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Eterna's Insights - June 2023

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Key Takeaways:

  • Optimism around the approval of a spot Bitcoin ETF

  • Digital assets institutional adoption is not fading

  • Blockchain technology continued its rapid pace of development

Portfolio Spotlight: Mailchain partners with some of the biggest names in the blockchain space


A Wave of New Spot Bitcoin ETF Applications

Despite facing years of rejection, optimism around the approval of a spot Bitcoin ETF in the US has returned with the recent filing by BlackRock, the world’s largest asset manager. Speculation that BlackRock’s application will be approved by the SEC given its 575-1 ETF approval track record brought general positive sentiment to the market. The filing included a new surveillance sharing agreement that may give the SEC comfort around the ability to prevent any possible fraudulent and manipulative activities.

A wave of new spot Bitcoin ETF filings followed the BlackRock one with many issuers such as Fidelity, Invesco and WisdomTree joining the race with some refiling previously rejected applications. The prospect of a US-based spot Bitcoin ETF approval is perceived as a big deal for Bitcoin and its adoption as it could lead to significantly more liquidity and stability by making it accessible to a much wider pool of investors.

Wall Street and Large Corporates Continue to Position Themselves

Beyond BlackRock’s ETF application, several initiatives have brought enthusiasm back to the space. EDX Markets, an institutional-grade non-custodial digital asset exchange backed by Citadel, Fidelity and Charles Schwab went live in June. This product resembles traditional exchanges and while it would incite more institutional investors trading activity, it could also potentially be integrated with existing trading products further down the road, making digital assets accessible to a wider pool of customers.

JPMorgan made several announcements over the past few weeks. Its JPM Coin system will expand to capture the euro to allow blockchain-based euro payments. The bank also announced a partnership with six large Indian banks to introduce a blockchain-based platform to facilitate interbank settlement of US-dollar transactions.

UK Passes Bill Recognising Crypto as Regulated Financial Activity

A bill giving regulators the power to supervise crypto and stablecoins was recently approved. This has been considered as a positive step forward to make crypto assets fall within the scope of the existing financial system and a fully regulated activity in the UK. It confirms the UK government’s mission to make the UK a crypto hub over the coming years and position itself as a robust alternative to other crypto friendly jurisdictions.

London recently managed to convince one of the world’s most respected Venture Capital firms and one of the most active blockchain/crypto investors Andreessen Horowitz (a16z) to open its first office outside the US. The US firm confirmed that the country’s “predictable business environment” was one of the main factors behind its decision to establish itself in the UK.

Several Key Projects Completed Significant Technology Milestones

Layer-2 Optimism completed its highly anticipated ‘Bedrock’ upgrade enabling a series of network improvements and new features such as reduced transaction fees, a shorter deposit waiting time, fault and validity proofs and better node performance. Network activity has significantly increased since the upgrade with c.67% increase in daily transactions.

The highly anticipated launch of Ethereum ‘Restaking’ Protocol EigenLayer went live. EigenLayer allows Ethereum (ETH) stakers and liquid staking derivative (LSD) token holders to restake their staked ETH and validate additional services/projects in exchange of extra yield. Given the protocol’s extremely ambitious roadmap and possible security risks, EigenLayer launched with some staking limits. These limits were reached on the first day hinting to a very strong demand for the protocol. This project is considered to have the potential to turn Ethereum staking into a shared security layer.

Uniswap, the leading decentralised crypto exchange (DEX), announced its v4. The new version of the protocol introduces several additional features such as more customisable liquidity pools and improved gas fee savings.

Binance's Issues Expand to Europe

Binance has been going through a difficult period in the US due to a lawsuit issued by the SEC against the exchange and an ongoing criminal investigation. The pressure is now mounting in Europe. Several months after establishing its regional headquarters in Paris as part of its expansion plan, Binance has encountered resistance from countries such as the Netherlands, Germany and Belgium, where it has been denied licenses, asked to cease operations or faced regulatory hurdles. French authorities are also investigating the exchange for inadequate money laundering controls and illegal service offerings made prior to Binance obtaining registration in the country.

Eterna Portfolio Company Spotlight: Mailchain partners with some of the biggest names in the blockchain space

Mailchain is working on making Web3 communication more accessible and intuitive for its users. Over the past months, the company made significant product improvements and integrations accelerated by its SDK (Software Development Kit). Mailchain has been able to expand its reach by securing a series of strategic partnerships with some of the biggest names in the blockchain space. They have been joined and trusted by the likes of Tezos, ENS Domains, Lens Protocol, Unstoppable Domains, NEAR, Avalanche and BNB Chain to enable Web3-native email integrations.


Disclaimer: this newsletter was put together for informational purposes only based on our review and analysis. This should not be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment or engage in any transaction.

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Eterna's Insights - February 2024

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