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Democrats Host Briefing Against FIT21 Ahead of Vote

Plus SEC Signals Approval for ETH ETFs

Author

Nathaniel Whittemore
May 21, 2024

The Breakdown First Five - Tuesday, May 21, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

Democrats Host Briefing Against FIT21 Ahead of Vote

5. Prometheum Soft Launch

Everyone’s favorite regulated exchange and definitely-not-an-SEC-front, Prometheum, says they have “soft launched” Ethereum custody with a small group of companies. The sole holder of a special purpose broker dealer license won’t name their customers, but assure they are absolutely real. Prometheum claim this announcement removes the argument that “things can’t be done under existing laws.” 

4. Grayscale Replaces CEO 

Long-time Grayscale CEO Michael Sonnenshein has stepped down to “pursue other interests.” He will be replaced by Peter Mintzberg beginning in August. Mintzberg is a 20-year veteran Goldman Sachs executive who last served as the Global Head of Strategy for Asset and Wealth Management. There are rumblings that Grayscale is being prepped for a sale. 

3. “Chokepoint” Marty Out

Disgraced FDIC Chair Marty Gruenberg has agreed to step aside at the request of Sherrod Brown. The FDIC has been embroiled in a massive scandal involving toxic workplace culture that enabled bullying, discrimination and sexual harassment. Gruenberg was a key architect of both iterations of Operation Chokepoint, so hopefully his departure and an agency rebuild will excise that politicization of the banking system. 

2. Dems Crypto Briefing

House Democrat leadership held a briefing on the impact of FIT21, which will go to a vote on Wednesday. Maxine Waters brought in Professor Hillary Allen and several other anti-crypto academics to explain why the bill is dangerous for investors and financial markets. A second briefing will be held today with SEC staff making a presentation. It appears that Democrats are being encouraged to vote no, with Waters strongly opposed to the bill. 

1. ETH ETF Pivot 

The most dramatic shift of the day was the SEC apparently reversing course, seeming likely to approve ETH ETFs on Thursday. Exchanges have been told to submit amended filings by this morning. Asset managers were taken by complete surprise, but not as much as the market. ETH rose by 20% on the news, its second largest daily price increase ever. The ETFs will likely be held up by document revisions, but it now seems likely they will launch within months.