What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
Exchange-traded Bitcoin funds (ETFs) play a crucial role in fulfilling the investment mandates of certain asset managers and are therefore indispensable for the integration of the crypto world with traditional finance. These vehicles offer institutional investors regulated and convenient channels to participate in the crypto markets while adhering to their established investment guidelines. However, the U.S. Securities and Exchange Commission (SEC) has steadfastly refused to approve a spot-based Bitcoin ETF for the past two years. The agency has only granted Bitcoin ETFs based on CME futures contracts, which incur additional fees and are not cost-effective investments. However, heavyweight financial player BlackRock has entered the race for the first spot-based ETF, overseeing an impressive $9.5 trillion in client assets and being regarded as one of the most influential financial giants. BlackRock’s support for a Bitcoin ETF not only serves as a strong endorsement of the sector but also sends a signal to the SEC.
Asset manager BlackRock has filed with the Securities and Exchange Commission (SEC) for the first spot-based bitcoin fund (ETF).
Andreessen Horowitz, also known as a16z, is a renowned venture capital firm that invests in tech startups, providing them with capital, guidance, and access to an extensive network of resources. Notable successes include early investments in companies like Airbnb, Skype, Robinhood, and Slack. In 2013, a16z made its first Bitcoin investment, leading to further involvement in various crypto-based startup financing over the subsequent years. This entire journey took place over a decade from its headquarters in California. The crypto-hostile stance of U.S. regulators has now prompted the venture capitalist to open its first office outside of the United States. According to General Partner Chris Dixon, the current Biden administration is actively trying to stifle the entire sector, with no political will for regulation and legal certainty in the U.S. On the other hand, the United Kingdom offers ideal conditions for an emerging technology hub, which is why the VC firm’s new crypto outpost will be located in London.
Due to the crypto-hostile attitude of U.S. regulators, Andreessen Horowitz (a16z) is setting up a division in London.
Switzerland, with the canton of Zug at the forefront, has become a significant center for crypto firms due to its favorable regulatory environment and proactive approach to blockchain technology. To strengthen the position of the “Crypto Valley,” the Zug cantonal government, in collaboration with universities in Lucerne, is launching a research initiative. Over the course of five years, nearly 40 million Swiss francs should be invested in the “Blockchain Zug – Joint Research Initiative.” Beyond the technological aspects, the initiative aims to anticipate the impacts of blockchain technology on the economy and society. This innovative flagship project with strong influence is expected to be launched, according to Heinz Tännler, the Zug director of finance.
The Government Council of Zug wants to invest 39.35 million Swiss francs in the “Blockchain Zug – Joint Research Initiative” over five years.
The challenging year for the crypto markets left its mark on the Crypto Valley. As a pioneer of the Swiss crypto ecosystem, Bitcoin Suisse AG reported significant losses in 2022, according to a leaked balance sheet from the Zug-based crypto bank. The adjusted operating loss amounted to CHF 24 million. The decrease in revenue from crypto trading, attributed in part to the weak volumes of the previous year, as well as a loss of nearly CHF 23 million from cryptocurrency holdings, were the main contributing factors. The decade-old company now aims to focus more on recurring income streams in response to the high volatility of the crypto markets. By shifting the focus towards traditional banking services such as crypto asset management and investment advisory, the goal is to reduce dependency on market turbulence. These business model changes will be accompanied by some alterations to the board of directors at the upcoming general meeting in late June.
The challenging year for the crypto markets left its mark on the Crypto Valley, as business figures from Zug-based Bitcoin Suisse reveal.
In addition: Decentralized exchanges (DEXes) are platforms that enable peer-to-peer trading of cryptocurrencies. Operating on blockchain technology, DEXes allow users to trade digital assets directly while retaining full control over their funds. Uniswap clearly stands out as a pioneer in the field. In 2018, the protocol introduced the concept of an Automated Market Maker (AMM) based on the Ether token. Two years later, the invention of token-to-token pairs (Uniswap V2) further shaped the Ethereum ecosystem. The subsequent iteration, Uniswap V3, solidified the protocol’s position as the market leader, thanks to increased cost efficiency. Currently, over 50% of all DEX trading orders are executed through Uniswap. With the recent protocol upgrade, the DeFi protocol gains additional functionalities. Under the V4 model, “Hooks” enable the integration of customizable plugins that allow developers to define specific actions. Some use cases of the upgrade include on-chain limit orders, dynamic fees based on volatility, or automatic fee accumulation back into liquidity positions.
The latest protocol upgrade Uniswap V4 introduces new functionalities for the decentralized exchange in the form of so-called “hooks”.
