US politics and Donald Trump spark a historic breakthrough: Hell freezes over, Ethereum ETF approved

The U.S. cryptocurrency industry experienced a seismic weekend, with two major victories bringing breakthroughs to the industry: the fast-tracked approval of a spot Ethereum exchange-traded fund (ETF) and progress on a bill aimed at providing a clear regulatory framework.
Just a week ago, Bloomberg ETF analysts rated the chances of Ethereum ETF approval as “minimal.”
In another major breakthrough, the U.S. House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21) on May 22, thanks to 71 Democrats crossing party lines and voting with Republicans in favor of the bill. This is the first time that a major cryptocurrency-related bill has passed a single chamber of Congress.
JPMorgan analysts said there was “an abrupt reversal in regulatory sentiment earlier this week” following “months of stalemated dialogue.” Then, the Securities and Exchange Commission (SEC) not only reengaged with fund managers eager to launch an Ethereum ETF, but also accelerated the approval process.
Ripple Labs CEO Brad Garlinghouse was so shocked by these developments that he posted on X: “It feels like hell froze over!!”
Cryptocurrency momentum was strong this week, with Ethereum ETF approval, bipartisan consensus on cryptocurrency legislation, and more…
It felt like hell froze over!!
https://t.co/70T0qLt1FH
— Brad Garlinghouse (@bgarlinghouse)
May 24, 2024
Ethereum ETF Approval Isn’t the Most Important Thing
So what changed the situation? The answer seems simple: politics.
“The most important thing here is not the ETF,” Adam Corcoran, a partner at venture capital firm Cinneamhain Ventures, said in a May 23 post on X. “It is: the complete change in the administration’s position, which forced FINRA Chairman Gensler to back down.”
The root of this change appears to be Donald Trump’s unexpected wooing of cryptocurrency voters in the upcoming presidential election. Trump, who once called Bitcoin a “scam,” is not only “cool with it,” but is even willing to accept donations in cryptocurrency to finance his campaign to unseat President Joe Biden.
The shift is an effort to build a “crypto army” to counter Biden’s “anti-crypto army,” led by Biden’s “official surrogate [Senator] Elizabeth Warren,” according to a campaign statement.
“If you’re in favor of cryptocurrencies, you better vote for Trump,” the former president said.
[Latest News] Trump now officially accepts Bitcoin campaign donations.
pic.twitter.com/ySkwNQT1D2
— Bitcoin Magazine (@BitcoinMagazine)
May 21, 2024
Trump challenges the Democratic Party, and Cardano founder Charles Hoskinson has accused the Democratic Party of "coordinated action" to try to stifle cryptocurrency.
Electric Capital co-founder Avichal Garg warned that if Biden sticks to his anti-crypto stance, the digital asset voter base will shift from “anti-Gensler” to “anti-Biden” and “anti-Democratic Party.”
Without warning, cryptocurrency has become an issue in the presidential election.
The Democratic response is what crypto entrepreneurs have dreamed of for years. The Securities and Exchange Commission (SEC), long a pain in the ass for the industry due to its enforcement strategies, earlier this week rolled out the red carpet for fund managers from BlackRock to Fidelity to apply to launch Ethereum ETFs. Then, in just a few days, the ETFs were approved.
What happens next?
Wider mainstream adoption, greater regulatory clarity, and perhaps even a renaissance for the U.S. cryptocurrency industry.
Standard Chartered analyst Jeffrey Kendrick believes this week’s developments are a “turning point” for cryptocurrencies, telling The Block that the Solana ETF and XRP ETF are on track to receive regulatory approval by 2025, just like Bitcoin and Ethereum.
He said: “The core technology is so similar to Ethereum that it would be difficult for the SEC to claim that they are securities, given Ethereum’s position. The cryptocurrency industry now seems to be under bipartisan political support.”
Fund manager VanEck shares the same view. Matthew Siegel, head of digital asset research at VanEck, posted on X that the improved political backdrop "will attract investment into Bitcoin, Ethereum, and other open-source blockchain software through new laws and court victories, leading to further wins for digital asset investors and developers."
We are pleased to confirm that the U.S. Securities and Exchange Commission (SEC) has approved the proposed rule changes of our stock exchange partner, the Chicago Board Options Exchange (CBOE), pursuant to Section 19(b) of the Securities Exchange Act of 1934, to list and trade a
@vaneck_us
Spot goods
# Ethereum
ETF!
TLDR: We expect an improvement in the political environment…
pic.twitter.com/o6ZbFWKExi
— Matthew Siegel, Recovering LFA (@matthew_sigel)
May 23, 2024
It now seems likely that greater regulatory clarity will also emerge, perhaps with a friendlier Commodity Futures Trading Commission (CFTC) taking a more prominent role in regulating the industry. The SEC has now de facto acknowledged that Ethereum is not a security, and the passage of the FIT21 law will give the CFTC more power and funding to regulate digital commodities.
In short, the U.S. cryptocurrency industry finds itself at a fantastic moment after a major boost. Prominent crypto figures once warned that the industry might leave the U.S. due to a hostile regulatory regime, which now seems like a long time ago.
“If cryptocurrency leaves the United States because of hostility toward cryptocurrency ... well, we’re going to stop it,” Trump said.