2024-01-05 17:12

The company last year made a similar pledge to Ethereum developers with respect to its ether futures ETF. Asset management firm and prospective BTC exchange-traded fund (ETF) provider VanEck will donate 5% of the profits from its fund (if approved) to Bitcoin developers Brink. VanEck's application to list a spot bitcoin ETF in the U.S. is one of more than a dozen currently awaiting a decision from the U.S. Securities and Exchange Commission (SEC). The markets regular is expected to finally approve such the listing of such a fund in the coming days. The arrival of spot bitcoin ETFs is expected to grow the amount of investment into cryptocurrency from the TradFi world to levels never seen before. While this is largely welcomed from the incumbent crypto community, there will also be friction in some quarters. Therefore providers like VanEck will be keen to demonstrate some commitment to the core Bitcoin industry by giving back to developers and others. "We’re not Bitcoin tourists at VanEck. We’re in it for the long haul," VanEck posted on X on Friday. "Brink's tireless dedication to decentralization and innovation is the cornerstone of the Bitcoin ecosystem, and we're here to support it." The move is reminiscent of a similar pledge by VanEck to donate 10% of profits from its ether futures ETF to Ethereum developers in October last year. Read More: If a Bitcoin ETF Is Approved, Here’s What May Happen https://www.coindesk.com/business/2024/01/05/vaneck-to-donate-5-of-profits-from-btc-etf-to-bitcoin-core-developers/

2024-01-05 16:28

This means there is now a 5.6 day wait for validators to exit the Ethereum blockchain. Ethereum's validators are stuck waiting several days to withdraw their staked ether (ETH), and the defunct crypto lender Celsius may be partially to blame for the backlog. Validators stake ETH to help secure the Ethereum network in exchange for a steady rate of interest, but there is a cap to the number of validators that can unstake their tokens on any given day, hence the present backlog. The exit queue for Ethereum validators spiked to over 16,000 on Friday, while it was just at 26 the previous day, according to blockchain data from validatorqueue.com. The queue represents more than $1 billion worth of staked ETH at current prices, but the large backlog means it could take up to 5.6 days for that ETH to get back into the hands of its depositors. Celsius, the crypto lender that filed for bankruptcy in 2022 and is now in the process of restructuring, seems to be responsible for the present delays. Celsius shared on Thursday on X, formerly Twitter, that the “significant unstaking activity in the next few days will unlock ETH to ensure timely distributions to creditors.” According to blockchain analytics firm Nansen, 32% of all ETH waiting to be withdrawn has been requested by Celsius, while 54.7% is from Figment, a staking service that Celsius reportedly uses. Ethereum has previously seen longer lines. In April, Ethereum validators had to wait upwards of 17 days to get their staked ETH back following the blockchain’s Shapella upgrade, which enabled staked ETH withdraws for the first time. At the time, some 28,000 validators were in line to leave the network at one point. Since then, the requests for exiting the blockchain diminished tremendously, and by the end of May, it took less than a day for a validator to leave the network, according to blockchain data dashboard validatorqueue.com. https://www.coindesk.com/tech/2024/01/05/ethereum-validators-forced-to-wait-days-to-unstake-amid-celsius-withdraws/

2024-01-05 14:40

The DEX is voting on whether to appoint a representative to triage this inquiry. Alleged crypto fraudster and thief Avi Eisenberg is set to go on trial in the coming months for stealing over $100 million from Mango Markets. But Mango Markets continues to face regulatory peril of its own. The decentralized crypto exchange (DEX) is facing "inquiries" in the United States stemming from that October 2022 heist, according to posts in the project's Discord server. Now the DEX's governing body, called MangoDAO, is voting on whether to appoint a representative who can triage "U.S. regulatory matters" on its behalf. Last bull cycle Mango Markets was the top on-chain trading venue for Solana-based crypto investors. Then it lost millions of dollars to one aggressive trader – Eisenberg – who allegedly used illegal market manipulation tricks to steal from Mango Markets' other customers. The Securities and Exchange Commission, Commodity Futures Trading Commission, and Department of Justice all sued that trader, as did a founder of Mango Markets. While many Solana protocols navigate booming crypto markets, Mango Markets is instead dealing with how to answer questions from regulators who only trained their attention on the DEX after it was the victim of an alleged crime. The posts did not name the regulators asking questions, but a proposal being voted on describes inquiries that need to be handled stemming from the SEC, CFTC and DOJ's investigation of Eisenberg. The situation underscores the perils of creating permissionless trading infrastructure atop blockchains, and leaving their operations to decentralized autonomous organizations, or DAOs. If crypto founders thought these attributes might shield them from legal scrutiny, then precedent is proving otherwise. The SEC and CFTC both brought suits against DAOs in 2023. Mango Markets' position in the crypto market left it vulnerable to regulatory security in the U.S., legal experts have previously told CoinDesk. As discussed in the various lawsuits against Eisenberg, it has offered trading services to U.S. that regulators believe should be under their oversight. Compounding the tenuous situation, the company Mango Labs – the DEX's previous legal guardian – is taking a step back. Its CEO Dafydd Durairaj said on Mango's Discord server Thursday that his company "might have a conflict of interest in strict legal terms" that prevent it from going to bat for the DEX. That position is a change from one year ago, when Durairaj told the DEX's community that Mango Labs was committed to its protection "even if the SEC wants to file a lawsuit." In return, the community repeatedly voted to give Mango Labs millions of dollars in crypto that it used to pay swelling legal bills, according to archived forum posts. Mango Markets' community of token holders have governing rights over the DEX and use their MNGO tokens to approve every change to its operations. On Wednesday they were informed of the "regulatory matters" in a Discord post and also presented a solution. Adrian Brzeziński, a 29 year-old crypto developer and longtime contributor to Mango Markets, proposed his three month old company, CyberByte, act as the DEX's representative to regulators. CyberByte would have the power to hire lawyers for the DEX and "partake in confidential and privileged communications with legal counsel to facilitate amicable resolutions to the U.S. regulatory matters." The DEX's voters – the community of token holders – would have final say over any "resolution," according to Brzeziński's posts. He requested $250,000 to foot the new legal bills. On Friday the vote over his proposal was sailing toward passage with unanimous approval from token holders who participated. But in the Discord server one community pressed for more details on how the proposal came together. Brzeziński declined to answer the Discord questions ahead of the vote's passage. He declined to comment when contacted by CoinDesk. https://www.coindesk.com/tech/2024/01/05/mango-markets-mngo-faces-regulatory-inquiry-ahead-of-eisenberg-crypto-fraud-trial/

2024-01-05 13:57

The SEC is on the brink of approving a first spot bitcoin ETF in the U.S. after 10 years of failed applications. Opinions on what will happen in the crypto market if the SEC approves a spot bitcoin ETF are mixed. Some analysts say predictions of a huge influx of investment are overdone. This week marked the 15th year since the first block, the genesis block, was mined on the Bitcoin blockchain. For more than 10 of those years, industry stalwarts have pleaded with the Securities and Exchange Commission (SEC) to approve a U.S. spot bitcoin exchange-traded fund (ETF), an instrument that's predicted to open the floodgates to a wave of institutional investment. So far, the SEC has rejected every application, but that may be about to change. Analysts are predicting that at least one of the more than a dozen current proposals will be approved as early as Friday. Opinions on what will happen in the crypto market if approval is granted are mixed. Gabor Gurbacs, the director of digital assets strategy at VanEck, said that while a spot ETF will create "trillions in value" over the long term, people tend to "overestimate the initial impact of U.S. Bitcoin ETFs," and initial flows will equal only "a few hundred million of (mostly recycled) money." Other analysts say approval will require ETF issuers to purchase tens of billions dollars of bitcoin to satisfy the institutional demand, leading to a radical shift in the supply and demand dynamics. Some analysts even predict a "supply shock" after exchange balances fell to a five-year low in October. A lack of bitcoin on exchanges suggests holders are storing it in their personal wallets, a sign they're less inclined to sell. Analysis of flows into the SPDR Gold Shares ETF (GLD), the first spot gold ETF in the U.S., which debuted in 2004, is informative. GLD amassed $1.9 billion in inflation-adjusted terms in its first four weeks, with the tally rising to $4.8 billion by the end of the first year, according to crypto exchange Coinbase. The ETF currently has $57.37 billion in total assets. Going back further in time, Invesco's QQQ, an ETF that tracks the Nasdaq-100 index of some of the world's most innovative companies, was launched in March 1999, a year before the dotcom bubble burst. The fund saw inflows of $847 million ($1.6 billion in today's dollars) in the first 30 days. And closer to home, the ProShares Bitcoin Strategy ETF (BITO), based on bitcoin futures, amassed around $1.5 billion in inflation-adjusted terms in the 30 days after its introduction in October 2021, when sentiment across crypto asset classes was uber bullish. As of Thursday, the fund held $1.65 billion in total assets. BITO, which invests in regulated CME futures rather than actual cryptocurrency, is exposed to rollover costs. The fund has, nevertheless, closely tracked bitcoin's spot price since inception and been a viable option for people looking for exposure to bitcoin without the ownership and storage hassles. Another consideration is the global economy, with elevated risk-free interest rates worldwide and worsening household finances. That macroeconomic environment plays against a scenario of strong mainstream uptake for spot ETFs. How will the market react? Bitcoin has rallied 61% since early October, largely on expectations the SEC will approve one or more of the spot ETF applications. That's prompted several analysts to forecast a sell-the-news-led pullback once the ETFs go live. They say the price will drop as investors who'd benefited from the run-up sell to lock in their profits once the news is confirmed. Consider the debut of CME bitcoin futures in December 2017, Coinbase's listing on Nasdaq in mid-April 2021, and the debut of several futures ETFs, including BITO. On those occasions, bitcoin had been rallying only to crash in the weeks after the events. For instance, bitcoin surged 15% in the three days before the SEC approved the first futures ETFs. A month later it hit a record high $69,000 and then crashed into a bear market that lasted for more than a year. CryptoQuant suggested last week that bitcoin could slump to as low as $32,000 because the amount of unrealized profits in the market is at a level that historically precedes a so-called price correction, often considered a drop of 10% in crypto markets. Bitcoin rallied 160% last year and has gained almost 4% this month. CryptoQuant is not alone in predicting a decline. QCP Capital, a Singapore-based crypto trading firm, said on Telegram last month that initial demand for the ETFs could be lower than expected, setting the stage for a classic sell-the-news scenario. Investors concerned about a replay of what followed the launches of CME futures and ProShares' BITO may want to note that both came when the market, having rallied by several hundred percent in 12 months, looked ripe for a correction. This time round, the expected spot ETF launch comes ahead of the Bitcoin blockchain's quadrennial mining-reward halving, which has previously marked the beginning of meteoric price rallies. It also follows this week's brief price slide to $41,000 in a sell-off that liquidated $400 million in leverage bets and wiped out $2 billion in futures open interest. Recycled cash or fresh flows? The difference between earlier sell-the-news events and this one is that a spot bitcoin ETF involves actual bitcoin, removing supply from the market. The CME's launch of futures prompted price declines because it allowed traders to synthetically short the cryptocurrency following a ferocious bull market that was led by 2017's unsustainable ICO mania. Another aspect of a spot bitcoin ETF is that institutional investors such as the typically conservative pension funds and insurance funds will gain a way to add exposure to native bitcoin, as opposed to an ETF derivative or bitcoin proxy shares like Coinbase (COIN) or MicroStrategy (MSTR). There are currently 35 gold ETFs in the U.S., with total assets under management standing at $118.70 billion. A recent report by financial services firm NYDIG drew parallels between them and a potential bitcoin ETF. "Given Bitcoin’s roughly 3.6 times higher volatility compared to gold, investors would need approximately 3.6 times less Bitcoin than dollar-denominated gold to achieve an equivalent level of risk exposure," the report said. "This would still translate to an additional demand of nearly $30 billion for a Bitcoin ETF." https://www.coindesk.com/markets/2024/01/05/if-a-bitcoin-etf-is-approved-heres-what-may-happen/

2024-01-05 11:00

So far, only six potential spot bitcoin ETF issuers have revealed their charges, and Fidelity is the cheapest. Only six of the more than a dozen spot bitcoin ETF applicants have announced their fee levels. Fees will play a critical role because all the funds will hold the same asset. Of the 13 applicants for a spot bitcoin exchange-traded fund (ETF), only half a dozen have said how much they'll charge in management fees, and with expectations that approvals could be granted as early as next week, that's become the figure for prospective investors to focus on. While many factors determine how popular and heavily traded an ETF is once it hits the market, in this case all will hold the same asset – bitcoin – so details like the cost become a crucial differentiating factor. "Fees will be critical," Bloomberg Intelligence’s ETF analyst James Seyffart said in an email interview. "I don't think the issuers have to offer the absolute lowest fee, but I do think they can't be charging too much more and still remain competitive." The fee, known as the expense ratio, is used to cover costs like custodial services, marketing and even salaries. According to research by Morningstar, the average fee for open-end mutual funds and exchange-traded funds was 0.37% in 2022, a lot lower than 20 years ago, for example, when it was 0.91%. Invesco and Galaxy set the bar and brought a "whopper," as ETF analyst Eric Balchunas described it, saying they will waive fees completely for the first six months and the first $5 billion in assets. After that, they will charge 0.59%. Fidelity set the fee at 0.39%, the lowest by far, while Ark and 21Shares as well as Valkyrie plan to charge 0.80%. "From a pure competitive standpoint, expense ratio matters greatly in this particular category," Nate Geraci , wrote on X. Geraci is president of The ETF Store, an investment advisory firm, and started a podcast about exchange-traded funds back in 2011. BlackRock, the world's largest asset manager, has yet to say how much it will charge. The investing giant is likely to be one of the front runners when it comes to popularity, given its name recognition, track record and hundreds of successful funds. Seyffart predicts BlackRock’s fee is likely to be around Fidelity’s number of 0.39%, while Geraci sees it somewhere between 0.40% and 0.80%. "Fidelity has a slight advantage potentially due to being more vertically integrated than anyone else here, which could allow them to offer the lowest fees," Seyffart said. Fidelity, unlike the others, is using an in-house custodian and is in a favorable position given its direct access to investors and advisers through its platform, he said. https://www.coindesk.com/business/2024/01/05/bitcoin-etf-fees-will-play-critical-role-in-the-race-to-popularity/

2024-01-05 08:55

The defunct crypto lender sent over 30,000 ETH to custodian Fireblocks in the past week, some of which was deposited on crypto exchange Coinbase. Ether (ETH) prices might gain in the coming weeks after crypto lender Celsius, which is restructuring in bankruptcy proceedings, said it will unstake its holdings of the second-largest cryptocurrency, removing a factor that may have contributed to the token’s underperformance in recent months. The company, which is converting to become a bitcoin miner, had previously said it would include staking in its activities. The firm has been selling staking rewards on the open market to cover costs associated with the reorganization plan. "Celsius will unstake existing ETH holdings, which have provided valuable staking rewards income to the estate, to offset certain costs incurred throughout the restructuring process," the firm said in an X post. "The significant unstaking activity in the next few days will unlock ETH to ensure timely distributions to creditors." Data from analysis tool Arkham show crypto wallets linked to Celsius have staked over $151 million worth of ether, a position on which it likely earns over 4%-5% in annualized yields. While the staking rewards may not cause a large amount of ether sales, they may have contributed to negative sentiment for the token, alongside other factors such as the interest in other blockchains. Meanwhile, outflow data shows Celsius sent over 30,000 ETH to custodian Fireblocks in the past week, some of which was deposited at crypto exchange Coinbase, where it may have been likely exchanged for stablecoins. https://www.coindesk.com/markets/2024/01/05/celsius-to-unstake-thousands-of-ether-possibly-easing-eth-selling-pressure/