Blockchain
Three unexpected risks from Wall Street’s foray into bitcoin
Bitcoin has officially gone mainstream in the U.S. after the approval of 11 spot bitcoin ETFs. Products by issuers such as BlackRock, Fidelity and Bitwise debuted on Thursday and exceeded $7 billion in cumulative trading volume over the first two days of trading.
For years, the crypto industry has been waiting for this approval to bring a huge inflow of fresh funds into the market, which is now open to the largest legacy finance firms and crypto-curious retail investors who are not ready for the technicalities of crypto.
However, bitcoin meeting Wall Street has its risks, too. Some long-time bitcoiners point at potentially increasing concentration of bitcoin ownership in the hands of a small group of institutions, potential rehypothecation and changes in the way the bitcoin community governs itself.
A single point of failure
The most obvious concern noticed by many prominent crypto individuals is that all the bitcoins backing the ETF shares will be held by only a handful of assigned custodians. Most of the issuers listed Coinbase as their custodian, with exceptions of VanEck, who chose Gemini, and Fidelity with its own custody product.
Jameson Lopp, co-founder and CTO of a bitcoin custody firm Casa, points out that in such situation, the custodian becomes a single point of failure and there are “relatively few ‘doors’ that would need to be knocked upon by government agencies,” if they wanted to seize the bitcoin locked in the ETFs, he told The Block.
Jeffrey Ross, the founder and managing director of an asset management firm Vailshire Capital, believes this concern is “overblown.” Theoretically, there is a risk of a custodian to make a mistake and lose large amounts of clients’ bitcoin, but large finance firms like the current ETF issuers have measures in place to prevent such accidents from happening, he told The Block.
As for a potential government seizure, people draw analogies with the Roosevelt-era ban on gold ownership. However, back then, the U.S. dollar was backed by gold, making it an essential component of monetary policy, and bitcoin is not in the same position, Ross said. “There is no reason for the government to seize bitcoin from Americans,” he added.
A new type of double-spending attack
Another potential concern can be the so-called financialization of bitcoin, or the transfer of practices from traditional finance into the bitcoin economy, which until now has been functioning more or less by its own standards.
“The ETFs are a double-edged sword for the bitcoin ecosystem,” says Caitlin Long, founder and CEO of Custodia. “The big drawback is that new forms of leverage-based financialization of bitcoin will happen. The SEC did the right thing by prohibiting custodians from lending the bitcoin that backs the ETF units, but there will be commingling, collateral substitution and leverage on the layer above that,” Long told The Block.
Bitcoin-based securities will essentially create bitcoin IOUs (“I owe you”), says Casa’s Lopp. This means that with ETFs, instead of actual bitcoins stored in hardware and software wallets, people will own something that represents the value of bitcoin but has none of its essential properties like decentralization, permissionless nature and visibility on a public ledger.
“Since you can’t verify a company’s balance sheet, you can’t be sure that your IOU is redeemable for the asset it represents,” Lopp said in a blog post last year.
Source: theblock.co
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Blockchain
Glidelogic Corp. Announces Revolutionary AI-Generated Content Copyright Protection Solution
Blockchain
Ethereum ETFs Aren’t Blockchain But Is A Revolutionary Tech: Top 6 Amazing Reasons To Invest In Them
The financial landscape is rapidly evolving, with the integration of blockchain technology and cryptocurrencies becoming more prominent. Among these, Ethereum ETFs (Exchange-Traded Funds) have emerged as a significant investment vehicle, offering exposure to the Ethereum blockchain’s native cryptocurrency, Ether (ETH), without requiring direct ownership. However, it’s crucial to understand that Ethereum ETFs are distinct from the blockchain itself and serve different purposes in the investment world.
Understanding Ethereum and ETFs
Ethereum: A decentralized platform that enables the creation and execution of smart contracts and decentralized applications (dApps). It operates using its cryptocurrency, Ether (ETH), which fuels the network.
ETF (Exchange-Traded Fund): A type of investment fund that holds a collection of assets and is traded on stock exchanges. ETFs can include various asset classes, such as stocks, commodities, or bonds.
Ethereum ETFs: The Intersection of Traditional Finance and Cryptocurrency
An Ethereum ETF provides a way for investors to gain exposure to the price movements of Ether without directly purchasing the cryptocurrency. This is achieved through an ETF structure, where the fund holds assets linked to the value of Ether, and investors can buy shares of the ETF on traditional stock exchanges.
Key Features of Ethereum ETFs:
- Indirect Exposure: Investors gain exposure to Ether’s price changes without needing to manage or store the cryptocurrency themselves.
- Regulatory Compliance: Unlike the relatively unregulated cryptocurrency market, ETFs operate under the oversight of financial regulators, offering a layer of investor protection.
- Accessibility: Ethereum ETFs are available through traditional brokerage platforms, making them accessible to a broader range of investors.
Why Invest in an Ethereum ETF?
- Diversification: Including an Ethereum ETF in a portfolio can provide exposure to the cryptocurrency market, potentially enhancing diversification beyond traditional assets.
- Convenience and Familiarity: ETFs are a familiar investment product, simplifying the process of investing in cryptocurrencies.
- Professional Management: ETF managers handle the investment decisions, including the buying and selling of assets, which can be advantageous for those less familiar with the cryptocurrency space.
- Regulatory Oversight: ETFs are subject to regulatory scrutiny, potentially offering more safety and transparency compared to direct cryptocurrency investments.
- Potential for Growth: As the cryptocurrency market grows, ETFs linked to assets like Ether may benefit from rising prices.
Key Differences Between Ethereum and Ethereum ETFs
While both are related to the Ethereum blockchain, Ethereum itself and Ethereum ETFs represent different forms of investment:
- Ethereum (ETH):
- Direct ownership of the cryptocurrency.
- Full exposure to Ethereum’s features, including staking and network participation.
- Traded on cryptocurrency exchanges.
- Highly volatile and largely unregulated.
- Ethereum ETF:
- Indirect exposure through shares representing Ether’s value.
- Traded on traditional stock exchanges under regulatory oversight.
- Offers a more stable and familiar investment structure.
- Typically lower volatility compared to direct cryptocurrency ownership.
Future Considerations for Ethereum ETFs
The approval and launch of Ethereum ETFs mark a significant milestone in bringing cryptocurrencies closer to mainstream finance. They offer a convenient and regulated means for investors to gain exposure to the growing digital assets market. However, they also come with limitations, such as not allowing direct participation in the Ethereum ecosystem’s innovations, like dApps and smart contracts.
As the market evolves, we may see more sophisticated financial products that better capture the full potential of the Ethereum ecosystem. For now, Ethereum ETFs provide a balanced option for those interested in cryptocurrency exposure within the framework of traditional finance.
In conclusion, while Ethereum ETFs offer a gateway into the world of digital assets, they should be viewed as complementary to, rather than a replacement for, direct investment in the underlying blockchain technologies. Investors should carefully consider their investment goals, risk tolerance, and the unique attributes of both Ethereum and Ethereum ETFs when making investment decisions.
Source: blockchainmagazine.net
The post Ethereum ETFs Aren’t Blockchain But Is A Revolutionary Tech: Top 6 Amazing Reasons To Invest In Them appeared first on HIPTHER Alerts.
Nexo, a leading institution in the digital assets industry, has reinforced its commitment to data security by renewing its SOC 2 Type 2 audit and attaining a new SOC 3 Type 2 assessment without any exceptions. This rigorous audit process, conducted by A-LIGN, a respected independent auditor specializing in security compliance, confirms Nexo’s adherence to stringent Trust Service Criteria for Security and Confidentiality.
Key Achievements and Certifications
- SOC 2 and SOC 3 Compliance:
- SOC 2 Type 2: This audit evaluates and reports on the effectiveness of an organization’s controls over data security, particularly focusing on the confidentiality, integrity, and availability of systems and data.
- SOC 3 Type 2: This public-facing report provides a summary of SOC 2 findings, offering assurance to customers and stakeholders about the robustness of Nexo’s data security practices.
- Additional Trust Service Criteria:
- Nexo expanded the scope of these audits to include Confidentiality, showcasing a deep commitment to protecting user data.
- Security Certifications:
- The company also adheres to the CCSS Level 3 Cryptocurrency Security Standard, and holds ISO 27001, ISO 27017, and ISO 27018 certifications, awarded by RINA. These certifications are benchmarks for security management and data privacy.
- CSA STAR Level 1 Certification:
- This certification demonstrates Nexo’s adherence to best practices in cloud security, further solidifying its position as a trusted partner in the digital assets sector.
Impact on Customers and Industry Standards
Nexo’s rigorous approach to data protection and compliance sets a high standard in the digital assets industry. By achieving these certifications, Nexo provides its over 7 million users across more than 200 jurisdictions with confidence in the security of their data. These achievements not only emphasize the company’s dedication to maintaining top-tier security standards but also highlight its proactive stance in fostering trust and transparency in digital asset management.
Nexo’s Broader Mission
As a premier institution for digital assets, Nexo offers a comprehensive suite of services, including advanced trading solutions, liquidity aggregation, and tax-efficient credit lines backed by digital assets. Since its inception, the company has processed over $130 billion, showcasing its significant impact and reliability in the global market.
In summary, Nexo’s successful completion of SOC 2 and SOC 3 audits, along with its comprehensive suite of certifications, underscores its commitment to the highest standards of data security and operational integrity. This dedication positions Nexo as a leader in the digital assets space, offering unparalleled security and peace of mind to its users.
Source: blockchainreporter.net
The post Nexo Reaffirms Commitment to Data Protection with SOC 3 and SOC 2 Compliance appeared first on HIPTHER Alerts.
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