Publications

Maven's Insight June

06 July 2021

ARK Investments partners with 21 Shares to market a newly proposed bitcoin ETF. ARK Investments has joined the line of firms waiting for the approval of a Bitcoin exchange-traded fund (ETF). The firm is assisting 21Shares with a new offering: the ARK 21Shares Bitcoin ETF. The aim is to offer direct exposure to bitcoin through shares valued daily based on the S&P Bitcoin Index, the tool developed by S&P Dow Jones Indices. The index relies on data from various reputable exchanges to arrive at a unified price based on "a combination of qualitative and quantitative metrics," Currently, a multitude of ETF’s are awaiting SEC approval. The most promising of these are: VanEck’s Bitcoin ETF, Grayscale Bitcoin ETF and the Wise Origin Bitcoin Trust by Fidelity.

El Salvador has passed a bill that will make Bitcoin legal tender in the country. El Salvador's legislature members cleared the bill with a "supermajority" vote, receiving 62 votes for the bill out of a possible 84. This new bill will "regulate Bitcoin as unrestricted legal tender." Articles of the so-called Bitcoin law include the ability for Bitcoin to be used to pay taxes, the exclusion of bitcoin from capital gains taxes and the use of the U.S. dollar as a "reference currency" when denominating prices. What's more, the bill mandates that "every economic agent must accept Bitcoin as payment when offered to him by whoever acquires a good or service." According to the text, El Salvador's government will play a role in facilitating the use of Bitcoin in the country alongside private-sector services.

Texas State regulator greenlights banks to custody crypto. The guidance is not representative of a new law, but an affirmation that state-chartered banks are allowed to provide crypto custody services as long as there are adequate protocols in place and the banks are complying with existing legal frameworks. According to the notice posted on the Texas Department of Banking’s website, the types of custody services offered by state-chartered banks may differ depending on each bank’s expertise, risk appetite and a business model. Banks may offer either fiduciary and non-fiduciary custody services, which could range from safely storing copies of a customer’s private keys to directly controlling crypto assets, including holding private keys on behalf of its customers.

The ex-Head of China’s Digital Yuan Effort Says CBDCs Could Operate on the Ethereum blockchain. Yao Qian, now director of the Science and Technology Supervision Bureau of the China Securities Regulatory Commission, said over the weekend that CBDCs shouldn’t attempt to be just a digital form of physical cash, but should incorporate smart contract functionality. Furthermore, Yao Qian mentioned that Central Bank Digital Currencies (CBDCs) are set to become more “smart” and could one day operate on blockchain networks like Ethereum.

Taproot, Bitcoin's long-in-the-making upgrade, has achieved activation lock-in in June. This has set Bitcoin up to integrate the privacy-focused upgrade known as Taproot later this year. Transactions on the Bitcoin network can use various features that give them more functionality and, the Taproot upgrade will make this more easy and straightforward to take place. The integration of Taproot represents the first major upgrade to Bitcoin's code since the introduction of SegWit in 2017. The full activation of Taproot is set for mid-November.

SEC commissioner Hester Peirce argues in favor of DeFi's promise of disintermediation. In an interview, Peirce noted her support for much of the work of decentralized finance, or DeFi, and argued against the enforcement-based approach that she had identified with the commission's work on initial coin offerings. "I don't want it to be an enforcement-based approach. If we can provide clarity around certain issues within DeFi, that's something we should do," Peirce said. She also mentioned: "Disintermediating can be quite helpful for financial stability," she said. "Also for ensuring easy access to financial services on the same terms — transparent terms. That's a positive thing."

This month we are very proud to announce the first closing of our €40 million fund II for decentralized finance and Web 3.0. The new fund is a direct response to the explosive demand for investment in and mentoring of start-ups in decentralized finance where cutting edge technology plays a central role. On the venture side, we kept investing, as we backed Runtime Verification in their first ever funding round of USD 5.3M. Runtime Verification is a company offering security audits on virtual machines and smart contracts on blockchains. Considering the tremendous growth DeFi has made, the importance of security on this software cannot be understated. In June, we also announced the launch of the Eagle Project. The project enables the community to vote on the future Ethereum gas limit, solving the coordination problem and enabling the community to signal its preferred gas limit.