September brought major advancements in the crypto space, starting with the SEC’s approval of BlackRock’s spot Bitcoin ETF options, a landmark move pushing Bitcoin further into mainstream finance. Meanwhile, Solana continues gaining institutional momentum, with Franklin Templeton launching a mutual fund on its blockchain and Citibank exploring its capabilities for payments. As the U.S. election draws closer, prediction markets are surging across both web2 and web3 platforms, with interest from traditional financial institutions further solidifying their role in market forecasting.
To start off this month's recap it’s interesting to point out the strength of Bitcoin and the inflow of the concurrent Bitcoin spot ETF. The September inflows for the BTC spot ETF drew in more than $1.4 billion, with a few large daily spikes nearing the end of the month. An important factor to note here is that a large portion of the buying pressure came from MicroStrategy, who continued their acquisition of Bitcoin and now holds over 250.000 Bitcoin. Importantly, the SEC has now also approved BlackRock's proposal to list and trade spot Bitcoin ETF options. This marks a significant step in bringing more mainstream financial products tied to Bitcoin into the market.
Diving deeper into the ecosystem, Solana has been attracting significant attention from major financial institutions. Franklin Templeton announced plans to launch a mutual fund directly on Solana’s blockchain, leveraging its speed and low transaction costs. Additionally, Citibank is exploring Solana's capabilities for smart contracts and cross-border payments, emphasizing both Solana and general blockchain's future role in finance. These announcements were made at the Solana Breakpoint event in Singapore this month. Traction from similar entities in the Ethereum ecosystem came from PayPal and Venmo, which have added support for the Ethereum Name Service (ENS), simplifying crypto payments by using easy-to-read addresses. Payments remain one of the core use cases for crypto on the institutional side. Another example here is SWIFT who announced it will begin trials with global banks to enable seamless digital and fiat currency transactions across its network.
FTX proposed their plan for paying back creditors in U.S. dollar-pegged stablecoins. However, the SEC warned the exchange that they might challenge this proposal, as it comes with broader concerns about the classification of stablecoins as “crypto asset securities”. Furthermore on the regulatory front, the Commodity Futures Trading Commission (CFTC) fined Uniswap $175,000 for allegedly offering illegal ‘leveraged tokens’ on their decentralized exchange. Leveraged tokens are considered a commodity and must be registered with the CFTC. As a result, venture capital giants a16z and Union Square Ventures, which previously invested in Uniswap, were subpoenaed by New York's attorney general, to investigate their involvement. Additionally, Kraken is fighting back the SEC and requested a jury trial in response to the SEC's allegations that it operated as an unregistered securities exchange. In another SEC related battle, eToro settled with the SEC and agreed to pay a $1.5 million fine and cease trading most assets for U.S. citizens.
Coinbase has launched cbBTC, which is a wrapped Bitcoin token on the Ethereum blockchain, and thus on the Base network. The launch is in response to concerns within the DeFi ecosystem around developments around BitGo, the custodian of the widely distributed wBTC. These concerns related to the transfer of parts of wBTC custody to TRON founder Justin Sun, which caused DeFi applications such as Sky (formerly known as MakerDAO) to work towards offboarding wBTC from their protocol. Additionally, Binance introduced a pre-market spot trading service, which enables users to trade actual tokens before the official market opens. Pre-markets have become increasingly popular in the crypto ecosystem as large and highly anticipated new projects are on the verge of launching at the end of this year. The introduction of these markets hints positively at the demand for new protocols in our industry.
With US elections on the horizon, the rise of prediction markets has steadily continued. Bloomberg integrated Polymarket odds on Bloomberg Terminal, solidifying this crypto-native market primitive’s breakout into the mainstream. Similarly, brokerage firm Interactive Brokers launched their ‘Election Forecast Contracts’, which enable U.S. investors to trade predictions on election outcomes, economic data, and climate indicators, again underlining how this crypto-native market type has started to engrain itself in traditional markets.
Portfolio company Chainflip completed a highly anticipated integration of the Solana blockchain, now enabling users to seamlessly swap their native Bitcoin or Ethereum for Solana. This unlock is extremely crucial for the interoperability and user experience within the broader DeFi ecosystem. Other cross-chain swapping protocols like Thorchain are working on a Solana integration, but Chainflip won the race and is the first to achieve this deployment. Lastly, Celestia introduced its Lemongrass upgrade, enabling one-click IBC interactions and interchain accounts, which significantly boosts cross-chain functionality. Key improvements that came with Lemongrass are the introduction of minimum gas pricing, more efficient data transfer, and important preparatory work for zk-based light clients.
