Author: Kristen Moran

Analysts anticipate significant growth for Bitcoin exchange-traded funds (ETFs) in Hong Kong, driven by the adoption of the in-kind creation model, which gives them a notable advantage over their US counterparts.

Eric Balchunas, a senior ETF analyst at Bloomberg, highlights Hong Kong’s adoption of the in-kind creation model as a potential catalyst for boosting assets under management (AUM) and trading volume for ETF products in the region. This view is supported by research from Bloomberg ETF analyst Rebecca Sin, who sees the in-kind model as an “opportunity for the market.”

Sin elaborates on the difference between the US and Hong Kong approaches, noting that while the US relies on cash transactions for Bitcoin ETF creation (cash in, Bitcoin ETF out), Hong Kong aims for Bitcoin-based creation (Bitcoin in, ETF out), presenting a unique opportunity for the market.

Earlier this year, Hong Kong authorities signaled their readiness to accept applications for spot crypto ETFs, with plans to introduce these financial products by mid-year. Several entities, including Harvest Hong Kong, have since filed applications to launch spot Bitcoin ETFs.

The in-kind creation model favored by Hong Kong contrasts sharply with the cash-creation model favored by US authorities. With in-kind redemptions, ETF issuers can exchange the fund’s underlying assets, such as Bitcoin, with market makers instead of transacting in cash during share creation and redemption. This mechanism allows ETFs to issue creation units without immediately selling the securities for cash.

In contrast, the cash redemptions required by the US SEC mandate fund managers to sell Bitcoin to provide cash for redeeming shareholders. Notably, BlackRock, one of the Bitcoin ETF issuers, has raised concerns about this method, citing challenges in maintaining share prices aligned with Bitcoin’s actual value.

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Worldcoin, the project known for its “proof of personhood” concept where individuals receive cryptocurrency tokens after having their irises scanned to verify their humanity, has faced a setback in Europe. A regulator in Portugal has directed the project to halt its biometric data collection efforts.

According to a report from Reuters, the Portugal data regulator, CNPD, has instructed Worldcoin to suspend its collection of personal data for 90 days. This directive follows a similar ban imposed on the project in Spain last month. The CNPD cited a high risk to citizens’ data protection rights as the rationale for urgent intervention to prevent potential harm. The report notes that over 300,000 individuals in Portugal have provided their biometric data to Worldcoin.

In response to the regulatory action, Tools for Humanity, the lead software contributor to the Worldcoin project, emphasized that the initiative adheres to all relevant laws and regulations governing the collection and transfer of biometric data. Jannick Preiwisch, the data protection officer at Worldcoin Foundation, reiterated the project’s commitment to complying with data protection authorities and expressed willingness to address any reported concerns, including those related to underage sign-ups in Portugal.

In an attempt to address privacy concerns and enhance user control over personal data, Worldcoin recently introduced “Personal Custody,” a new process that eliminates the storage and encryption of individuals’ biometric data. Previously, users had the option to allow Worldcoin to store their data. Tiago Sada, an executive at Tools for Humanity, highlighted that the updated approach grants users greater autonomy over their data, offering reassurance by reducing the need to place trust in external entities.

Worldcoin’s unique model rewards individuals with cryptocurrency tokens, known as WLD tokens, upon undergoing iris scanning to establish a World ID. According to the project’s website, Worldcoin has garnered participation from over 4.5 million individuals across 120 countries.

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According to analysts at Bernstein, BlackRock’s upcoming tokenized fund launch is poised to bring significant legitimacy to public smart contract chains, particularly Ethereum. The announcement of BlackRock’s BUIDL tokenized private equity fund earlier this month marks a significant move into digital assets by the world’s largest asset manager, following the launch of a spot bitcoin ETF.

The analysts at Bernstein suggest that BlackRock’s decision to utilize the public Ethereum blockchain instead of private chains, such as JPMorgan’s Onyx, expands interoperability and programmability within the space. This move is seen as a departure from the perception of public chains solely as “retail casinos.”

The analysts further elaborate that tokenized fund redemption could be facilitated on-chain with the integration of stablecoins like USDC. Additionally, the introduction of new asset classes such as bonds, equities, and foreign exchange stablecoins could lead to increased interoperability between asset classes on-chain, allowing for further programmability based on deal contract conditions. This development is seen as a significant step in utilizing blockchain technology for institutional utility rather than just retail speculation.

BlackRock’s tokenized fund, named the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), was revealed in a U.S. Securities and Exchange Commission filing. The fund will invest in U.S. Treasury bills, repurchase agreements, and cash, although a specific launch date was not provided. Securitize will act as the tokenization platform, with ecosystem partners such as Anchorage, Coinbase, BitGo, Fireblocks, and BNY Mellon facilitating custody, settlement, and interoperability with traditional markets.

Bernstein’s analysts argue that BlackRock’s collaboration with partners from both traditional and crypto worlds will encourage more traditional institutional customers to adopt on-chain funds, resulting in reduced friction. This move is expected to provide institutional holders with benefits such as 24/7 instant settlement, increased transparency, improved capital efficiency, and reduced operating costs.

Furthermore, Bernstein suggests that tokenized funds could become a new growth category for asset managers, evolving from simple investment via ETFs to building on-chain products as a commercial revenue and cost-saving opportunity.

The analysts conclude that tokenization represents the next evolution of financial markets, akin to the ETF wave of the last two decades. They have also raised their year-end bitcoin price target to $90,000, anticipating a “mild” halving impact on miners.

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Tether, the entity responsible for the world’s largest stablecoin USDT, has disclosed its strategic foray into the domain of artificial intelligence, as per the company’s announcement on March 26. With a market capitalization reaching $104 billion, Tether is aiming to spearhead the development of open-source, multimodal AI models and integrate AI solutions into market-driven offerings.

This initiative emerges amidst mounting apprehensions regarding the monopolization of AI technologies by tech giants such as Microsoft, Facebook, and Google. Tether Data, a newly established subsidiary of Tether, is positioning itself as an advocate for transparency and privacy in AI model development. The company is delineating its focus into three primary domains: advancing open-source AI models, fostering collaborations for AI integration into various products, and engaging with the broader ecosystem through community participation.

Tether Data’s expansion into the realm of AI signifies a significant stride for the company, which has a track record of strategic investments across diverse sectors including renewable peer-to-peer telecommunications, energy, and bitcoin mining.

Paolo Ardoino, CEO of Tether, remarked in the announcement, “Artificial intelligence stands poised to revolutionize nearly every facet of our lives, both in the real and digital worlds. Today’s announcement establishes a new division within Tether, redefining AI boundaries and democratizing privacy-preserving open AI technology while setting industry benchmarks for innovation, utility, and transparency.”

As part of its AI venture, Tether Data has initiated a global recruitment campaign to attract top-tier talent to its burgeoning AI division. The company is extending invitations to proficient individuals passionate about AI to explore career opportunities through its dedicated careers page.

The implications of Tether’s entry into the AI arena are profound for the cryptocurrency industry. As a frontrunner in this space, Tether’s emphasis on open-source, transparent, and privacy-preserving AI models could establish new paradigms for the development and deployment of AI technologies. Furthermore, the integration of AI solutions into market-driven products may foster innovation and enhance efficiency within the digital assets market.

While AI continues its rapid advancement, concerns surrounding bias, accountability, and ethical usage remain prevalent. Tether Data’s commitment to open-source solutions could serve to address these concerns as it progresses with the development and integration of AI models into various products. Elon Musk’s recent legal action against Open AI over its closed-sourced models, followed by his subsequent open-sourcing of the ‘Grok’ model, underscores the significance of open-source initiatives in the AI landscape. Tether’s entry into this arena could further amplify the momentum of open-source endeavors, particularly given its considerable resources.

In summary, Tether’s strategic foray into AI signifies a notable evolution in its business trajectory as it seeks to consolidate its position within the burgeoning tech landscape. The burgeoning decentralized AI space in the crypto sector has experienced substantial growth in recent months, with the market cap surpassing the $25 billion mark in March.

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Binance has announced its decision to discontinue support for USDC (USD Coin) deposits and withdrawals on the Tron blockchain, effective April 5. This move comes more than a month after Circle, the issuer of USDC terminated its USDC minting services on Tron.

Starting from 2:00 a.m. UTC on April 5, deposits of TRC20 USDC tokens will no longer be credited to users’ accounts on Binance, as stated in an official blog post by the crypto exchange. However, it’s important to note that this change solely affects USDC issued on the Tron blockchain and deposits and withdrawals of the stablecoin on other networks like Ethereum will remain unaffected.

Despite the discontinuation of support for TRC20 USDC, trading of USDC on Binance will continue without any interruptions.

Circle, the issuer of USDC, cited risk management as the primary reason for terminating USDC minting services on Tron. The company emphasized its commitment to ensuring the trustworthiness, transparency, and safety of USDC, which led to the decision to discontinue support on certain blockchains.

Although Tron’s role as a platform for USDC is diminishing, it remains the primary blockchain for USDT (Tether), the dominant stablecoin, with the majority of USDT supply still residing on the Tron network.

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