[CC may contain inaccuracies] This is not a full approval.
We want to make that clear. But but what exactly has changed and how
is this possibly opening the door now? Yeah, that's right.
And obviously it's not a full approval. It is a very big step towards approval,
though. There are basically two departments in
the SCC that need to sign off on a new exchange traded fund.
One basically decides whether it meets the requirements for the stock exchanges
to actually list the products. So New York Stock Exchange, ARCA
Exchange, the NASDAQ and CBOE have all applied to list these products.
So that's what was approved today. That is one piece of the approval
process. The other is the documents known as the
S-1. So those are basically the registration
documents of the prospectus for the funds that lay out exactly how they're
going to invest the assets, who's going to take custody of the underlying assets
and all manner of sort of nitty gritty details like that.
That approval comes from a different section of the SCC.
They have not approved the funds yet, so that is still to come.
It's anyone's guess when and if that will happen.
People a lot of experts think a matter of weeks perhaps at the approval of the
other set of documents. So to actually list these products on
the exchanges does signal to many though, that the the other part of the
SCC will eventually approve the prospectuses as well, which is really a
pretty dramatic reversal on sentiment As far as about a week ago, many of the ETF
issuers we were talking to said we don't think they're going to get approved
because the SCC has not been very inquisitive and asking for changes to
these applications or sort of testing some of the assumptions in the documents
to it to, you know, basically give the issuers guidance on what they need to
get approval. But it was a really sort of flurry of
activity between the SCC and the ETF companies in this week so far that has
led to these approvals tonight that we're talking about.
The other hot button topic is the removal of staking plans for these
funds. Right.
Is this kind of seen as a short term sort of downside or a net positive for
the industry? Well, it's a really interesting
question. And for the industry, for the actual
cryptocurrency industry, they are kind of happy that these funds will not be
staking their tokens. And what does that mean?
Etherium is a proof of stake blockchain. So what that means is if you're the
quote, equivalent of what you think of as a Bitcoin miner, they're called
validators on a theory. And what they do is they quote unquote
stake some ether to basically lock up on the blockchain to ensure that they sort
of have skin in the game and that when they validate the transactions and they
help secure the blockchain, they're doing everything right.
And if they don't do it right, then that stake ether is taken away from them, or
at least some of it. So the big question
around staking is that these validators who do that earn rewards from the
blockchain. So if you provide your ether to be
staked as part of this validation process, you earn a yield on it.
It's roughly about three 3 to 4%, I believe so.
So the FCC and the regulators, that raises the question, well, this looks a
lot more like a security than, say, Bitcoin, where you do not earn a yield
that way. So it's still not 100% clear what the
SCC thinks of ether as far as is it a security, is it not a security?
It is pretty clear that they do not want ETF issuers who buy the ether to
actually stake the ether.
