Crypto Biz: Bitcoin‘s institutional flow looms, Coinbase’s debt round, and more

This week‘s Crypto Biz covers the buzz surrounding Bitcoin, the outlook for Ether ETFs, Ubisoft as an XPLA validator, Coinbase’s challenges and global banks taking on blockchain.

Asset managers expect inflows into Bitcoin (BTC) exchange-traded funds (ETFs) to accelerate further in the second half of 2024. Bitwise, for instance, has been involved in “serious due diligence” discussions with institutions representing “trillions of dollars in assets” seeking to add or increase exposure to Bitcoin ETFs in the coming months.

Matt Hougan, Bitwises chief investment officer, said in a memo to investors that many individual investors, family offices, hedge funds and venture capital firms are poised to increase their stakes in spot Bitcoin ETFs by the end of June.

Overseas investors are also interested in investing in Bitcoin ETFs. Thailand‘s Securities and Exchange Commission reportedly amended its rules to allow private funds to invest in spot Bitcoin ETFs traded on United States exchanges. Brazil made a similar move weeks ago, enabling investors to invest in BlackRock’s ETF through depositary receipts.

All the Bitcoin hype, however, may not be enough to shore up Coinbases cash flow. The exchange plans to raise $1 billion through senior convertible notes to repay previous debt issuances.

Along with the buzz surrounding Bitcoin, this week‘s Crypto Biz explores the outlook for Ether (ETH) ETFs, Ubisoft as an XPLA validator, Coinbase’s challenges and global banks taking on blockchain.

SEC radio silence on Ethereum ETF ‘not a good sign’ — Bloomberg analyst

A lack of communication from the U.S. Securities and Exchange Commission (SEC) around Ether ETFs toward issuers could be a bad sign for those hoping for Ether ETF approvals by May. Speaking to Cointelegraph, Bloomberg ETF analyst Eric Balchunas said there were more than a few reasons he‘s now downgraded the chances of Ether ETF approval to just 35%. According to the analyst, proposers are less than 70 days from the final deadline, and there has been no contact or comments from the SEC yet. “That’s not a good sign,” Balchunas said. In addition, Balchunas said Gary Genslers stance on Ether could also be a factor, arguing that Gensler still views Ether as a security.

Balchunas pegs the likelihood of an ETH ETF approval by May at 35%. Source: Eric Balchunas on XUbisoft is now a validator on the XPLA blockchain

Ubisoft, the maker of several hit gaming franchises — including Assassin‘s Creed and Far Cry — has joined the XPLA blockchain as a node validator. According to a press release from XPLA, Ubisoft will “actively participate in governance proposal decisions” as part of the partnership. France-based Ubisoft is among the world’s largest gaming companies. Its games have sold a combined of around 800 million titles. With a market capitalization of nearly $2.75 billion, it‘s the second largest in Europe, behind only Poland’s CD Projekt Red ($2.99 billion). Some of the most popular intellectual properties with games on the XPLA blockchain include The Walking Dead: All-Stars and Summoners War: Chronicles.

Coinbase shares dip after-hours as exchange plans $1 billion convertible notes offer

Crypto exchange Coinbase plans to raise $1 billion from senior convertible notes to repay debts and for “general corporate purposes.” The notes will only be privately offered to eligible institutional buyers and must be repaid by April 1, 2030, unless earlier repurchased, redeemed or converted, the firm said in a March 12 blog post. The notes are senior to common stock as holders have priority should bankruptcy or liquidation occur. Coinbase said it intends to use the proceeds to repay at maturity its own outstanding convertible senior notes due in 2026, 2028 and 2031. The three notes have respective interests of 0.50%, 3.375% and 3.625%.

Global banks participate in large-scale blockchain pilot test

Major financial institutions, including Goldman Sachs, BNY Mellon and Cboe Global Markets, have completed a large-scale pilot test using blockchain technology. Institutional investors executed over 350 simulated transactions via distributed ledger technology in areas such as tokenized assets, fund registry, digital cash, repo, securities lending and margin management on the Canton network, which was launched in May 2023 by startup Digital Asset Holdings. The pilot test included 15 asset managers, 13 banks, four custodians, three exchanges and the stablecoin issuer Paxos Trust.

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