ARK Pulls Spot Ether ETF Bid as Miners Adjust Post-Halving

Investment firm 21Shares submitted a late-day filing to the Securities and Exchange Commission (SEC) on Friday, May 31, to rename its proposed spot Ether (ETH) exchange-traded fund (ETF) and to exclude ARK Invest from the proposal. A representative from ARK Invest later confirmed that the company chose not to proceed with the crypto product. This decision was driven by the need to reassess their investment strategy. The move has raised some eyebrows within the crypto community, fueling doubts about the short-term viability of these newly approved ETFs.

During an interview on June 5, Gary Gensler, Chair of the SEC, hinted at a potential delay in the final approvals for asset managers. Gensler mentioned that ETFs would “take some time” before getting the green light. The regulatory body has yet to finalize the S-1 registration statements from various applicants. Despite this, ARK Invest and 21Shares will continue to collaborate on their spot Bitcoin (BTC) ETF, which launched back in January.

This week’s Crypto Biz news also unwraps details about Galaxy Digital’s tokenized loan for Animoca Brands, Avail’s successful fundraising, Polygon Labs’ acquisition of Toposware, and the first post-halving reports from Bitcoin miners.

In an innovative move, Michael Novogratz’s Galaxy Digital and Yat Siu, co-founder of Animoca Brands, have tokenized a Stradivarius violin from 1708, utilizing it as collateral for a multimillion-dollar loan. On June 4, Galaxy extended an undisclosed sum to Siu, who provided the centuries-old violin he owns as collateral. The digital assets firm transformed the violin into a nonfungible token (NFT) and will retain both the NFT and the physical violin until the loan is settled. Remarkably, the violin used to belong to the Russian Empress Catherine the Great.

On another front, Polygon Labs has acquired Toposware, a blockchain research and engineering company, marking their third zero-knowledge (ZK) startup investment in just three years. Toposware has been collaborating with Polygon to develop the Type 1 Prover, which allows Ethereum-compatible blockchains to use zero-knowledge proofs with minimal changes. The acquisition adds 11 Toposware engineers to Polygon’s ZK teams and elevates Polygon’s total ZK technology investment to exceed $1 billion. This includes their previous $650 million acquisitions of Mir and Hermez in 2021.

In the world of Bitcoin mining, Riot Platforms experienced a 43% drop in Bitcoin production in May, generating only 215 BTC despite expanding its operations. This decline is a direct consequence of the Bitcoin halving event, which reduced mining rewards to 3.125 BTC. Riot had anticipated this and upgraded its infrastructure to retain production levels, opening a new facility in Corsicana, Texas, which added 3.1 exahashes per second to its mining capability. This represents a 17% increase from the previous month. Marathon Digital adjusted its operations following the halving, selling 63% of its BTC production in May.

Avail, a modular blockchain base layer, has recently completed a $43 million Series A funding round, which was oversubscribed. The round saw participation from numerous venture capital firms and angel investors, including Altos Ventures, Alliance DAO, Hashkey, Elixir Capital, Spark Digital Capital, and RW3 Ventures, among others. In total, Avail has raised $75 million across various funding rounds. Arjun, a co-founder of Polygon, leads Avail with the objective of tackling significant challenges in the Web3 ecosystem, such as blockchain fragmentation, inadequate data availability, and limited scalability.

Franklin Templeton’s CEO, Jenny Johnson, believes that we are still in the infancy of the Bitcoin investment cycle. She opines that substantial institutional money has yet to be fully invested in this burgeoning asset class. This perspective suggests that significant growth potential remains for Bitcoin and other cryptocurrencies as more institutional investors begin to participate.

The crypto space continues to develop rapidly, marked by innovative financial instruments, strategic partnerships, and substantial investments. The evolving landscape signals both opportunities and challenges, as regulatory bodies and market participants navigate this dynamic environment. Whether through innovative loan mechanisms, significant acquisitions, or the evolving nature of blockchain technology, it’s clear that the crypto market is here to stay and is continuously evolving.