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Bitcoin ETFs could attract billions from TradFi

Bitcoin ETFs could attract billions from TradFi

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The arrival of Bitcoin’s first spot ETFs may shift billions from traditional finance markets according to Arthur Hayes. A week into the approval, the BitMEX founder sees new predictable arbitrage windows opening between Eastern and Western exchanges, as well as through upcoming Hong Kong ETF products. These opportunities could attract waves of institutional capital, especially if global inflation persists.

On the regulatory front, crypto businesses received relief as the IRS halted rules requiring reporting digital asset transactions above $10,000 until formal guidance emerges. The surprise delay followed complaints that the complex requirements were essentially impossible for many users to follow. However, the infrastructure law’s controversial crypto tax provisions remain intact for later implementation.

On the technology front, Ethereum’s Dencun testnet upgrade was finally activated after overcoming a snag caused by low validator participation rates, which temporarily delayed consensus. With Prysm validators now back online, the last planned Goerli testnet fork before its looming shutdown can introduce key scalability boosts like proto-danksharding ahead of mainnet deployment.

Today’s Newsletter

  • Bitcoin ETFs could attract billions from TradFi, says BitMEX founder Arthur Hayes
  • IRS steps back crypto tax rules, exempting TXs over $10K from obligations
  • Ethereum’s Dencun upgrade launches on Goerli testnet

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BITCOIN

Bitcoin ETFs could attract billions from TradFi, says BitMEX founder Arthur Hayes

The newly launched spot Bitcoin ETFs open opportunities for major capital flows between traditional and crypto markets according to Arthur Hayes. The BitMEX founder predicts billions may shift as predictable arbitrage windows between Eastern and Western exchanges emerge. Additional inflows could come as Hong Kong’s own upcoming spot ETF products unlock more regulated regional trading venues.

Hayes believes even slight differences between global Bitcoin prices will create exploitable inefficiencies for savvy managers. With policymakers still priming markets and inflation persisting, he anticipates fund appetite for uncorrelated crypto exposure will swell. If his vision materializes, ETF volumes could exponentially grow as distributors activate extensive distribution pipelines. [cryptobriefing]

REGULATION

IRS steps back crypto tax rules, exempting TXs over $10K from obligations

The IRS has halted newly enacted rules requiring businesses to report cryptocurrency transactions over $10,000 until formal regulatory guidance is released. The surprise delay follows complaints that complex reporting was essentially impossible for many users to follow accurately. However, the controversial requirements tied to a broader infrastructure bill remain intact for later implementation.

While digital asset advocates praised the temporary reprieve, problems persist with overly broad legislation poorly suited for crypto’s nuances. With no timeline for renewed guidance, year-end taxes loom amid ongoing uncertainty over accounting complications. For now, the IRS extends a reporting grace period, but unresolved crypto taxes still loom large in 2024. [cointelegraph]

ETHEREUM

Ethereum’s Dencun upgrade launches on Goerli testnet

Ethereum’s Dencun testnet upgrade was activated after overcoming temporary setbacks caused by low validator participation hindering consensus. The issues were resolved as Prysm validators came back online, allowing the final Goerli testnet fork before its shutdown to introduce long-awaited scalability boosts. Dencun will unleash key innovations like proto-danksharding to cut Layer 2 fees before eventual mainnet deployment.

Goerli’s struggles showcased the need for high node coordination during complex upgrades. However, the successful activation of blob transactions and other Dencun improvements provides optimism. With the path cleared through multiple testnets, developers can fine-tune incremental releases to optimize the user experience before Ethereum’s scaling properties transform. [cryptobriefing]

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