It’s Friday! In today’s Daily, the Ethereum Foundation is set to release its financial report amid community criticism over its spending, Japan’s three megabanks plan to pilot stablecoins, and the US spot Bitcoin ETF continues to bleed.
Meanwhile, former SEC Chairman Jay Clayton said in the latest episode of The Scoop podcast that the crypto industry is “evolving the infrastructure of the U.S. market.”
Let’s get started.
Ethereum Foundation Releases Financial Report Amid Community Criticism Over Spending
According to researcher Justin Drake, the Ethereum Foundation plans to release its financial report “relatively soon” to address community concerns about spending.
- In an AMA session on the r/ethereum subreddit, Drake said that according to his “limited personal understanding,” the foundation spends around $100 million annually and currently holds around $650 million in its main Ethereum wallet.
- Drake added that the Ethereum Foundation could have financial stability for about 10 years, depending on the price of Ethereum.
- “The current rough budget strategy is to spend 15% of the remaining money each year,” Ethereum co-founder Vitalik Buterin said in a separate comment on the subreddit. “This implies a basic path where EF will last forever, but get smaller and smaller (as part of the ecosystem) over time.”
- Community members have been strongly criticizing the Ethereum Foundation over the recent unexplained massive Ether transfers that have occurred in recent weeks, and have called on the foundation to provide greater transparency.
- Last month, blockchain analytics provider Lookonchain reported that the foundation had transferred 35,000 ETH ($94 million) to the Kraken cryptocurrency exchange.
- The Ethereum Foundation’s budget management includes grants and salaries, and going forward, Ether will be sold gradually and systematically, said Aya Miyaguchi, executive director of the Ethereum Foundation.
Japan’s Big Bank Plans to Test Stablecoin
Japan’s three largest banks, MUFG, SMBC, and Mizuho, are set to test a cross-border stablecoin transfer platform called “Project Pax,” with other global banks expected to join.
- The pilot program, run by cryptocurrency companies Progmat, Datachain, and TOKI, aims to provide faster international payments to businesses using blockchain technology.
- Project Pax will leverage stablecoins issued through Progmat, instruct banks to use Progmat’s blockchain network, and use SWIFT’s existing API framework to address compliance challenges.
- The project aims to commercialize the platform by 2025 and launch stablecoins denominated in JPY, USD, and EUR that can be used domestically and internationally.
US Spot Bitcoin ETF Continues to Fall
U.S. spot Bitcoin ETFs saw a net outflow of $211.1 million on Thursday, marking the seventh straight day of losses of more than $1 billion.
- Fidelity’s FBTC had the largest net outflow among the funds, at $149.5 million, followed by Bitwise’s BITB with $30 million.
- Grayscale’s GBTC and BTC Mini Trust products also saw net outflows of $23.2 million and $8.4 million respectively, while the remaining ETFs saw no inflows at all.
- Meanwhile, spot Ethereum ETFs saw relatively little movement on Thursday, with only Grayscale’s ETHE recording a net outflow of $7.4 million, nearly offset by the ETH Mini Trust, which saw only net inflows of $7.2 million.
- VanEck, the issuer of a spot Ethereum ETF, also announced on Thursday that it plans to shut down its Ethereum futures ETF, EFUT.
Cryptocurrency micropayments are key to avoiding AI financial economic bottlenecks
Gautam Chhugani, an analyst at Bernstein, argues that micropayments via cryptocurrencies are needed to avoid financial bottlenecks in the new AI economy.
- He said existing financial systems are ill-suited to AI consumption patterns, due to their identity verification requirements and inability to handle small payments, compared to crypto solutions for seamless payments (such as streaming money for data or content).
- Addingon sees stablecoins as the biggest opportunity to build a permissionless AI economy and provide fast, global digital payments for machine-to-machine transactions.
- He added that integrating cryptocurrency wallets into AI systems could allow AI agents to autonomously manage financial transactions, which could open up new commercial applications for stablecoins.
Telegram CEO Pavel Durov Says He’s ‘Ready to Leave Incompatible Markets’ After Arrest in France
Telegram CEO Pavel Durov said the platform is ready to leave a market it finds incompatible with the popular messaging app’s principles, emphasizing the company’s commitment to prioritizing privacy over profits.
- Durov has recently criticized the French government for its indictment of a cybercrime operation allegedly carried out using the platform’s encryption tools and services.
- Telegram, which is closely tied to TON’s blockchain, generates significant revenue from cryptocurrency-related activities, and currently holds $400 million worth of digital assets in 2023.
Looking forward to next week
- US CPI inflation data and UK GDP figures are released on Wednesday. The latest ECB rate decision, US PPI figures and US jobless claims are released on Thursday.
- Korea Blockchain Week and ETH Warsaw 2024 wrap up over the weekend, with ETHSafari taking place in Kenya.
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