Your Monthly Brief into the World of Digital Assets
Article by Sixte C
JKL Capital sponsors Bitcoin 2022
- New hope for Bitcoin spot ETF
Financial institutions and blockchain actors
- Pantera’s new Select Fund
- The Ethereum merge has been postponed for the umpteenth time
JKL Capital sponsors Bitcoin 2022
The Bitcoin 2022 conference in Miami was long awaited and the staggering number of attendees attested to its success. 25 thousand people per day showed up at the event and the JKL team, sponsoring the conference, was among them.
No highlight in Miami measured up to Bukele’s announcement at Bitcoin 2021 that El Salvador will make Bitcoin legal tender. Yet some speakers did reveal noteworthy updates and here are a few:
- During his speech, Miami’s mayor Francis Suarez highlighted the intention to push for BTC adoption while hinting he will appear as a presidential candidate at the next elections.
- Kevin O’Leary warned that pushing the mining business to carbon neutrality might not be that easy since the SEC might not allow the purchase of carbon offsets to reach that goal.
- Cash app was the main sponsor of the event and announced the integration of the lightning network on their platform.
- Strike CEO, Jack Mallers, announced a partnership with Shopify to enable Bitcoin lightning payments for all Shopify merchants. They will receive Bitcoin as US dollars. Shopify is an online commerce platform present in almost 200 countries.
- Grant McCarty announced the birth of Financial Freedom, a Political Action Committee (PAC) to support pro crypto politicies in the US. It will foster pro-crypto regulations efficiently and legally since PACs is how most politicians get their funding.
Mining was a major topic at the conference and a vast majority of the sponsors were in the mining business.
“Bitcoin 2022 Miami showcased the culmination of an exciting year in the industry. Mining took the centre stage at the conference with exciting immersion cooling solutions, eye catching containers, mining stage, and multiple mining lounges.” — Onno Ho, Vice President and Head of Mining at JKL Capital
Around half of the conference exhibition facility was dedicated to mining and the biggest actors of the sector were present. Mining gained a lot of traction this year and drawn large crowds at the conference. For Onno, it was “exhilarating to connect with peers at the conference and be part of the professionalisation and industrialisation of the sector.”
Finally, mining impact on the environment was the centre of attention. In fact, reaching carbon neutrality is miners’ most pressing issue and only way to earn favourable public opinion to ease regulations.
New hope for Bitcoin spot ETF
Ever since Bitcoin gained mainstream adoption and fell under the radar of regulators, a BTC spot ETF approval always seemed to be right around the corner. However, until today no spot ETFs have met regulatory requirements. WisdomTree, Ark 21 Shares and Fidelity among other saw their application rejected or extended due to regulators’ lack of confidence in correct investor protection and suitable market surveillance. The road to a successful BTC spot ETF application has been a succession of hopes and disillusions.
First, in February 2021, the nomination of Gary Gensler as the new SEC chair set high expectations for a favourable scrutiny over BTC spot ETFs. Market actors soon realised that strong doubts and apprehension remained regarding BTC spot ETFs within the US regulatory cohort. Even the general optimism following the BTC futures ETF approval in October 2021 that triggered Bitcoin price to reach new ATH was short lived due to the nature of BTC futures. Indeed, the approval should be accredited to the fact that the BTC future contracts were already being traded on the regulated Chicago Market Exchange (CME) rather than a shift in regulators sentiment towards bitcoin products. Following this event, hope for spot ETFs quickly faded.
Six months later, on April 20th, the Teucrium futures funds received approval from the SEC to go forward with its futures based BTC ETF. So why is this event worth mentioning while 6 other funds received SEC authorisation before them? Because instead of applying under the traditional Investment Company Act of 1940 under which all other BTC future ETF were approved, Teucrium filed its application under the Securities Act of 1933 (“33 Act”) and Securities Exchange Act of 1934 (“34 Act”). This technical difference is major since all bitcoin spot-based ETF application have been filed under the “33 Act” and the “34 Act”. Will this be another fake step towards spot based BTC ETF approval, only time will tell.
While all eyes are fixed on US regulators, 8 other countries have approved spot BTC ETF. Most recently, Cosmos Asset Management listed Australia’s first Bitcoin spot ETF end of April. Ultimately, most experts agree that it’s a question of ‘when’ and not ‘if’ for a BTC spot-based ETF to be approved in the US.
· EU Parliament Passes Privacy-Busting Crypto Rules Despite Industry Criticism (Read More)
· Elizabeth Warren Calls for US to Create a CBDC (Read More)
· Government sets out plan to make UK a global cryptoasset technology hub (Read More)
· Slovenia Unveils Plan for Flat Tax on Crypto Transactions (Read More)
· Secretary Yellen Finds Limited Evidence of Crypto Sanctions Evasion in Russia (Read More)
· Tax law in India plunged trading volume, up to a 72% downfall on WazirX the largest Indian crypto exchange. The tax collects 30% of all trading profits that cannot be offset with losses on another transaction. (Read More)
· US Government Warns of North Korean Crypto Attacks After Tying Nation to $625M Hack (Read More)
· The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) gave its first Ukraine-Russia war related sanction to a crypto firm (Read More)
Financial institutions and blockchain actors
Pantera’s new Select Fund
The fund was built on the prospect of investing in three growth stage companies. Such investment opportunities used to be offered through their traditional funds like Venture fund III. Pantera is taking advantage of its current large deal flow to expand its AUM. Seven to nine other growth stage projects will be added to the fund’s exposure over the coming year. Pantera is aiming to raise $200 million to mainly fund settled companies that already generate returns. The new fund strategy contrasts with the historical strategy of Pantera focusing on early venture investments. Still, Pantera Select Fund might devote a part of the funds to earlier stage projects led by Pantera. The small size of the fund will allow its asset managers to lean towards more targeted investments that might enhance fund’s distribution efficiency.
The three confirmed deals include two unnamed companies (for confidentiality reasons) and Amber, a digital asset platform for both individuals and institutions. The first of the two unnamed company is “one of India’s largest and safest cryptocurrency exchanges”. It might be WazirX, as it has its own token and a strong KYC process. The second company is “the #1 provider of NFT domains on the blockchain”. Therefore, it might be Unstoppable domain, as it is the largest and most popular NFT domain marketplace. Identity of both companies is pure speculation based on online research.
The Ethereum merge has been postponed for the umpteenth time
Recently planned for June 2022, the merge has been delayed at least until fall. The merge also known as Serenity was first supposed to launch in January 2020, more than two years ago. Since then it has been consistently pushed back. The repetitive delays can be explained by the tremendous amount of work that switching from PoW to PoS implies. To understand better the complexity of the process, let’s use an analogy from Zack Seward’s “The Hash” podcast: shifting from one consensus mechanism to another is like swapping an airplane engine while it’s in mid-flight.
If successful, the merge will reduce Ethereum’s energy consumption by 99%, however, it will not scale the network. It will rather make it easier to implement upgrades to increase transaction throughput thanks to the more flexible nature of a PoS blockchain compared to PoW. No improvement on scalability also means no reduction of gas fees. Ethereum is home to most of the crypto ecosystem dApps, which greatly rely on transaction cost for efficiency. Since scalability won’t be directly impacted by the merge, projects built on Ethereum will require additional upgrades. Most importantly, layer 2s will keep their fundamental role on Ethereum network.
Ethereum developers might keep delaying the merge, yet it is worth noting a significant milestone has been achieved early April. In fact, Ethereum’s first mainnet shadow fork went live to “check if our assumptions work on existing testnets and/or mainnet”, according to Parithosh Jayanthi, an Ethereum Foundation developer. Just like all market participants are waiting for a spot-based Bitcoin ETF to be approved, the Ethereum merge is one of the most longed-for events of the crypto space. Regardless of its success, it has the power to disrupt the market.
· Twitter Accepts Elon Musk’s $54.20-a-Share Buyout Offer (Read More)
· Cosmos Asset Management will list Australia’s first Bitcoin ETF next week (Read More)
· DBS Bank, Singapore’s largest bank, gives up on delivering a retail crypto exchange due to unfriendly regulatory environment (Read More)
· DeFi Lender Inverse Finance Exploited for $15.6M (Read More)
· Binance US Valued at $4.5B, Circle Among New Investors (Read More)
· Mastercard, as part of its crypto adoption efforts, has applied for 15 metaverse and crypto landmarks (Read More)
· Pantera, the first crypto fund, wrapped up a $1.3b blockchain fund (Read More)
· UST stablecoin surpassed BUSD in marketcap to become the third largest stablecoin after Tether’s USDT and Circle’s USDC (Read More)
· Morgan Stanley Says Crypto Could Become More Widely Used as Currency (Read More)
· Marathon Digital moves Montana BTC mine to pursue carbon neutrality (Read More)
· Lightning Network Sees Growing Adoption (Read More)
· Strike Launches Shopify Integration Bringing Bitcoin Lighting Payments to Merchants (Read More)
· Block Inc. and Blockstream Corp. announced their partnership to mine bitcoin using Tesla’s solar power batteries in Texas (Read More)
· Robinhood picks up its UK expansion plan by acquiring British crypto firm Ziglu (Read More)
· Binance.US left the Blockchain association to create its own lobbying operation (Read More)
· Crypto.com accelerated its lobbying operations (Read More)
· US crypto trade association lobbying slipped last quarter for the first time in years (Read More)
· Crypto Ownership Nearly Doubled in the United States, Latin America, and Asia Pacific in 2021 (Read More)
· According to Google trends data retail is losing interest in cryptocurrencies (Read More)
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