Why an Ethereum ETF could be on the cards

• The launch of PYUSD had little to no impact on the market.
• Analysts opined that regulators would approve several Ethereum futures ETFs.

This year, the evolution of the cryptocurrency market has been marked by various milestones. First, it was the approval of a leveraged Bitcoin [BTC] Exchange Traded Fund (ETF). Now, payment giant PayPal has confirmed the integration of stablecoins into its platform with the launch of PayPal USD [PYUSD].

Realistic or not, here’s ETH’s market cap in BTC’s terms

The success of these developments signaled the growing acceptance of cryptocurrencies in mainstream finance. For a while, the ecosystem has been evolving and converging with traditional financial systems.

But the question on many minds now is whether the regulatory landscape and market demand are aligning to pave the way for co-participation in the traditional and blockchain sectors.

PYUSD fails to impact the market

As of this period, the crypto market had slipped a bit from the highs registered in Q1. Fortunately, the development would prove to have a positive impact on BTC’s price and the broader market. 

Beyond the approved leveraged ETFs, the U.S. SEC could also be in line to approve multiple Bitcoin Spot ETFs, according to Cathie Wood. 

Wood, the CEO of asset management firm ARK Invest, said in an interview with Bloomberg on 7 August,

“I think the SEC, if it’s going to approve a Bitcoin ETF, will approve more than one at once.”

However, the launch of PYUSD did not follow a similar market reaction to ETF acceptance. Over the last 24 hours, prices of many cryptocurrencies have either remained the same or hovered around the same point. 

A good day for stablecoins?

One reason for this neutrality could be the fact that stablecoins generally have a 1:1 peg to the U.S. dollar. Besides the fact that these assets are not as volatile as their other counterparts, the stablecoin market has been prone to sudden changes and challenges. 

For instance, the market cap of Circle [USDC] fell as a result of the challenges banks faced by U.S. bank sometime banks. Binance USD [BUSD], on the other hand, has been increasingly decreasing as per market cap since regulators ordered a stop to its minting. 

The challenges faced by these stablecoins have helped Tether [USDT] extend its dominance in the market. It also gave rise to the attention TrueUSD [TUSD] gained.

Source: CoinMarketCap

AMBCrypto spoke to Harman Singh, Director at Cyphere, a security firm whose mission is to protect the digital assets of investors in the UK and the U.S. about the matter. Singh opined that PYUSD was a good move for the ecosystem, noting,

“This move could also encourage other major companies to follow suit, consequently driving further growth and acceptance of digital currencies. Additionally, the introduction of a PayPal stablecoin could enhance the usability and accessibility of cryptocurrencies for everyday transactions.”

Meanwhile, the introduction of PYUSD has led to the launch of several imposters on several chains. Typically, degenerates in the ecosystem are known to deploy new tokens based on trending narratives.

And according to information from DEX Screener, chains including Ethereum, BNB Chain, and Coinbase’s L2 Base have not been left out. For example, the PYUSD/WETH pair on the Ethereum blockchain rallied as much as 22,237% 18 hours after launch with a 24-hour volume of $2.9 million. 

Source: DEX Screener

Opening the way for Ethereum ETF approval

Away from Ponzis and memes, there has been speculation that the PYUSD deployment could give way to the approval of Ethereum futures ETF. One reason this speculation thrived was that PayPal decided to launch PYUSD as an ERC-20 token.

And a few days back, Bloomberg Intelligence analysts James Seyffart and Eric Balchunas confirmed that there have been about 12 different futures ETF applications. The duo also opined that the applications have a 75% chance of approval.

How much are 1,10,100 ETHs worth today?

But when asked about the chance of an Ethereum spot ETF, Seyffart said it could take some time. He said,

“Time will tell. But if we get spot Bitcoin ETFs AND Ether futures ETFs, it would only be a matter of time before spot Ether. Absolute utter soonest would be ~260 days from Eth futures launch if i had to guess. All becomes irrelevant if spot btc dont launch or eth futures dont launch or if SEC files a suit somewhere claiming ETH to be a security. There are A LOT of ‘ifs’”

Singh also commented on the Bitcoin and Ethereum ETF applications. Accoridng to him, the approval of the ETFs could foster increased institutional demand for both cryptocurrencies.  He said,

“As for the Bitcoin and Ethereum ETF idea, it has the potential to attract institutional investors and provide them with a regulated and convenient way to invest in these popular cryptocurrencies.”