Eterna's Insights - June 2024

SEC Closes Investigations into Ethereum 2.0

Consensys announced that the SEC has ended its investigation into "Ethereum 2.0." The probe began in March 2023, investigating ETH trading activities. In April 2024, Consensys received a Wells Notice for allegedly violating securities laws via its MetaMask products, leading to a lawsuit against the SEC.

In May, the SEC approved three ETH exchange-traded products and has now closed its investigation into Consensys without recommending enforcement action. However, the SEC's letter clarified this does not exonerate Consensys or prevent future actions. Consensys continues to seek a legal declaration that MetaMask products comply with securities laws.

MiCA’s New Rules to Take Effect in EU

New EU regulations from the Markets in Crypto Asset (MiCA) framework will take effect on June 30, impacting crypto businesses and consumer access. Stablecoin issuers face stringent requirements, including a cap of 1 million transactions or 200 million euros ($215 million) daily. Article 23 mandates these limits to safeguard the monetary system. Issuers can bypass these caps if tokens are not used as an exchange means, like in P2P transactions.

Stablecoin issuers must also obtain e-money licenses to operate legally in the EU, but many, including Circle and Tether, have yet to do so. Industry participants express confusion over the unclear regulatory guidance. Some exchanges, like OKX and Bitstamp, have delisted Tether's EURT, while Binance will restrict Unauthorized Stablecoins for EEA users starting next week.

Paradigm Unveils First Production Ready Release of Reth

Paradigm announced the first production-ready release of Reth, a new Ethereum execution client written in Rust. After two years of development, Reth is now available for node operators, offering faster sync times and reduced storage needs. Key features include a 50-hour sync from genesis, 2.25TB archive node storage, and excellent RPC throughput and latency. The next release will enhance usability for optimistic rollups and implement changes for Ethereum's upcoming Pectra upgrade.

Optimism Reaches Stage 1 of Decentralization

Optimism has implemented fraud proofs, advancing its rollup decentralization. As of June 10, permissionless fraud proofs are live, enhancing security by allowing anyone to challenge fraudulent transactions. This moves Optimism from 'Stage 0' to 'Stage 1' decentralization.

Key Stage 1 features include:

• A functional proof system

• User exits without operator coordination

• A Security Council with admin controls

Optimism plans to extend fraud proofs to other OP Stack chains in the 'Superchain' and is developing additional proof systems, like ZK proofs, to further enhance security. The ultimate goal is 'Stage 2' decentralization, fully managed by smart contracts.

Robinhood Buys Bitstamp

Robinhood has acquired cryptocurrency exchange Bitstamp for $200 million. Founded in 2011, Bitstamp is the world’s oldest still-operating crypto exchange. Robinhood, initially known for zero-fee stock trading, entered the crypto market in 2018 and now supports various cryptocurrencies. This acquisition, advised by Barclays Capital for Robinhood and Galaxy Digital Partners for Bitstamp, marks a significant expansion in Robinhood's crypto offerings.

Eterna Portfolio Company Spotlight:

Space and Time’s launches its high performance ZK prover for processing data – Proof of SQL - the first sub-second ZK prover

A new zero-knowledge proof technology called "proof of SQL," developed by Space and Time (SxT), significantly reduces SQL query times from 30 minutes to sub-seconds. This open-source tool enhances real-time data processing and is designed to improve the performance and security of decentralized applications. Available on GitHub, it allows for efficient and trustless queries, broadening blockchain technology's potential use cases. Proof of SQL can be integrated with generalized zkVMs to quickly provide verifiable source data that any code can be executed over - unlocking next generational data-driven applications.