CCIP's Quantum Leap in Asset Link(age) and Kraken's Euro Push Amid ETF Limbo

Week in Review


CCIP's Quantum Leap in Asset Link(age) and Kraken's Euro Push Amid ETF Limbo


Week in Review

  • Chainlink Cross-Chain Interoperability Protocol (CCIP) went live on Base
  • Kraken obtained EU E-Money Licence and VASP registration in Spain
  • Laser Digital received in-principal approval from Abu Dhabi

SEC ETF saga: Bitcoin spot takes pause, ether futures’ optimism soars

The majority of crypto assets traded in the red this week, resulting in a total market capitalization decline of 2.4%, and bitcoin's dominance slipped below 49%. Among the major cryptocurrencies, bitcoin dropped 2.9% week on week, while ether outperformed bitcoin with a weekly decline of 1.6%. Despite the lack of significant market catalysts, bitcoin has held up surprisingly well amidst macroeconomic concerns. Despite rising interest rates this year, bitcoin has gained over 50% year to date, compared to the S&P 500's 11.8% increase.

The US Securities and Exchange Commission (SEC) is currently reviewing applications for spot crypto exchange-traded funds (ETFs) from Franklin Templeton and Hashdex, while also announcing delays in the approval decisions for VanEck's and ARK's ether ETF applications. Franklin Templeton has filed for a bitcoin spot ETF, and Hashdex has submitted an application for a ether spot ETF, according to SEC filings. The SEC has consistently extended its decision timelines, making use of the full 240 days available. Originally, a decision on a group of ETF applications, including those from BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie Digital Assets, was anticipated in mid-October.

While the approval of a bitcoin spot ETF remains uncertain, there's a growing sense of optimism in the market regarding the approval of ether futures-based ETFs. Eric Balchunas, a senior ETF analyst at Bloomberg, has indicated that the SEC may be inclined to expedite the launch of ether futures ETFs before a potential shutdown. He tweeted that the SEC has asked the applicants to update their documents by the end of the week (US time). Balchunas predicts that the likelihood of approval for an ether futures-derived ETF is now over 90%, with nearly a dozen institutions awaiting approval.

CCIP's quantum leap: Elevating asset link(ing) in blockchain

The decentralized oracle network Chainlink (LINK) continued its upward trajectory, recording a weekly gain of 10.6%. This surge in network activity can be attributed to the growing adoption of the Cross-Chain Interoperability Protocol (CCIP) by both DeFi developers and traditional financial institutions. Chainlink recently expanded CCIP's reach to Base, an Ethereum layer-2 network backed by Coinbase, with the aim of facilitating seamless communication between various blockchains and traditional Web2 applications. Chainlink also serves as a primary oracle for the Base network.

In July, CCIP was launched on Mainnet Early Access, with prominent DeFi players like Synthetix and Aave being early adopters. In August, Chainlink price feeds were integrated into Base, granting Base developers access to industry-standard Chainlink data feeds and other Web3 services. Several projects, including Raft, Nuon, Folks Finance, and Polychain Monsters, have already begun incorporating CCIP into Base, resulting in the protocol generating over $86,000 in revenue since its July launch. Additionally, Swift, in collaboration with Chainlink and more than a dozen financial institutions and financial market infrastructure providers, conducted a series of experiments demonstrating the smooth transfer of tokenized value across multiple public and private blockchains using Swift's infrastructure.

The Curve DAO Token (CRV) has demonstrated remarkable strength, surging by an impressive +17.6% this week, outpacing its DeFi counterparts. In a strategic move, Curve founder Michael Egorov deposited 68 million CRV tokens, equivalent to $35 million, to fully settle his debt position on the DeFi lending platform Aave earlier this week. This action followed Egorov's earlier move in August, where he raised $42 million through over-the-counter (OTC) sales of CRV tokens to address $80 million in on-chain debt. This proactive approach helped safeguard Egorov's CRV positions from potential liquidation during a market downturn, a scenario that could have had cascading effects due to a lack of liquidity. At the time of writing, Egorov held 253.67 million CRV tokens, valued at approximately $132.52 million, as collateral, while owing $42 million across four different DeFi lenders, as reported by Debank.

The sound of progress: MoneyGram's Stellar wallet, Kraken's Euro push and Laser Digital's Middle East momentum

MoneyGram, a fintech company, has announced its intention to introduce a non-custodial digital wallet in the first quarter of 2024. In 2022, MoneyGram pioneered an innovative global fiat on and off-ramp service for digital wallets, aimed at enhancing the usability of digital assets by establishing a connection between traditional fiat currencies and digital counterparts. Since its initial launch, this service has expanded to encompass eight digital wallets operating on the Stellar blockchain, offering consumers the capability to withdraw funds in over 180 countries and deposit funds in more than 30 countries worldwide. The upcoming MoneyGram non-custodial digital wallet, which will be available with zero fees until June 2024, will utilize the Stellar network and integrate with MoneyGram's fiat on and off-ramp services, developed in collaboration with Cheesecake Labs.

Crypto exchange Kraken has announced its receipt of authorization from the Central Bank of Ireland as an E-Money Institution (EMI). Additionally, Kraken has successfully registered with the Bank of Spain as a Virtual Asset Service Provider (VASP). The EMI license, granted to Kraken's subsidiary in Ireland, allows the exchange to expand its EUR fiat services in collaboration with European banks, serving clients across the 27 European Union (EU) member states and European Economic Area (EEA) countries. In Spain, Kraken's new VASP registration permits it to provide cryptocurrency exchange and custodial wallet services to Spanish residents, following similar registrations in Ireland and Italy.

The Abu Dhabi Global Market (ADGM) has granted Laser Digital, the digital assets division of Japan's Nomura Bank, preliminary approval to offer broker-dealer services and asset/fund management services for both digital and traditional assets. This approval in Abu Dhabi follows Laser Digital's recent acquisition of an operating license from Dubai's Virtual Asset Regulatory Authority (VARA), marking another milestone in the company's expansion into the Middle East. 

Macro pulse 

Among TradFi assets, US Equities fell 2.9% vs. the previous week with investors still wrestling with prospects for a long period of high interest rates and the economic fallout. The US Dollar index rallied 1.1%, the 10-year US treasury yields rose 21 bps, while the Gold & Silver index plummeted 9.2% week on week. Oil futures surged 4.7% week on week, printing a fresh one-year high this week as US storage hub crude stockpiles reached their lowest levels since July 2022.

*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on September 28, 2023 

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