The Daily: Ethereum Foundation's financial report, Japan's megabanks' stablecoin trial, spot Bitcoin ETFs continue to bleed and more

It's Friday! In today's Daily, the Ethereum Foundation is set to release a financial report amid community criticism of its spending, Japan's three megabanks plan a stablecoin trial, U.S. spot Bitcoin ETFs continue to bleed and more.

Meanwhile, former SEC Chair Jay Clayton says the crypto industry is "pushing U.S. market infrastructure forward" on the latest episode of The Scoop podcast.

Let's get started.

Ethereum Foundation to release financial report amid community criticism of its spending

The Ethereum Foundation plans to release a financial report "relatively soon" to address community concerns surrounding its spending, according to researcher Justin Drake.

• In an AMA session on the r/ethereum subreddit, Drake said that, in his "limited personal understanding," the foundation spends around $100 million per year, currently holding about $650 million in its main Ethereum wallet.
• Depending on ether prices, that provides the Ethereum Foundation with a financial runway of roughly 10 years, Drake added.
• "The current approximate budget strategy is to spend 15% of our remaining money every year," Ethereum co-founder Vitalik Buterin said in a separate comment on the subreddit. "This implies a default path where the EF lasts forever but gets smaller and smaller (as a share of the ecosystem) over time."
• Community members have heavily criticized the Ethereum Foundation regarding a series of unexplained large ether transfers in recent weeks, urging it to provide greater transparency.
• Last month, blockchain analytics provider Lookonchain reported that the foundation transferred 35,000 ETH ($94 million) to the Kraken crypto exchange.
• The Ethereum Foundation's budget management involves grants and salaries, with gradual and planned sales of ether going forward, according to Executive Director Aya Miyaguchi.

Japan's megabanks plan stablecoin trial

Japan's three major banks, MUFG, SMBC and Mizuho, are set to test a cross-border stablecoin transfer platform dubbed "Project Pax," with participation from other global banks anticipated.

• The pilot, run by crypto firms, including Progmat, Datachain and TOKI, aims to provide faster international settlements for enterprises using blockchain technology.
• Project Pax will leverage the stablecoins issued via Progmat and use SWIFT's existing API framework for banks to instruct Progmat to settle on blockchain networks and address compliance challenges.
• The project aims to commercialize its platform by 2025, with stablecoins denominated in JPY, USD and EUR for domestic and international use.

US spot Bitcoin ETFs continue to bleed

U.S. spot Bitcoin ETFs saw $211.1 million in net outflows on Thursday , marking the seventh consecutive day of negative flows totaling over $1 billion.

• Fidelity's FBTC recorded the largest net outflows among the funds with $149.5 million, followed by Bitwise's BITB with $30 million.
• Both Grayscale's GBTC and BTC Mini Trust products also witnessed net outflows of $23.2 million and $8.4 million, respectively, with the remaining ETFs experiencing zero flows.
• Meanwhile, spot Ethereum ETFs saw relatively minor movements on Thursday, with Grayscale's ETHE showing the only net outflows of $7.4 million, nearly offset by its ETH Mini Trust, which reported the only net inflows of $7.2 million.
• Spot Ethereum ETF issuer VanEck also announced plans to close its Ethereum futures ETF , EFUT, on Thursday.

Crypto micropayments are key to avoiding AI financial economy bottleneck

Bernstein analyst Gautam Chhugani argues that crypto micropayments are required to avoid financial bottlenecks in the emerging AI economy.

• The traditional financial system's identity requirements and inability to handle micropayments make it unsuitable for AI consumption patterns compared to crypto solutions for frictionless payments, such as streaming money for data or content, he said.
• Chhugani sees stablecoins as the greatest opportunity for enabling permissionless AI economies, offering fast, global digital payments for settling machine-to-machine transactions.
• The integration of crypto wallets into AI systems could allow AI agents to manage financial transactions autonomously, unlocking new commercial applications for stablecoins, he added.

Telegram CEO Pavel Durov says he's prepared to 'leave markets that aren’t compatible' after France arrest

Telegram CEO Pavel Durov said the platform is prepared to leave markets incompatible with the popular messaging app's principles, emphasizing the company's commitment to privacy over profits.

• Durov criticized his recent arrest in France, where he was indicted on charges related to cybercrime activities allegedly facilitated using the platform's cryptography tools and services.
• Telegram, closely linked with TON's blockchain, generates significant revenue from crypto-related activities and holds $400 million in digital assets as of 2023.

Looking ahead to next week

• U.S. CPI inflation data and UK GDP figures are released on Wednesday. The ECB's latest interest rate decision, U.S. PPI numbers and U.S. jobless claims are due on Thursday.
• Korea Blockchain Week and ETH Warsaw 2024 conclude over the weekend as ETHSafari gets underway in Kenya.

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