Tag Archives: charlie shrem

EIP-1559 is Live Thanks to Ethereum’s London Hard Fork

  • MEV, or Miner Extractable Value, or a new way for miners to extract revenue from the Ethereum blockchain in an era of reduced mining revenue
  • MEV is a measure of the income a miner receives from their ability to reorder transactions within a block. This can be problematic as it allows front-running of transactions, and challenges the idea of the immutability of the blockchain

The London hard fork went live Thursday, and despite some vocal opposition from miners, the EIP-1559 upgrade went through without a hitch and the price of Ether subsequently rose nearly 4% to $2,800 according to CoinGecko

“The London Hardfork is one of the most significant upgrades to Ethereum in the history of the network. In our eyes, the upgrade will be viewed as a positive catalyst. It makes the network more usable by making fees more predictable for end users and also creates a new potentially deflationary monetary policy. The biggest outstanding question is around EIP-1559, which radically reduces revenue earned by block producers and therefore potentially reduces the security of Ethereum,” Tushar Jain, Managing Partner, Multicoin Capital told Blockworks in a statement.  “We expect block producers to make up lost revenue by either capturing more MEV or by joining other networks that help them earn fees in different ways.”

Of miners and MEV: Ethereum’s new reality

MEV, or Miner Extractable Value, refers to the ability for miners to re-prioritize the orders of transactions on the Ethereum blockchain. This process was first described in a paper published in mid-2020 by Cornell Researchers called the “Flash Boys 2.0” which documented the rise of bots on the then-nascent decentralized exchange market that would front-run trades by outbidding them on the network, forcing their trades to come in first and materially moving the market in their favor.

The value lost to retail investors from this trade re-ordering hasn’t been quantified, but to an average observer it would remind them of some of the criticisms put forward by retail traders at the height of Robinhood’s GameStop fiasco earlier this year. 

According to Flashbots, an aggregator that tracks these bots and the MEV they extract, since the start of 2020 $725.7 million in value has been extracted by miners in this fashion.  For a point of comparison, the total value locked into DeFi is just above $73 billion according to DeFi Pulse and the trading value on UniSwap, the best known DEX, is around $1.7 billion a day according to CoinGecko

This all comes back to one core issue: miners have to make up for lost revenue because of EIP-1559’s ‘burning’ of transaction fees as a form of rent control on fees and deflation on the Ether money supply. According to ultrasound.money, since the London Hard Fork went live earlier today over 2,400 ether or $6.7 million has been burnt.

Ethermine, a vocal opponent of EIP-1559, introduced in March specific front-running software for its mining pool (it accounts for just over 20% of the collective hashrate of Ethereum). At the time, Ethermine said this was to “compensate for the upcoming mining reward reduction caused by the adoption of EIP 1559.

While the threat of a miner coup was played down because of the looming transition to ETH 2 and the move away from miner-intensive proof of work to proof of stake, the problem is all signs point to MEV being something that’s here to stay. Miners will simply be swapped out and replaced with validators — stakeholders that hold a lot of Ether — doing the same. 

According to a report from Flashbots, miner rewards will simply be called validator rewards. The name might shift to ‘maximal’ not ‘miner’ extractable value, but the principle will remain. 

“We find that MEV will significantly boost validator rewards but may reinforce inequalities among participants of ETH2,” the group wrote. 

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The post EIP-1559 is Live Thanks to Ethereum’s London Hard Fork appeared first on Blockworks.

Ether’s Record Trading, Equities Make Steady Gains: Markets Wrap

  • Ether is up 600.1% since last year, according to Messari
  • Invesco and ProShares plan to launch bitcoin futures ETFs

Ether’s two-month high on Thursday morning had the ‘London hard fork’ to thank, trading over $2,800.

Investors’ eyes were on EIP-1559, which proposed a set of changes to the blockchain’s code. Following the launch, ether and bitcoin both advanced roughly 4%.

ETH has been capturing the lion’s share of attention for the last few months.

  • ETH:BTC soared to the highest it has been in over a month at 0.071 this morning.
  • Ether is up 600.1% since last year, according to Messari.
  • Bitcoin is up 301.46% in the same time frame.
  • ETH is up +17.79% while BTC is up 3.01% over the last seven days.

Ethereum passed bitcoin on year-over-year growth, Blockworks reported. The data, compiled by Coinbase, revealed that ETH appreciated 895% while BTC’s appreciation was up 280% in the 12 months period of growth.

In decentralized finance (DeFi), Swisscom announced today that it is joining oracle network Chainlink, Blockworks reported on Thursday. In the blockchain industry, oracles are third-party intermediaries that provide smart contracts and decentralized applications with real-world data that allows for contract execution. 

DeFi

  • Uniswap is trading at $25.10 with a total value locked of $4,711,894,171 up 0.1% in 24 hours at 4:00 pm ET. 
  • Chainlink is trading at $24.09, advancing 0.3% with trading volume at $1,149,630,985 in 24 hours at 4:00 pm ET.
  • DeFi:ETH is 30.8% at 4:00 pm ET.

Crypto

  • Bitcoin is trading around $40,879.42, up 3.04% in 24 hours at 4:00 pm ET.
  • Ether is trading around $2,797.015, advancing 3.27% in 24 hours at 4:00 pm ET.
  • ETH:BTC is slightly lower at 0.0685, down -0.15% at 4:00 pm ET.
  • VIX declined -2.84% to 17.46 at 4:00 pm ET.

Insight

“BTC was stumped by resistance in the 42k region and has fallen decisively back into the 30-40k range. A stronger catalyst may be required for the decisive break above 40k or below 30k. There are some potential ones on the horizon,” QCP Capital Broadcast said in a note on Tuesday. “…ETH has clearly started to price [the EIP-1559 mainnet implementation] in, rallying 57% in the last 12 trading days and breaking out of the consolidation triangle formed over the last 3 months.”

Ethereum / Bitcoin hit over a one-month high on Thursday morning. Source: TradingView

Wall Street gauges stayed ahead following news that initial jobless claims matched analysts expectations. Claims fell to 385,000 after reporting 399,000 the week prior. However, employers are still struggling to fill positions. Investors are waiting to assess the July employment report on Friday. 

Corporate earnings continue to roll in on Thursday. Zillow Group, Inc. surpassed Wall Street estimates with $1.31 billion in Q2 revenue 

In the Nasdaq composite, Amazon.com, Inc. announced that they would postpone returning to office until 2022. Originally, the tech giant anticipated staff to return September 7 of this year. Shares were trading 0.03% lower by 4:00 pm ET.

Robinhood Markets, Inc. (HOOD) tanked on Thursday as the company revealed that some investors are set to sell over 99 million shares over time. Following the news, the popular retail trading platform dropped 19.42% intraday. It’s been a wild week for HOOD whose stocks surged 53% on Wednesday.

All major equities closed in the green.

Equities

  • The Dow is up 0.64% to 35,014.
  • S&P 500 advanced 0.49% to 4,424.
  • Nasdaq rose 0.71% to 14,887.

The US 10-year treasury advanced four base points intraday following improved labor market data.

Fixed Income

  • US 10-year treasury yields 1.222% as of 4:00 pm ET.

Commodities

  • Brent crude rose to $71.27 per barrel, advancing 1.29%.
  • Gold fell -0.45% to $1,806.30.

Currencies

  • The US dollar strengthened 0.01%, according to the Bloomberg Dollar Spot Index.

In other news…

Invesco and ProShares have filed for actively managed crypto ETFs that would invest in bitcoin futures contracts just days after SEC Chairman Gary Gensler hinted that products of this type could be granted favorable regulatory treatment.

We’re watching out for…

  • Investors wait to assess the July employment report on Friday morning at 8:30 am ET.

That’s it for today’s markets wrap. I’ll see you back here tomorrow.

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

The post Ether’s Record Trading, Equities Make Steady Gains: Markets Wrap appeared first on Blockworks.

Invesco, ProShares Plan to Launch Bitcoin Futures-Based ETFs

  • In addition to bitcoin futures contracts, actively managed products may invest in Canadian bitcoin ETFs, Grayscale Bitcoin Trust
  • Planned products come after Invesco and ProShares filed for index strategies focused on blockchain and digital assets companies

Invesco and ProShares have filed for actively managed crypto ETFs that would invest in bitcoin futures contracts just days after SEC Chairman Gary Gensler hinted that products of this type could be granted favorable regulatory treatment.

The $1.5 trillion Atlanta-based asset manager revealed plans to launch the Invesco Bitcoin Strategy ETF in an Aug. 4 SEC disclosure. The document does not indicate a ticker or expense ratio for the proposed offering. 

The fund is actively managed and plans to invest most or all of its assets in exchange-traded bitcoin futures contracts traded on the the Chicago Mercantile Exchange (CME), as well as collateral investments, such as cash or government securities, the filing states. It will not invest directly in bitcoin.  

While the proposed fund generally seeks to have full exposure to bitcoin futures, the fund may at times invest in bitcoin-related assets, which include ETFs listed outside of the US and open-ended private investment trusts that are linked to bitcoin, such as the Grayscale Bitcoin Trust (GBTC). 

Meanwhile, ProShares also filed with the SEC on Aug. 4 to launch a similar fund. Like the planned Invesco product, the ProShares Bitcoin Strategy ETF would be actively managed and  invest in bitcoin futures contracts traded on the CME. It may invest in Canadian ETFs, but would not directly invest in bitcoin. 

No ticker or management fees are yet listed for the ETF. 

Spokespeople for Invesco and ProShares declined to comment on the applications.

The filings come after Gensler said during the Aspen Security Forum on Tuesday that he anticipates more crypto ETF filings from fund managers.  

“I look forward to the staff’s review of such filings,” he noted, “particularly if those are limited to these CME-traded Bitcoin futures.”

Futures first?

Though there are about a dozen crypto ETFs, many that would invest directly in bitcoin, awaiting approval by the SEC, Gensler’s comments could mean that ETFs that hold bitcoin futures could be greenlit first, industry watchers have said. 

Ben Johnson, Morningstar’s director of global ETF research, told Blockworks that he is not surprised by the latest Invesco and ProShares filings.

“Asset managers are pulling out all the stops to be first to market with a bitcoin ETF,” Johnson said. “The experience of the first Canadian bitcoin ETFs has shown that the first one out of the gate may win most of the assets.”

Purpose Investments launched Canada’s first bitcoin ETF in February, and the fund has grown to $1.1 billion (CAD) in assets, according to the firm’s website. Evolve ETFs’ bitcoin ETF, which launched a day after Purpose’s offering, has just $83 million in assets.

The proposals are not the first forays into crypto for Invesco and ProShares. 

Not their first forays

Invesco filed in June to launch the Invesco Galaxy Crypto Economy ETF. Unlike the latest filed-for actively managed product, that fund would invest at least 80% of its total assets in the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Index. That offering also expects to invest in bitcoin futures, with a planned allocation of about 10%.

John Hoffman, Invesco’s head of ETFs and indexed strategies in the Americas, said during an interview on Bloomberg’s “Trillions” podcast that there are “incredible parallels” between the ETF and digital asset markets. He added that Invesco has historically pioneered new ways to get exposure to new asset classes, and continues research and development in the crypto realm.

“There’s a lot of questions that need to be solved in this blockchain — and more specifically, bitcoin — space,” he told Bloomberg. “I would argue that the first bitcoin ETF is not the ending place. There is going to be theoretically a whole series of return patterns in this market, in this new asset class, and it’s something that we are spending a lot of energy on.”

ProShares was among the first sponsors to file for a bitcoin strategy ETF in 2017, and ProFunds, its parent company, last week launched the Bitcoin Strategy ProFund. The first publicly available US bitcoin strategy mutual fund primarily invests in bitcoin futures contracts. 

The fund group also proposed to the SEC in June the ProShares S&P Kensho Global Crypto & Blockchain ETF, an index fund that would invest in companies focused on distributed ledger technology and digital currencies. 

“ProShares constantly strives to develop innovative products like the Bitcoin Strategy ProFund that expand investors’ choice and offer new ways to access important asset classes,” a spokesperson said.

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

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Singapore’s DBS Reports $100 Million in Digital Assets in Custody

  • DBS said its digital assets exchange has just under 400 customers
  • These customers did $133 million worth of transactions during the quarter

During a briefing call with analysts, DBS CEO Piyush Gupta said he was “quite pleased” with the progress the exchange had made since it first launched in December 2020. Gupta said that the exchange’s goal was to hit 1,000 customers from the “tad under 400” it currently has. These approximately 400 institutional clients (the exchange isn’t open to retail investors) did around $133 million in transactions during the quarter.

The exchange offers trading for bitcoin, ether, bitcoin cash and XRP in multiple regional currency pairs, as well as digitized stocks and bonds.

In June, DBS said that it would offer a bond in the form of a Security Token Offering but its not clear as to the progress it has made with this project. At the time, experts Blockworks spoke to said they haven’t “seen much interest” in the offering and prior endeavours to offer STOs haven’t generated much excitement in Asia.  

Gupta also mentioned that he expects the volume to pick up once the exchange extends its trading hours past the Singapore business day. 

“A large part of this activity actually happens outside the Asian time zone,” he said. 

Overall, Gupta said that DBS recorded a 37% jump in quarterly net profit to $1.26 billion, compared to the same time last year as Singapore’s economy re-opens. While the Delta variant continues to be a concern, Gupta pointed out that the hospitalization rate in Singapore continues to be low and the recovery rate high. 

Overall, the bank’s new business segment, which includes the digital exchange, expansion into rural banking in China and India, as well as growth-stage debt financing platform EvolutionX brought in $350 million in revenue.

Gupta said that these new initiatives were an important focus for the bank in order to find new sources of revenue in an era of prolonged low interest rates. 

Curiously, during the bank’s quarterly update for the media there wasn’t much of a focus on the digital exchange, however, and it only got a passing mention until the analyst briefing later. A DBS spokesperson didn’t return a request for comment on why this was by press time. 

DBS’ stock is currently trading for SGD 30.80 ($22.20) in Singapore. It’s up nearly 18% since the start of the year.   

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Podcast: Senator Lummis on Why the Infrastructure Bill Kills Innovation

In the latest episode of Blockworks’ podcast “Empire,” Jason Yanowitz , co-founder of Blockworks, sits down with US Senator Cynthia Lummis (R-WY) to talk about the proposed infrastructure bill and the negative effects the bill could have for bitcoin, digital assets and innovation.

This is a shorter episode than usual as Senator Lummis had less than 30 minutes to record between votes.

Senator Lummis and Jason talk about:

  • Impact of inflation
  • Increasing national debt
  • Fiscal policy
  • The infrastructure bill
  • Knowledge of BTC in the Senate
  • Regulation vs innovation

Check out what they had to say in the video below. 👇

On “Empire,” once a week, Jason interviews individuals that have built the crypto industry to talk about their struggles, bold moves and tough decisions. For any NPR or Guy Raz fans out there, you can think of “Empire” like a “How I Built This” for the bitcoin and crypto industry.

Episodes are released every Thursday morning. 

Subscribe to Empire today on Apple or Spotify. Watch episodes on YouTube.

The post Podcast: Senator Lummis on Why the Infrastructure Bill Kills Innovation appeared first on Blockworks.

Coinbase Acquires Crypto Data Aggregator Zabo

  • Over the last three years, the startup established the Zabo API to connect users to any crypto exchange platform, wallet, protocol or account
  • Coinbase is scheduled to announce its Q2 earnings on August 10 with an expected earnings per share of 2.57 and an expected revenue of $1.83 billion

Coinbase is acquiring a cryptocurrency data aggregator, Zabo, according to a blog post announcement on Wednesday.

Zabo began in 2018 with a mission to build new tools to bring cryptocurrency into mainstream financial services, co-founders Christopher Brown and Alex Treece wrote in the blog.

Over the last three years, the startup established the Zabo API, which is a single application programming interface that connects users to any crypto exchange platform, wallet, protocol or account.

“The cryptocurrency industry is still early, and there are many fundamental technologies which need to be built to make the stack work for mainstream participants. Ultimately the technology needs to be safe and usable even as we see more groundbreaking innovation within the cryptocurrency space,” Brown said in an email to Blockworks. “We think this acquisition will help drive the development of key technologies.”

Zabo could not share the value of the deal or what the integration into Coinbase’s platform will look like. However, Brown said that the acquisition will take place “as soon as possible,” and the two companies are in the final stages of the process.

Coinbase’s mission “of increasing economic freedom in the world is bold and important,” Brown said. “Once we understood there is mutual benefit to be had with our team and technology, then it became an easy decision for us,” he added. 

In March 2020, Zabo announced a $2.5 million seed raise led by Moonshots Capital and was joined by Blockchange Ventures, Castle Island Ventures, Digital Currency Group, CoinShares, Tezos Foundation, Capital Factory and others.

In the last few months alone, Coinbase has has launched crypto savings high-yield USDC accounts, a prime brokerage service and expanded into borrowing bitcoin as collateral, among other developments. 

The first half of 2021 was one of the most active periods on record for crypto, said Brian Foster, a member of Coinbase’s Institutional Sales, Trading, and Prime Services team and Coinbase Ventures, in the company’s H1 2021 Review report. The first six months brought in new all-time highs in asset prices, user adoption and trader activity, Foster said. 

In Q1 2021, Coinbase had a net revenue of $1.597 billion, up 792% from $179 million in the year-ago quarter. During Q1, Coinbase also acquired Bison Trail, which will allow companies to send and store crypto, accept crypto payments and build their businesses with crypto-native infrastructure, it said in a shareholder letter

At the time, the company said that the rapid expansion of the crypto economy creates new challenges as competition is increasing among the marketplace as new groups join the space every month. While Coinbase said they welcome these challenges, they said they have to continue to move quickly to address them through action and growth.  

Coinbase is scheduled to announce its Q2 earnings on August 10 with an expected earnings per share of 2.57 and an expected revenue of $1.83 billion. 

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

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Cryptos Inch Higher, Equities Topple Amid Delta Concerns: Markets Wrap

  • Ethereum surged more than 9% on Wednesday as the crypto sector awaits the Ethereum hard fork
  • Private-sector hires were sharply lower last month, falling from 680,000 in June to 330,000 new workers in July.

Following less-than-prime jobs data and Fed Vice Chairman’s market-moving remarks at a virtual appearance, Wall Street indices slumped on Wednesday. Widespread concerns over the Delta variant may have also added on to the markets losses, but cryptos inched higher.

The Fed’s Richard Clarida said that interest-rate hikes could start as early as the end of next year, adding that the rapid spread of the variant may stunt the country’s economic growth. 

Private-sector hires in US firms were sharply lower last month, falling from 680,000 in June to 330,000 new workers in July, according to an ADP employment report.

Following the onslaught of news, the S&P 500 and Dow Jones Industrial Average both fell 1% and 0.5%, respectively. 

Small wins were made by the tech-heavy Nasdaq composite. Robinhood Markets Inc. (HOOD) touched $85, hiking around 53% on Wednesday. The popular retail trading platform has jumped 140% since its IPO price of $38 last week. Paycom (PAYC) was up 11% as well, following better-than-expected earnings. The software company’s revenue for Q2 hiked up 33.3% to $242.15 million. Only the Nasdaq was ahead by market close.

Equities

  • The Dow was down -0.92% to 34,792.
  • S&P 500 declined -0.46% to 4,402.
  • Nasdaq had an uptick of 0.13% to 14,770.

Insight

Founding Principal of BKCoin Capital, Kevin Kang, weighed in on Wednesday’s markets activity.

“I think the market is translating the big miss on jobs reports and the Fed staying its course with accommodative policies. We can see the divergence between the S&P 500 and Nasdaq as low interest rates are good for growth stocks. Also crypto seems to be running on the back of SEC chair Gary Gensler making positive comments regarding crypto regulations as he said the lack of crypto regulation isn’t a good thing for the advancement of the technology and he was pro-innovation,” Kang, CFA, told Blockworks. “The sentiment in the market seems to have flipped completely these past two weeks as the market brushed off the news yesterday that the SEC will regulate cryptocurrency markets to the maximum extent possible.”

Tesla shares hit an intraday high of $724.90 following the news, while ether and bitcoin continued to hike up 8% and 5%, respectively.

As the S&P 500 fell Wednesday morning, Tesla shares and Bitcoin traded higher. Source: TradingView

In decentralized finance (DeFi), Genesis reported continued demand for DeFi tokens and ethereum lending in their Q2 Markets Observation report on Wednesday. While bitcoin trading previously accounted for 80% of overall spot trading, the largest cryptocurrency has fallen to 47% in Q2. However, ether has risen to 25% of overall trading volumes on the desk.

DeFi

  • Uniswap is trading at $23.29 with a total value locked of $4,497,369,839 up 1.1% in 24 hours at 4:00 pm ET. 
  • Chainlink is trading at $24.26, advancing 0.8% with trading volume at $1,228,574,228 in 24 hours at 4:00 pm ET.
  • DeFi:ETH is 31.1% at 4:00 pm ET.

Crypto

  • Bitcoin is trading around $39,731.30, up 3.64% in 24 hours at 4:00 pm ET.
  • Ether is trading around $2,711.06, advancing 8.87% in 24 hours at 4:00 pm ET.
  • ETH:BTC is at 0.0682, up 3.87% at 4:00 pm ET.
  • VIX is down -0.39% to 17.97 at 4:00 pm ET.

Insight

“Trends both in Genesis’s activity and the broader market confirm the changing role of bitcoin as the industry’s gateway asset, and highlight the emerging protagonism of Ethereum and decentralized finance,” said Matt Ballensweig, Head of Institutional Lending at Genesis. “Bitcoin’s dominance in terms of market cap declined from over 70% at the end of 2020 to under 45% at the end of Q2, as Ether and most of the main decentralized finance tokens more than doubled in price from the beginning of the year.”

Fixed Income

  • US 10-year treasury yields 1.184% as of 4:00 pm ET.

Commodities

  • Brent crude is down to $70.21 per barrel, declining -3.04%.
  • Gold fell -0.01% to $1,814.

Currencies

  • The US dollar strengethened 0.22%, according to the Bloomberg Dollar Spot Index.

In other news…

Ethereum Improvement Proposal (EIP) 1559, a form of ‘rent control’ on gas fees that comes at the expense of miners, is set to be implemented through Ethereum blockchain’s London hard fork, Blockworks reported on Wednesday.

We’re watching out for…

  • Bank of England’s interest rate decision will be announced on Thursday

That’s it for today’s markets wrap. I’ll see you back here tomorrow.

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

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Senators Propose Infrastructure Bill Amendment to Lighten Crypto Reporting Requirements

  • The White House’s $1.2 trillion infrastructure deal includes provisions for a dramatic strengthening of tax enforcement of digital assets
  • Digital assets brokers would have a much higher requirement for tax reporting, but the definition of what constitutes a broker has proven to be problematic

Three US Senators have proposed an amendment to the $1.2 trillion infrastructure deal currently before Congress which would seek to revise one of the parts of the bill previously deemed an “imminent threat” to the country’s digital asset industry. 

In its current form the bill contains a provision called “Enhancement of Information Reporting for Brokers and Digital Assets,” as Blockworks has previously reported, which creates extensive reporting requirements for Brokers. The problem, however, is that the definition of broker is wide enough to cover miners, lightning nodes, and the like,” Jerry Brito, executive director of Coin Center, said in a Twitter post.

Senators Wyden, Lummus, and Toomey instead have proposed amendments to specifically exclude validators, hardware and software makers, as well as protocol developers from these tax reporting requirements. 

Rob Portman, one of the authors of the original bill, denies that the language is problematic and said on Twitter that “digital assets like bitcoin and other cryptocurrencies are a rapidly growing part of our economy.”

“The legislation does not impose new reporting requirements on software developers, crypto miners, node operators or other non-brokers,” he said on Twitter

In a prior statement, the Blockchain Association, an industry trade group, had said that the language in the bill would put many infrastructure providers in an impossible place. Bitcoin miners and software developers don’t have enough information on their users, like Social Security Numbers, to properly report tax details. 

“It would create this compliance nightmare,” Kristin Smith, the association’s executive director, said in a public statement. “So then people would have no choice but to either operate illegally, leave, or shut down.”

“While much more work needs to be done, this amendment is a responsible step toward fully incorporating digital assets into the US financial sector,” Senator Cynthia Lumis said in a public statement. “The digital asset and financial technology space is incredibly complicated, and we have spent long hours working in the Senate, with industry stakeholders, and with the administration to find a way to effectively integrate digital assets into our tax code without harming the technology or stifling innovation.”

This proposed amendment is supported by the Blockchain Association, Coinbase, Coin Center, Ribbit Capital, and Square, according to a public statement.

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

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Victory Capital Launches Crypto Index Fund

  • Launch comes after Victory partnered with index provider Nasdaq and crypto investment firm Hashdex
  • Index that the fund tracks holds bitcoin and ethereum as well others including chainlink, litecoin and filecoin

Victory Capital has launched a private fund to offer qualified clients access to digital assets and has plans to broaden the strategy’s availability by offering it as an ETF.

The Texas-based company, which manages about $160 billion assets, has launched the Victory Hashdex Nasdaq Crypto Index Fund LLC, the firm announced Wednesday. The fund’s management fee is 175 basis points.

The offering tracks the Nasdaq Crypto Index, which holds multiple coins — a differentiator to competing offerings, Dhillon noted. As of June 1, the index held bitcoin and ethereum at weightings of about 62% and 32%, respectively, as well as smaller positions in litecoin, chainlink, bitcoin cash, uniswap, stellar lumens and filecoin.

“We have seen an evolution in crypto assets that is continuing, and we believe this is a viable asset class,” Mannik Dhillon, president of VictoryShares & Solutions, told Blockworks in an email. “Our private fund provides US accredited investors with the opportunity to gain broad-based exposure to crypto assets in a dynamic, adaptable way for a relatively low cost and without lockups.”

The launch comes after Victory announced plans to enter the cryptocurrency market through a partnership with Nasdaq and Hashdex. The latter firm, a Brazil-based asset manager founded in 2018, launched its own crypto ETF earlier this year using the same Nasdaq index. The product trades on the Bermuda Stock Exchange for accredited non-US investors.

Victory has filed an initial registration statement with the SEC to offer the strategy in an ETF vehicle, the firm also revealed Wednesday.

“We have always felt that if you build an institutional quality product you should try to bring it to as many investors as possible,” Dhillon said. “ETFs and their exchange-traded nature allow for more investors to easily access investment strategies, thereby further democratizing access to the asset class.”

ETFs that directly invest in crypto currently await approval by US regulators. SEC Chair Gary Gensler said Tuesday that he is looking forward in particular to the agency’s review of ETFs limited to bitcoin futures.

Dhillon noted that the dialogue around regulation and potential product approvals is great for investors. 

Further solidifying regulation of products and the crypto asset class in general will be a huge, positive evolutionary step for the industry — with regulation comes increased comfort and generally more demand from more investors embracing an asset class or investment,” he added. “As far as timing, only the SEC really knows, but we trust they will approach the topic objectively, methodically and with the attention and rigor it deserves.”

Want more investor-focused content on digital assets? Join us September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. Buy it now.

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Aspen Digital Secures $8.8M in Pre-Series A

  • The company was seeded and co-founded by digital assets group Everest Ventures Group and TT Bond Partners, which is the boutique advisory firm of former HSBC Chairman John Bond
  • The company’s strategy is to target the segments of investors currently underserved by existing solutions in the marketplace, said Yang He, co-founder and CEO

Digital asset investment platform Aspen Digital has secured $8.8 million in pre-Series A funding as it continues to build solutions for the growing demand of institutional investments in the crypto space, the company said in a statement. 

The financing round was led by Liberty City Ventures and RIT Capital Partners, the investment trust founded by Jacob Rothschild, a British investment banker and member of the prominent Rothschild banking family. Additional investors include Cherubic Ventures, Token Bay Capital, Somerley Capital, and Chatchaval Jiaravanon & Chaval Jiaravanon. 

The company was seeded and co-founded by digital assets group Everest Ventures Group and TT Bond Partners, which is the boutique advisory firm of former HSBC Chairman John Bond. 

Aspen’s platform is tailored to asset managers, institutional investors and other professional investors through a single account, which brings together dozens of digital assets service providers like FTX, Celsius Network, Hex Trust and others. Through their accounts, users can trade, grow yield and automate investments, the company said. 

“Asset managers and family offices manage generational wealth, their primary goal is to manage risk by constructing a portfolio of diversified assets that will perform across economic cycles,” said Yang He, co-founder and CEO of Aspen in an email to Blockworks. 

Yang He, Co-founder of Aspen Digital

Digital assets are quickly maturing and becoming a new asset class and the main driving force for investors is the need to create a diversified portfolio and relentless search for risk-adjusted returns, He said.

The company is headquartered in Hong Kong, but plans to use the new funding to create a second headquarters and expand the team in London, which will serve clients in Europe and the Middle East. In the future, the company plans to establish a Singapore office to target the Southeast Asian market, which is continuously growing in the crypto space. 

The company’s strategy is to target the segments of investors currently underserved by existing solutions in the marketplace, He said. Right now, the focus is either on serving large institutional organizations like NYDIG and Anchorage Digital or appealing to the mass retail audience through applications like Coinbase and Binance, He added. 

“There is an underserved white space where family offices and asset managers are increasingly looking to create a diversified crypto portfolio, that’s where we are targeting,” He said. 

In the future, Aspen plans to have additional funding rounds post product launch and after it has gained more traction. 

“I don’t know for certain where crypto will go in the end, but what I do know is that crypto is quickly becoming a new, innovative asset class that can no longer be ignored by institutions,” He said. “We are here to help make digital assets investing more accessible by creating a platform that would give asset managers a single portal to create a diversified crypto portfolio.”

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