June was a positive month for crypto compared to previous periods over the past year where regulatory scrutiny or bankruptcies predominated the newsflow.
To begin with, Optimism, the Layer 2 network focused on scaling Ethereum applications, has successfully implemented their Bedrock upgrade. This upgrade reduces deposit times, lowers fees, and implements additional security measures. More importantly, the upgrade embraces modular proof systems, allowing developers to create and customize their own blockchains, moving Optimism closer to the goal of becoming a “Superchain” of interoperable blockchains.
Furthermore, Visa published a comprehensive article on exploring emerging design spaces within the blockchain landscape. In this article they discuss the blockchain trilemma where striking the right balance between decentralization, scalability and security is needed for adoption. Visa also presents the Modular design space, where a blockchain is broken down into smaller independent components to allow for optimization of specific blockchain characteristics as per unique use-case needs which is in alignment with our vision.
The biggest news this month was undoubtedly that BlackRock, the world’s largest asset manager, filed with the SEC to launch an exchange traded spot bitcoin trust, with speculation that BlackRock will finally be able to break the SEC’s decade-long resistance to exchange traded funds based on bitcoin leading to positive sentiments. The SEC’s main objection has been around the possibility of market price manipulation, which hasn’t been an issue for other countries’ spot bitcoin ETFs. Historically, BlackRock has a near 100% success rate at getting their filings approved, which has many analysts positive.
The BlackRock ETF filings resulted in a slew of similar filings, like Fidelity investments, Wisdomtree and few more joining the race for spot Bitcoin ETF. As was the case with the Gold ETF at the beginning of this century, an ETF approval could be a big deal for bitcoin, as it would open up the market to a wider pool of investors which could lead to more liquidity and price stability. However, rumors suggest that the SEC is hesitant about allowing a Bitcoin Spot ETF as the filings are still inadequate with the SEC’s guidelines.
Meanwhile, an institutional crypto exchange backed by Citadel, Fidelity, and Schwab called EDX Markets also went live this month. EDX Markets is a non-custodial U.S. crypto exchange that specifically caters to institutions, and as is the case for the ETF filings demonstrates continued interest in the cryptocurrency industry by Wall Street giants.
Continuing this month with some positive regulatory updates. The ECB is set to explore the use of distributed ledger technology (DLT) for financial market settlements, marking a significant step in recognizing the potential of crypto. This is further strengthened by the IMF’s recent advice against crypto asset bans, instead advocating for increased transparency and regulation.
Simultaneously, the ECB plans to develop a "digital euro," following the IMF's emphasis on addressing unmet digital payment needs. Moreover, the European Commission is crafting laws to regulate a retail central bank digital currency, a move reinforcing responsible innovation. These developments signal an increasingly open and progressive regulatory stance towards cryptocurrencies in Europe.
Also this month saw MakerDAO acquiring an additional $700 million in U.S. Treasury bonds, increasing its DAI stablecoin reserve to $1.2 billion. This move is part of MakerDAO's "Endgame Plan" strategy to diversify the assets backing its $4.5 billion dollar-pegged stablecoin by incorporating traditional financial assets like government bonds. The acquisition comes as part of a March-approved proposal to boost the upper limit of a real-world asset vault to $1.25 billion.
MakerDAO also increased the Dai Savings Rate (DSR) from 1% to 3.33%, marking it one of the highest earnings rates for a stablecoins in the DeFi sector.
Lastly, we want to congratulate our portfolio company Gensyn on their successful $43 million Series A funding round which was led by a16z. Gensyn connects buyers and sellers of compute power through a blockchain-based marketplace protocol, with a particular focus on brokering this compute power for machine learning purposes. As they embark on this new chapter, we offer our support and enthusiasm for their work.
We are confident that this funding will enable Gensyn to further their vision of creating an open infrastructure that facilitates the development of AI by a broader range of contributors, which is crucial to mitigating bias and promoting diverse perspectives in the AI sector.