Leading cryptocurrency asset manager Grayscale has witnessed a significant slowdown in the outflows from its spot Bitcoin exchange-traded fund (ETF), despite the market's anticipation of further declines.

Coinbase has dropped support for native Bitcoin and other cryptocurrencies using the unspent transaction output (UTXO) model on its Coinbase Commerce platform, in a move announced by Lauren Dowling, the company's head of product.

Jupiter Asset Management has divested its holdings in the 21Shares Ripple XRP ETP (AXRP), incurring a slight financial setback. This decision came after the firm's internal compliance team identified that the investment did not align with the strict guidelines set forth by Ireland's Undertakings for Collective Investment in Transferable Securities Directive (UCITS), which notably restricts exposure to cryptocurrencies.

Top stories in the Crypto Roundup today:

• Grayscale Bitcoin ETF Outflows Top $7 Billion
• Coinbase Commerce Drops Native Bitcoin Support
• Jupiter Asset Management Retreats from XRP ETP Amid Regulatory Pressures
• AI Tokens Skyrocket Nearly 30%, Leading Crypto Token Baskets in February

Grayscale Bitcoin ETF Outflows Top $7 Billion

Leading cryptocurrency asset manager Grayscale has witnessed a significant slowdown in the outflows from its spot Bitcoin exchange-traded fund (ETF), despite the market's anticipation of further declines.

Grayscale’s GBTC fund has seen a total outflow of $7 billion as of February 16th, following its conversion to a spot Bitcoin ETF. The largest exodus occurred in January, amounting to $5.64 billion. February has so far seen a reduced outflow of $1.37 billion, indicating a deceleration in the rate of fund withdrawals.

Spot Bitcoin ETFs in the United States have, over the past week, seen net inflows surpass $2.2 billion, with BlackRock’s iShares Bitcoin Trust (IBIT) seeing the majority of the positive flows.

A significant factor contributing to Grayscale's outflows has been the fund's substantial discount to the BTC market price, which stood at around 44% when BlackRock filed for its spot ETF in June 2023. This discount prompted investors to seek 'cheaper' BTC opportunities, leading to a strategic shift once Grayscale converted to an ETF on January 11, 2024.

Further challenges loom for Grayscale, including a recent court decision allowing the bankrupt crypto lender Genesis to sell off part of its investments in Grayscale, potentially exacerbating the outflow trend. Despite these hurdles, there's speculation that Grayscale might launch a "mini-GBTC" with significantly lower fees, aiming to stem the tide of outflows.

Coinbase Commerce Drops Native Bitcoin Support

Coinbase has dropped support for native Bitcoin and other cryptocurrencies using the unspent transaction output (UTXO) model on its Coinbase Commerce platform, in a move announced by Lauren Dowling, the company's head of product.

In a post on X (formerly known as Twitter), Dowling shared that the company faced challenges in implementing recent updates to its EVM payment protocol specifically for Bitcoin, leading to this significant change in its service offerings.

She added that the new Commerce product “enforces the details of each payment onchain, supports hundreds of assets (native and ERC-20s) across Base, Polygon, and Ethereum, & automatically converts payments to USDC onchain at a guaranteed rate to merchants.”

Dowling further explained that delivering these capabilities on Bitcoin without smart contracts and stablecoins “was challenging,” and led to the decision.

However, Coinbase CEO Brian Armstrong highlighted on X that Bitcoin payments can still be made through Coinbase Commerce, but only if users have an account with the exchange, before pointing out that Coinbase is set to integrate the Lightning Network.

On social media, the crypto community has been criticizing and discussing the move, with concerns being raised about its potential impact on the wider adoption of Bitcoin.

Jupiter Asset Management Retreats from XRP ETP Amid Regulatory Pressures

Jupiter Asset Management has divested its holdings in the 21Shares Ripple XRP ETP (AXRP), incurring a slight financial setback. This decision came after the firm's internal compliance team identified that the investment did not align with the strict guidelines set forth by Ireland's Undertakings for Collective Investment in Transferable Securities Directive (UCITS), which notably restricts exposure to cryptocurrencies.

Initially, Jupiter Asset Management had invested $2,571,504 into AXRP during the first half of 2023, drawn by the potential of Ripple's XRP and the ETP's promising performance metrics. Despite the AXRP ETP showcasing a commendable one-year return of 31.7%, it has faced a 13.2% decline over the past six months, reflecting the inherent volatility associated with cryptocurrency investments.

The firm's decision to liquidate its investment resulted in a modest loss of $834, a figure that, while minor in the grand scheme of the firm's investment portfolio, highlights the financial implications of regulatory compliance.

The AXRP ETP, launched in March 2019, aims to mirror the performance of XRP and has amassed assets under management totaling approximately $50.5 million.

This development highlights the ongoing debate and regulatory uncertainty surrounding the inclusion of crypto assets in UCITS funds across Europe, with regulators in Ireland and France recently expressing reservations about allowing UCITS funds to invest in crypto assets.

In contrast, the German financial regulator permits UCITS funds to have exposure to crypto ETPs, provided they accurately reflect the underlying asset, illustrating the varied regulatory attitudes towards crypto investments within the EU.

AI Tokens Skyrocket Nearly 30%, Leading Crypto Token Baskets in February

As of February 16, numerous cryptocurrency asset baskets have seen significant returns, with tokens focused on artificial intelligence (AI) seeing a surge of nearly 30%, outperforming other baskets.

Layer-2 and infrastructure-focused tokens surged 29.5% and 18.58%, respectively, while meme-inspired tokens came in next with gains of 18.45%, ahead of the 17.85% gained by layer-1 tokens.

In contrast, the staking basket has seen a performance just shy of 6% so far this month, while exchange tokens rose 0.08%.

State of the Crypto by Top Tier Exchange Volume

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