The Weekly Wrap - 30 April 2021

1. EIB issues digital bond on Ethereum

The Facts:

• The European Investment Bank (EIB) has announced that it issued €100 million worth of 2-year bonds on Ethereum.
• The Banque de France selected the project as part of their central bank digital currency (CBDC) endeavors.
• The money from underwriters – Goldman Sachs, Santander, and Société Générale, is represented as CBDC on Ethereum.

Why it’s important:

• The issuance of financial securities on a public blockchain by the EIB may accelerate the adoption of the technology by other market players.
• Earlier, private pilot bond issuances, such as the one by Banco Santander in 2019, also chose Ethereum as their platform – which signals that confidence in public blockchains in general, and Ethereum specifically, among institutions is growing.

2. Aave launches liquidity incentives for v2

The Facts:

• Aave Improvement Proposal 16 (AIP-16) has passed with overwhelming support by token holders.
• The AIP will distribute 2’200 staked AAVE tokens per day, or ca. $1M, to lenders and borrowers on Aave v2.
• Currently, this results in yields of 4-10% for borrowing various stablecoins; total value locked in Aave has jumped from $6 billion to $8 billion.

Why it’s important:

• Aave’s liquidity program incentivizes both borrowers and lenders to migrate from the old v1 to the new v2.
• This pilot will also provide valuable inputs for further Aave governance decisions regarding the usefulness of liquidity incentives.

3. SEC delays VanEck Bitcoin ETF

The Facts:

• The SEC extended their deadline for a decision on VanEck’s Bitcoin ETF application, which was due on May 3, until June 17.
• VanEck withdrew previous Bitcoin ETF applications and refiled the current one in December 2020.
• In Canada, three Bitcoin ETFs have already launched.

Why it’s important:

• The SEC has so far been reluctant to approve any Bitcoin ETFs – this may change under the leadership of new SEC chairman Gary Gensler.
• While a Bitcoin ETF would certainly expand the range of available tools to invest in BTC and lend additional credibility to the space, well-developed and efficient spot and futures markets already exist.

4. Tesla sells 10% of Bitcoin holdings

The Facts:

• Tesla sold Bitcoin worth $272 million, as their Q1 earnings report reveals.
• Despite this, they reaffirmed their belief in the long-term value of Bitcoin and intent to accumulate more from customer purchases with BTC.
• According to Zach Kirkhorn, CFO/Master of Coin, Tesla has been “quite pleased” with the liquidity in the market.

Why it’s important:

• Tesla’s sale may have initially spooked some investors that more selling pressure might come from Tesla, which still holds ca. 43’200 BTC.
• This “demonstration” of liquidity in the Bitcoin markets may also strengthen the argument for Bitcoin as a suitable asset for corporate treasuries.

5. Germany passes legislation for institutional crypto funds

The Facts:

• In Germany, new legislation will allow so-called “Spezialfonds” – popular institutional investment funds – to allocate 20% to cryptocurrencies.
• The law is set to come into force on July 1.
• According to a , this could theoretically bring up to €350 billion into crypto.

Why it’s important:

• The global shift towards a more accommodative stance on cryptocurrency by regulators highlights the growing interest and opportunity in the space.
• Potential money flows into crypto due to this new law might be substantial.

In other news

• Tether supply on Tron surpasses USDT on Ethereum (via The Block)
• PayPal crypto partner Paxos raises $300 million (via Cointelegraph)
• Osprey Funds launches Polkadot trust (via The Block)