The U.S. Securities and Exchange Commission (SEC) is reportedly investigating whether to classify Ethereum, the world's second-largest cryptocurrency, as a security, according to multiple companies that received subpoenas related to the probe.

The world’s largest asset manager BlackRock has announced the launch of its first tokenized fund on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL).

Cryptocurrency exchange Kraken is launching a qualified custody service dubbed Kraken Custody for institutional clients leveraging Kraken Financial, the firm’s state-chartered bank based in cryptocurrency-friendly Wyoming.

Top stories in the Crypto Roundup today:

• SEC Investigates Ethereum’s Potential Status as a Security
• BlackRock Launches Ethereum-Based Tokenized Fund BUIDL
• Kraken Unveils Crypto Custody Solution for Institutions
• Total Stablecoin Market Capitalisation Reaches Highest Level Since September 2022

SEC Investigates Ethereum’s Potential Status as a Security

The U.S. Securities and Exchange Commission (SEC) is reportedly investigating whether to classify Ethereum, the world's second-largest cryptocurrency, as a security, according to multiple companies that received subpoenas related to the probe.

The SEC’s move casts a shadow over the crypto industry's hopes for approval of spot Ethereum exchange-traded funds (ETFs) after the SEC greenlit a series of spot Bitcoin ETFs earlier this year.

The SEC's investigation involves demanding documents and financial records from firms regarding their dealings with the Switzerland-based Ethereum Foundation, the non-profit overseeing the blockchain's governance and development. Sources familiar with the subpoenas said the investigation began after Ethereum's shift to a Proof-of-Stake network in September 2022.

The existence of the probe aligns with reports citing a recent update to the Ethereum Foundation's code repository suggesting an investigation by an unidentified state agency.

Ethereum's legal status is particularly murky. While then-Director of Corporation Finance William Hinman stated in 2018 that Ethereum didn't resemble a security, Gensler's arrival at the SEC in 2021 and Ethereum's subsequent shift to Proof-of-Stake appear to have prompted a change in stance.

Gensler has suggested that cryptocurrencies relying on Proof-of-Stake consensus could be classified as securities, though he hasn't explicitly addressed Ethereum. Further complicating the issue is the SEC's approval of nine Ether futures ETFs in October 2023, seemingly aligning with the CFTC's view of Ether as a commodity.

BlackRock Launches Ethereum-Based Tokenized Fund BUIDL

The world’s largest asset manager BlackRock has announced the launch of its first tokenized fund on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL).

BUIDL is set to offer qualified investors the opportunity to earn U.S. dollar yields through a tokenized structure. Investors can subscribe to the fund through Securitize Markets, a firm specializing in digital asset securities.

The tokenization of the fund offers several advantages, according to the firm, as ownership is issued and traded directly on the blockchain, streamlining processes and increasing transparency while investors benefit from instantaneous settlement, 24/7/365 transferability, and the ability to choose their own custody solutions.

BNY Mellon will further enhance the fund's functionality by enabling interoperability between digital and traditional markets acting as its custodian and administrator. The fund is designed to maintain the value of $1 per token and to automatically distribute daily accrued dividends to investors’ wallets.

BUIDL is set to invest only in cash, U.S. Treasury bills, and repurchase agreements to offer a low-risk yield generation strategy within the Ethereum blockchain.

Kraken Unveils Crypto Custody Solution for Institutions

Cryptocurrency exchange Kraken is launching a qualified custody service dubbed Kraken Custody for institutional clients leveraging Kraken Financial, the firm’s state-chartered bank based in cryptocurrency-friendly Wyoming.

Kraken Financial operates as a segregated entity, meaning all funds and assets are held entirely separate from Kraken itself. These assets remain readily available for withdrawal at any time in a structure that provides a familiar framework for traditional finance institutions venturing into the digital asset space.

The new service, dubbed Kraken Custody, will offer a secure and centralized platform for clients to store, manage, and transfer their crypto assets. In-house security protocols, according to the exchange’s announcement, will safeguard these custodial holdings.

Total Stablecoin Market Capitalisation Reaches Highest Level Since September 2022

In February, the total market capitalization of the stablecoin sector increased by 4.24% to $147 billion, marking the sixth consecutive month of growth and achieving the highest value since September 2022. Despite this growth, stablecoins saw a decrease in their market dominance to 5.83% in March, hitting their lowest market share since November 2021.

Trading volumes of stablecoins on centralized exchanges (CEXs) also experienced growth in February, with a 5.14% rise to $1.09 trillion, reaching their highest level of activity since December 2021.

The trend appears to be continuing into March, with trading volumes already hitting $1.10 billion on CEXs by the 15th of the month.

Dig deeper into the stablecoin sector through CCData’s latest Stablecoins & CBDCs report.

State of the Crypto by Top Tier Exchange Volume

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