UK Legislators Advocate for Treating Crypto Trading Similar to Gambling Regulations

In a recent report, a UK legislative committee has acknowledged the potential of cryptoassets and their underlying technologies to revolutionize financial services, particularly in streamlining payments and reducing associated costs. They specifically point to the potential benefits for cross-border transactions and economies with underdeveloped financial sectors.

However, the committee raised concerns about the current regulatory challenges faced by the Financial Conduct Authority (FCA) in managing the burgeoning cryptoasset industry, emphasizing the need for the Government and regulators to keep pace with these rapidly evolving technologies.

While the committee supports innovation in the financial sector, they caution that the true extent and impact of cryptoasset technologies remain uncertain, with significant risks to both consumers and the environment.

The legislators recommend a balanced approach, urging the Government to avoid investing public resources in cryptoasset activities without a clear, beneficial use case. They cite the recent failed attempt to produce a Royal Mint non-fungible token (NFT) as an example of misdirected efforts.

The report also calls for a shift in the regulatory approach towards unbacked cryptoassets, such as Bitcoin and Ether. Due to their volatility and lack of intrinsic value, the committee argues that these assets pose substantial risks to consumers, likening speculation in these assets to gambling.

Therefore, they strongly recommend that retail trading and investment in unbacked cryptoassets be regulated as gambling rather than as a financial service, to prevent consumers from misinterpreting the risks involved.

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Grayscale Launches New Entity to Manage Growing Funds

Grayscale Investments, the cryptocurrency asset manager, has announced the launch of a new entity, the Grayscale Funds Trust, to manage its publicly traded financial products in-house. The move indicates the company’s growing confidence in its ability to manage its funds internally.

In addition to the launch of the new trust, Grayscale has filed a registration statement with the United States Securities and Exchange Commission (SEC) for three new cryptocurrency-focused exchange-traded funds (ETFs). The new funds include a Bitcoin Composite ETF, an Ethereum Futures ETF, and a Privacy ETF.

Grayscale’s Bitcoin Composite ETF will invest in exchange-traded products related to or backed by Bitcoin, including Bitcoin mining firms. The Ethereum Futures ETF will offer indirect exposure to the potential future value of Ether through shares that track ETH’s price. The Grayscale Privacy ETF will invest in companies working on blockchain-based privacy technology.

However, until the registration statement is approved by the SEC, the funds will not be available for public purchase. This move comes as Grayscale continues to navigate a conflict with the SEC over converting its $17 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF product.

In January 2021, Grayscale sued the SEC for denying its application, arguing that the SEC acted unfairly in treating crypto spot traded exchange-traded products differently from futures products. Grayscale claims that there is a 99.9% correlation between prices in the Bitcoin futures market and the spot Bitcoin market. Despite the SEC’s approval of several Bitcoin Futures ETFs, it has so far rejected every application for a spot Bitcoin investment product due to concerns about exposing investors to potential fraud and market manipulation.

Despite these challenges, Grayscale’s move to launch new crypto ETFs and manage its publicly traded financial products in-house demonstrates the company’s commitment to the cryptocurrency market and its belief in the long-term potential of digital assets.

In conclusion, Grayscale Investments’ launch of the Grayscale Funds Trust and its filing of three new cryptocurrency-focused ETFs is a significant development for the company and the cryptocurrency market as a whole. While the SEC’s approval of these new ETFs is still pending, Grayscale’s continued efforts to introduce crypto-focused investment products is a positive sign for the industry’s growth and adoption.

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Grayscale Files for Three New Crypto ETFs

Grayscale Investments, the cryptocurrency asset manager, is seeking approval from the United States Securities and Exchange Commission (SEC) for three new cryptocurrency-focused exchange-traded funds (ETFs). The new funds include a Bitcoin Composite ETF, an Ethereum Futures ETF, and a Privacy ETF.

Grayscale’s Bitcoin Composite ETF will invest in exchange-traded products related to or backed by Bitcoin, including Bitcoin mining firms. The Ethereum Futures ETF, on the other hand, will offer indirect exposure to the potential future value of Ether through shares that track ETH’s price. The Grayscale Privacy ETF will invest in companies working on blockchain-based privacy technology.

Despite previous roadblocks from the SEC over crypto-related ETFs, Grayscale has filed a registration statement for the new ETFs. However, until the registration statement is approved, the funds will not be available for public purchase.

Grayscale also announced the launch of the Grayscale Funds Trust, a new arm of its business that allows it to manage many of its publicly traded financial products in-house. This move indicates the company’s growing confidence in its ability to manage its funds internally.

While Grayscale continues to navigate a conflict with the SEC over converting its $17 billion Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF product, the company remains optimistic about the future of crypto ETFs. In January 2021, Grayscale sued the SEC for denying its application, arguing that the SEC acted unfairly in treating crypto spot traded exchange-traded products differently from futures products. Grayscale claims that there is a 99.9% correlation between prices in the Bitcoin futures market and the spot Bitcoin market.

Despite the SEC’s approval of several Bitcoin Futures ETFs, it has so far rejected every application for a spot Bitcoin investment product due to concerns about exposing investors to potential fraud and market manipulation. However, Grayscale’s move to launch new crypto ETFs and manage its publicly traded financial products in-house demonstrates the company’s commitment to the cryptocurrency market and its belief in the long-term potential of digital assets.

In conclusion, Grayscale Investments’ filing of three new cryptocurrency-focused ETFs and the launch of its Grayscale Funds Trust is a significant step forward for the company and the cryptocurrency market as a whole. While the SEC’s approval of these new ETFs is still pending, Grayscale’s continued efforts to introduce crypto-focused investment products is a positive sign for the industry’s growth and adoption.

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Circle Launches Cross-Chain Transfer Protocol for USDC

Users are now able to move US Dollar Coin (USDC) between Ethereum and Avalanche thanks to the implementation of a new mainnet protocol by Circle, the company that created the US Dollar Coin (USDC). The Cross-Chain Transfer Protocol (CCTP), which was introduced on April 26, intends to lessen the amount of fragmentation that exists within the Web3 ecosystem and do away with the need for USDC bridges.

Prior to this update, customers who owned USDC on Ethereum and wished to move it to Avalanche were required to either deposit their coins with a Circle partner or utilize a third-party bridge to complete the transfer. Nevertheless, customers are now able to transfer their USDC straight across the two networks thanks to the newly developed CCTP.

The new protocol operates in a manner that is distinct from that of a conventional bridge. Instead of putting a lock on tokens that are submitted to its contract, it will entirely destroy them and then issue fresh tokens on the network that is receiving them. Users have the ability to immediately convert these newly issued tokens into bank deposits by depositing them with Circle or one of its partners.

The Circle team anticipates that the CCTP will remedy the problem of fragmentation that exists within the Web3 ecosystem. At the moment, there are a number of unauthorised versions of USDC that are circulating on other networks. The majority of these versions are the consequence of tokens on one network being bridged to another network. The development team anticipates that the usage of unauthorised copies will gradually decrease now that there is an official means to move coins across networks. This will result in the token being easier to understand and utilize.

A significant number of the most prominent cross-chain protocols, such as Celer, Hyperlane, LayerZero, LI.FI, MetaMask, and Wormhole, as well as others, have already committed to making use of CCTP in the future. It is anticipated that the new protocol will get widespread adoption as a result of this support, which will further reduce the need for USDC bridges and facilitate the use of the token across other networks.

In the realm of decentralized finance (DeFi), the introduction of Circle’s new Cross-Chain Transfer Protocol represents an important step forward overall. This demonstrates both the rising desire for smooth interoperability across multiple blockchain networks as well as the willingness of prominent companies in the industry to cooperate in order to enhance the user experience for everyone. The future of DeFi is expected to become more linked and available to a larger audience as the number of projects that embrace cross-chain protocols like CCTP increases.

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Ethereum Network’s Gas Fees Skyrocket Amid Memecoin Frenzy

The Ethereum network has been experiencing a surge in gas fees due to the ongoing memecoin frenzy. As a result, the network’s daily revenue has skyrocketed and has even surpassed that of Bitcoin. However, while some Ethereum proponents celebrate the growing revenue, many others are concerned about the network’s growing congestion and the difficulty in processing transactions.

According to recent reports, there has been an unusual shift in the top 10 gas-burning altcoins. Instead of the usual suspects like ETH, WETH, and USDT, memecoins such as TROLL, APED, and BOBO have become the top 10 spenders. The average gas price for Ethereum transactions as of April 20 was 81.94 gwei, which is a significant increase from 60.82 gwei on April 19 and 44.42 gwei last year.

Independent Ethereum educator Anthony Sassano noted the surge in daily fee revenue of the Ethereum network and pointed out that the network had brought in 28 times the revenue of Bitcoin. He also mentioned Ethereum layer-2 platforms like Arbitrum One that have outperformed the BTC network in terms of daily revenue due to the ongoing meme frenzy.

Ethereum proponents argue that the high gas fee and subsequent higher revenue highlight the network’s growing usability. However, many on Crypto Twitter were quick to point out that the extensive usage they are referring to is just a few thousand users gambling on memecoins. Some users have even paid gas fees as high as a few hundred dollars, while others complained about having to pay a higher gas fee than the actual transaction.

The soaring gas fees were also blamed on a Maximal Extractable Value (MEV) trading bot that is front-running memecoin trades on a massive scale. The bot in question, jaredfromsubway.eth, has been the top gas spender in the last 24 hours, spending 455 ETH ($950,000) and using 7% of the total gas of the network. In the last two months, it has spent more than 3,720 ETH ($7 million) in gas fees and performed more than 180,000 transactions. The Subway-themed bot is using the sandwich trading technique to pocket millions of dollars while congesting the network at the same time.

This situation highlights the need for Ethereum to address its scalability issues and find a long-term solution to address the increasing demand for memecoin trading. The current frenzy may be beneficial for short-term revenue, but it is also causing significant congestion and higher fees for users. The Ethereum network needs to find a balance between profitability and usability to ensure the long-term sustainability of the network.

In conclusion, the growing memecoin frenzy has caused Ethereum’s gas fees to skyrocket and has resulted in a surge of revenue for the network. However, it has also highlighted the growing congestion and difficulty in processing transactions. The Ethereum network needs to find a long-term solution to address its scalability issues and find a balance between profitability and usability to ensure its long-term sustainability.

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1inch Joins Ethereum’s zkSync Era for Faster DeFi Transactions

Decentralized finance (DeFi) protocol 1inch has recently made an important move to join Ethereum’s scaling solution, the zkSync Era. By deploying its aggregation and limit order protocols on zkSync, 1inch aims to tap into faster and cheaper transactions that the layer-2 scaling solution offers.

The integration of 1inch on zkSync is expected to improve the protocol’s performance and enable users to perform more DeFi transactions with greater efficiency. With the soaring demand for DeFi solutions, 1inch seeks to ensure that its users can continue to enjoy seamless and uninterrupted services while also reducing transaction fees.

1inch is just the latest Ethereum-based platform to join the zkSync Era. Other notable DeFi protocols that have already deployed on the zero-knowledge proof (zk-proof) based scaling platform include Uniswap, SushiSwap, Maker, and Curve Finance.

The adoption of zkSync by a growing number of DeFi protocols underscores the importance of layer-2 scaling solutions in addressing the scalability issues faced by the Ethereum network. As a result of its growing popularity, zkSync has emerged as one of the most promising scaling solutions for Ethereum, offering faster and more cost-effective transactions than the Ethereum mainnet.

For those unfamiliar with zkSync, it is a scaling solution based on zk-proof technology that allows Ethereum to process transactions off-chain while still maintaining the same level of security and decentralization as the mainnet. With zkSync, users can perform transactions at a fraction of the cost and at a much faster speed than what is currently possible on the Ethereum mainnet.

By deploying on zkSync, 1inch is positioning itself to better serve its users and tap into the full potential of DeFi. With faster and cheaper transactions, 1inch aims to provide its users with a seamless and efficient experience, while also attracting more users to the platform.

In conclusion, the integration of 1inch on Ethereum’s zkSync Era represents a major milestone for the DeFi ecosystem. With the growing adoption of layer-2 scaling solutions, the future of DeFi looks promising, as more users are expected to flock to these platforms, further driving innovation and growth in the DeFi space.

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Ethereum staking volume surpasses withdrawal volume post-Shapella upgrade

The Ethereum blockchain underwent a critical Shapella upgrade on April 12, marking a milestone in the history of the blockchain. The upgrade enabled validators to withdraw their staked Ether (ETH) from the Beacon Chain after three years, opening up the possibility of mass selling. However, the latest data suggests that most validators are choosing to restake their unlocked Ether, contributing to an increase in staked ETH volume.

According to the on-chain analytics firm Nansen, as of April 17, the ETH staking volume of 124,000 ETH exceeded the withdrawal volume of 64,800 ETH for the first time since the Shapella upgrade. In the last 24 hours, the amount of staked ETH was 94,968 against 27,076 in withdrawals. Notably, the first round of withdrawals primarily consisted of partial withdrawals from Lido and old validators, and it takes approximately three days to get into the withdrawal queue.

The Shapella upgrade was a make-or-break situation for the Ethereum blockchain, with millions in unlocked ETH posing a risk of mass selling. However, the data shows that the majority of validators are choosing to restake their unlocked Ether. Crypto exchange Binance is set to open withdrawals on April 19, which could lead to further changes in staked and withdrawal volumes.

Out of the 1 million withdrawn ETH, three addresses restaked a total of 19,844 ETH, suggesting that validators are actively choosing to remain invested in the blockchain. Three addresses transferred ETH to centralized exchanges (CEXs) after withdrawal, with 71,444 ETH sent to different exchanges. Other whales did the same, with some sending it to Huobi staking addresses and a few others to CEXs, according to data shared by Lookonchain.

While some validators, like Kraken, had to exit to comply with a United States Securities and Exchange Commission ruling, the majority of early withdrawals are staking rewards. Currently, 22,231 validators have signed up for a complete exit out of 574,624, while 910,930 ETH of the 18.6 million staked ETH is slated to be withdrawn.

One of the reasons for the decrease in withdrawals could be attributed to the current price of ETH. The average price of staked ETH is about $2,137, which suggests that validators are choosing to hold their assets rather than selling them at current prices.

In conclusion, the Shapella upgrade has been a success for the Ethereum blockchain, with the majority of validators choosing to remain invested in the platform. While some early withdrawals were staking rewards, the majority of validators are restaking their unlocked Ether, which has contributed to an increase in staked ETH volume. As the situation continues to evolve, it will be interesting to see how the balance between staked and withdrawn ETH evolves over time.

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Ethereum Layer 2s See Surge in Popularity in Q1 2023

Ethereum layer 2 networks, including Optimism, Arbitrum, and Polygon, saw a surge in popularity in Q1 2023, according to a report from Web3 development platform Alchemy. The report, titled “Web3 Development Report,” cites data from Dune Analytics and shows that Ethereum users bridged over $635,000 worth of crypto assets to these networks from January to March, a significant increase of 44% over the fourth quarter of 2022 and 518% over the first quarter of 2022.

The growth in bridged assets may have been driven by successful airdrops from Optimism and Arbitrum in Q1 2023, as suggested by the Alchemy report. Additionally, layer 2s saw greater activity from developers, with the deployment of smart contracts related to layer 2s increasing by 160% compared to Q1 2022, despite a 30% decrease from Q4 2022.

Layer 2s have been offered as a solution to Ethereum’s scalability problem, which has been causing high gas fees since as early as 2020. By enabling more transactions to be processed off the main Ethereum network, layer 2s can significantly reduce the fees required to interact with the blockchain. As a result, users are increasingly turning to these new scalability solutions.

This trend is reflected in the broader Ethereum ecosystem, with increased developer interest observed in Q1 2023. According to the Alchemy report, Ethereum software development kits (SDKs) such as Ethers.js, Web3.js, Hardhat, and Web3.py were downloaded 1.9 million times in the first quarter of 2023, an 8% increase from Q1 2022. Downloads of the MetaMask SDK, a tool used to develop apps that can interact with Ethereum wallet MetaMask, also increased in each month of the first quarter.

The crypto industry is coming off the back of a steep downturn in trading volume and crypto prices during 2022, with scandals like the UST depegging and FTX collapse causing many investors to shy away. However, despite this negative sentiment, users still flocked to these new scalability solutions.

While layer 2s have proven to be a useful tool for improving Ethereum’s scalability, some experts have argued that sharding the Ethereum network will also help to cut down on gas fees. Sharding involves breaking up the Ethereum network into smaller, more manageable pieces, allowing for more parallel processing of transactions. Ultimately, a combination of solutions will likely be necessary to address Ethereum’s scalability challenges and keep up with growing demand.

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Ethereum Beacon Chain Sees Over $2 Billion Worth of ETH Withdrawn in Four Days

Ethereum’s Beacon Chain has been making headlines as over 1 million ETH worth $2.1 billion has been withdrawn from it in the first four days of the Shapella hard fork. This has resulted in Ether’s price rising above $2,100 for the first time in 11 months. According to data from beaconcha.in, the withdrawals have come from 473,7000 withdrawal requests, with Saturday, April 15, marking the largest withdrawal day at 392,800 ETH.

As of now, nearly 87% or 469,000 out of 540,000 active validators are able to withdraw their staked Ether. The Shapella hard fork has been a topic of debate within the Ethereum community as many were uncertain about its impact on ETH’s price. However, the first four days have produced close to a 10% rise, indicating that the hard fork has been beneficial for Ether’s price.

According to experts, much of the stake that has been withdrawn over the last few days is actually going straight back into the Beacon Chain as validators are looking to compound their interest. So much so that net stake is currently increasing. This means that the withdrawn stake is being reinvested in the Beacon Chain to earn interest on it, rather than being sold off in the market.

The current macroeconomic climate has also played a role in the withdrawals. Many early stakers wanted to liquidate their stake after waiting nearly 30 months for some. The withdrawals have allowed them to finally reap the benefits of their investments. The reinvestment of the withdrawn stake in the Beacon Chain also indicates that investors are confident in the platform’s future and are looking to earn long-term returns.

The Beacon Chain is an important component of Ethereum’s transition to a Proof of Stake (PoS) consensus algorithm. It is currently running parallel to the existing Proof of Work (PoW) chain and will eventually replace it. The PoS algorithm is expected to reduce the energy consumption required for mining and increase the efficiency of the network. With the success of the Beacon Chain withdrawals, the transition to PoS is looking more promising than ever before.

In conclusion, the Beacon Chain’s recent success with over $2 billion worth of ETH withdrawn in just four days is a positive sign for Ethereum’s future. The reinvestment of the withdrawn stake in the platform is a strong indication of investor confidence in the long-term potential of the network. The transition to a PoS consensus algorithm is also looking more promising than ever before, and with the current macroeconomic climate, the future looks bright for Ethereum.

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Shapella Upgrade, Privacy Concerns, Hacks, and Financial Inclusion

The DeFi space had a busy week with several significant developments. The highly anticipated Shapella upgrade on Ethereum’s mainnet was successfully completed, allowing validators to withdraw their staked Ether after three years. However, only 253 validators have signed up to fully exit their staked Ether position, with analytics firm Glassnode predicting that less than 1% of the staked ETH will be withdrawn.

In addition to the Shapella upgrade, an Ethereum researcher revealed that staking Ether could become a privacy concern. The researcher found that staking Ether shows a user’s IP address information, which could lead to privacy issues. This discovery raised concerns within the cryptocurrency community.

A DeFi hack also occurred during the week, where a hacker exploited an old Yearn.finance contract and minted 1 quadrillion Yearn Tether (yUSDT). The hacker then swapped the yUSDT to other stablecoins, allowing them to take hold of $11.6 million worth of stablecoins.

However, the week also had positive news regarding financial inclusion in Africa. Fonbnk, a Web3 on-ramp that allows Africans to obtain cryptocurrency assets by exchanging their airtime credits, partnered with Tanda, a merchant network platform in East Africa, to launch an airtime trading marketplace across Tanda’s network of agents. This partnership aims to increase liquidity and earning opportunities for African micro-entrepreneurs.

Finally, the top 100 DeFi tokens had a bullish week, thanks to a late surge in the crypto market after Ethereum’s much-awaited upgrade. Most DeFi tokens traded in the green along with the rest of the market.

In conclusion, the DeFi space had a busy week with several significant developments, including the successful Shapella upgrade, privacy concerns related to staking, a major DeFi hack, and a partnership to increase financial inclusion in Africa. The top 100 DeFi tokens had a bullish week, and Glassnode predicted only a small percentage of staked ETH would be withdrawn.

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