Alpaca Finance Institutional Newsletter #113

Key Points:

  • Two New ETFs Target Bitcoin Bond Adoption Trend

  • IRS requires DeFi front-end platforms to report digital asset sales

  • MiCA transition brings uncertainty to USDT in the EU

Two recently filed ETFs aim to capitalize on the growing adoption of bitcoin by businesses. Bitwise has proposed the Bitcoin Standard Inc ETF, which invests in companies that hold more than 1,000 BTC and meet size and liquidity criteria, with its holdings weighted by bitcoin value rather than market cap. Strive’s Bitcoin Bond ETF focuses on convertible securities of companies like MicroStrategy that are closely tied to bitcoin investments. The growth reflects the “bitcoin vault virus,” as companies like KULR and Semler Scientific embrace bitcoin, and major players like Tesla and MicroStrategy have qualified for inclusion.

The U.S. Internal Revenue Service (IRS) has issued final regulations requiring brokers, including decentralized finance (DeFi) front-end platforms, to disclose digital asset transactions. The rules, which take effect in 2027, require these platforms to report gross revenue from cryptocurrency sales and provide taxpayer information. While not all DeFi applications are covered, the regulations focus on platforms that facilitate transactions and classify them as brokers. The change, which aims to increase transparency and compliance, affects up to 2.6 million taxpayers and an estimated 650-875 DeFi brokers. The IRS claims that these rules align DeFi with existing reporting standards for brokers.

The implementation phase of MiCA ends on December 30, 2024, introducing an 18-month transition period that extends to July 2026, which has created uncertainty about USDT's compliance. Although Coinbase preemptively delisted USDT, citing regulatory risks, other exchanges such as Binance and Crypto.com continue to trade USDT, awaiting clearer guidance from EU regulators. ESMA has not yet confirmed USDT's status under MiCA, but transitional measures such as "grandfather clauses" allow entities operating under national laws to continue operating until they are authorized by MiCA, providing temporary operational flexibility amid long-standing ambiguity.

news

  • Solana co-founder sued by ex-wife for staking SOL

  • CoinGecko: Memecoins top cryptocurrency investor interest through 2024

  • Cryptocurrency hacking losses to reach $2.3 billion in 2024, down 40% year-over-year

  • Montenegro orders extradition of Terraform Labs co-founder Do Kwon to the US

product

Regulation

  • IRS releases digital asset reporting rules, says brokers are front-end

  • Senior officials said that the EU’s silence does not mean that USDT meets MiCA standards

  • If the IRS rule isn’t reversed, DeFi has 3 options — Alex Thorn

  • Brazil ’s Self-Custody Stablecoin Ban Will Boost Decentralization

funds