the importance of crypto becoming a mainstream topic in political discourse, reflecting its growing significance among Americans. When asked about the potential differences in crypto regulation under a Trump or Harris administration, Rashwan noted that bipartisan support for crypto-related legislation suggested positive outcomes regardless of the election results. He reiterated that crypto made sense for America and was here to stay.
At the time of writing (9:30 p.m. UTC on July 23), ETH is trading at around $3,479, up 0.6% on the day.
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