In a significant development within the decentralized finance space, Ethereum-based staking project Swell has launched a new liquid restaking token known as swBTC. This move enables Bitcoin holders to earn yield within the Ethereum ecosystem by leveraging their assets in restaking protocols. The Ethereum-based Swell swBTC is poised to attract significant interest as it offers a unique way for crypto users to generate returns on their Bitcoin holdings while participating in Ethereum’s DeFi network.

What is Ethereum-Based Swell swBTC?

The Ethereum-based Swell swBTC is a liquid restaking token that allows users to stake their Wrapped Bitcoin and earn yield. Wrapped Bitcoin is a token pegged 1:1 to Bitcoin, enabling Bitcoin to be used on the Ethereum network while retaining its value. Swell’s introduction of swBTC allows Bitcoin holders to deposit their wBTC into the Swell platform in exchange for swBTC, which can then be restaked to earn yield from protocols like EigenLayer, Symbiotic, and Karak.

This innovative approach not only preserves the value of Bitcoin but also integrates it into the broader Ethereum DeFi ecosystem, where it can generate additional income for users. According to an announcement shared with CoinDesk, yield generation for swBTC is expected to begin in mid-September, making it a timely opportunity for Bitcoin holders looking to diversify their crypto earnings.

How Restaking Works with swBTC

Restaking is a process where Ether tokens that have been staked as security for the Ethereum network can be repurposed to secure other blockchains and protocols. With the introduction of Ethereum-based Swell swBTC, this concept is extended to Bitcoin, allowing BTC holders to participate in restaking while maintaining their exposure to Bitcoin’s value.

Swell’s approach to restaking through swBTC offers a dual benefit. On one hand, users retain the store of value that Bitcoin represents, and on the other, they earn yields from their assets being utilized in other blockchain ecosystems. This functionality is particularly appealing in a market where passive income opportunities are highly sought after, and it represents a new avenue for integrating Bitcoin into Ethereum’s thriving DeFi landscape.

The Potential Impact of swBTC on DeFi

The introduction of Ethereum-based Swell swBTC has the potential to significantly impact the DeFi ecosystem. As Swell founder Daniel Dizon noted, the goal is to unlock up to $1 trillion of Bitcoin liquidity and direct it into DeFi, thereby increasing the overall liquidity and stability of the market. By offering Bitcoin holders a way to earn yield through Ethereum-based protocols, Swell is helping to bridge the gap between the Bitcoin and Ethereum communities, fostering greater collaboration and innovation across the blockchain space.

Moreover, the ability to earn yield from Bitcoin while simultaneously supporting the security and development of other protocols adds a new layer of utility to the cryptocurrency, enhancing its appeal to both institutional and retail investors. This development could lead to increased adoption of DeFi protocols by Bitcoin holders who were previously hesitant to engage with Ethereum’s DeFi offerings due to a preference for Bitcoin’s security and store of value characteristics.

Looking Ahead: The Future of swBTC and DeFi

As the DeFi landscape continues to evolve, the introduction of Ethereum-based Swell swBTC represents a significant step forward in the integration of Bitcoin into the Ethereum ecosystem. By enabling Bitcoin holders to earn yield through restaking, Swell is opening up new opportunities for passive income generation and expanding the use cases for Bitcoin within DeFi.

With yield generation set to begin in mid-September, the success of swBTC could pave the way for further innovations in the DeFi space, particularly as more Bitcoin liquidity flows into Ethereum-based protocols. As these ecosystems continue to grow and develop, the potential for cross-chain collaboration and the creation of new financial products becomes increasingly likely, positioning swBTC as a key player in the future of decentralized finance.

In conclusion, the launch of Ethereum-based Swell swBTC marks an important milestone in the ongoing convergence of Bitcoin and Ethereum. By offering a new way to generate yield while maintaining exposure to Bitcoin, Swell is helping to drive the next wave of innovation in DeFi, with the potential to reshape the financial landscape for years to come.

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Financial services industry consultant John Reed Stark has raised concerns about Morgan Stanley’s recent move to permit its wealth advisors to recommend spot Bitcoin ETFs to clients. Stark, president of a consulting firm based in Bethesda, Md., warned that this decision could invite substantial regulatory scrutiny. In a post on X, Stark suggested that Morgan Stanley’s action might trigger what could be “the largest SEC and FINRA examination sweep in history,” given that the firm’s 15,000 advisors will now be able to solicit clients for select spot Bitcoin ETFs.

Diverse Opinions on Bitcoin ETFs

Morgan Stanley’s decision to allow advisors to offer two of the nine existing spot Bitcoin ETFs—the $9.7 billion Fidelity Wise Origin Bitcoin Fund (FBTC) and the $19 billion iShares Bitcoin Trust (IBIT)—has sparked debate. Advisors will only offer these ETFs to clients with at least $1.5 million in investable assets. Critics like Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, question Stark’s position, noting that Stark has been consistently skeptical of cryptocurrencies. Balchunas argues that Stark’s concerns lack specifics on how advisors might face trouble.

On the other hand, some experts, such as Svetlin Krastev, founder of Black Sea Gold Advisors, believe that since spot Bitcoin ETFs have already undergone extensive regulatory scrutiny, further unique oversight is unlikely. Krastev contends that offering an SEC-approved product should not invite additional regulatory challenges.

Potential for Increased Regulatory Oversight

Noah Damsky, principal at Marina Wealth Advisors, expresses concerns that market volatility could prompt regulators to target Bitcoin ETFs as “low-hanging fruit.” Damsky points out the significant price swings in Bitcoin, noting that last week, Bitcoin fell 6% while the Nasdaq dropped 3%. This volatility raises concerns about the suitability of such investments for the average investor.

Adam Gana, a New York-based securities lawyer with Gana Weinstein, also foresees potential issues. Gana predicts increased arbitration cases as Bitcoin becomes more accessible to Main Street investors and cautions that the industry might look back critically at this move in the future.

Ric Edelman, founder of the Digital Assets Council of Financial Professionals, countered Stark’s claims, emphasizing that financial advisors should not be deterred by Stark’s criticisms. Edelman asserts that Stark’s views are biased and advises advisors to focus on serving their clients’ best interests, despite Stark’s warnings.

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The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency company NovaTech and its co-founders, Cynthia and Eddy Petion, alleging that they orchestrated a fraudulent scheme that amassed over $650 million from more than 200,000 investors globally, including a significant number of Haitian-Americans. The SEC alleges that NovaTech and the Petions falsely assured investors of the safety of their funds, with Cynthia Petion promising profits “from day one.”

Details of the Alleged Scheme

According to the SEC, the Petions used new investor funds primarily to repay earlier investors and pay commissions to promoters, while diverting millions of dollars for their benefit. The fraudulent scheme reportedly lasted four years, ending with NovaTech’s collapse in May 2023. The lawsuit, filed in Miami federal court, follows a similar lawsuit from New York Attorney General Letitia James, who had previously estimated the fraud at over $1 billion.

The regulators accuse NovaTech of exploiting victims’ religious beliefs through social media, Telegram, WhatsApp, and even in Haitian Creole, with Cynthia Petion portraying herself as “Reverend CEO” and claiming NovaTech was “God’s vision.” Both the SEC and state regulators have labeled the scheme as a pyramid scheme, where new investments are used to pay returns to earlier investors and recruit more participants.

The SEC has also charged six NovaTech promoters with fraud, accusing them of continuing to recruit investors despite obvious warning signs, such as delayed withdrawals and regulatory scrutiny in the U.S. and Canada. One promoter, Martin Zizi, has agreed to a $100,000 civil fine.

Both the SEC and state lawsuits seek restitution for victims and civil penalties. The case is filed as SEC v. Nova Tech Ltd., U.S. District Court, Southern District of Florida, No. 24-23058.

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Marathon Digital Holdings Inc. (NASDAQ:MARA)

Marathon Digital Holdings Inc. has announced plans to sell $250 million in convertible senior notes, with the proceeds earmarked for acquiring additional Bitcoin. This move aligns with a strategy similar to that of MicroStrategy Inc., which has been increasing its Bitcoin holdings over the years in anticipation of a rise in cryptocurrency prices.

Strategic Moves and Market Impact

Marathon Digita, the largest Bitcoin miner in the U.S., is among several public mining companies that have resumed accumulating Bitcoin following the April ‘halving’ event, which reduced mining revenue. In 2022, many miners had been liquidating their Bitcoin reserves to manage high energy costs and industry challenges. The ‘holding’ strategy, as it’s known in the crypto world, could enhance the market presence of public mining companies as leveraged proxies for Bitcoin prices and potentially boost their stock prices, according to Ethan Vera, Chief Operating Officer at Luxor Technology.

The issuance of convertible notes also introduces the risk of dilution for existing shareholders. On Monday, Marathon’s shares fell by up to 12% to $15, reflecting a 34% drop in stock value for the year, despite Bitcoin’s 40% gain over the same period. As of July 31, Marathon held 20,818 Bitcoin and had a total of $1.6 billion in cash and digital assets. The company reported a nearly $200 million net loss for the second quarter, primarily due to a writedown on its digital asset holdings.

The convertible notes, set to mature in 2031, will be offered in a private placement to institutional investors.

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Top NFT Collections Drive Significant Sales

On August 11, DMarket dominated the non-fungible tokens (NFTs) market with an outstanding sales figure of $733,528, according to CryptoSlam data. DMarket, an NFT collection featuring in-game items from popular games such as Counter-Strike and Dota 2, outperformed other collections that day. The Mythos-based collection has achieved an all-time sales volume of $485.22 million, ranking it as the 14th largest collection in the NFT industry.

Other Leading NFT Collections and Blockchain Performance

The second-highest NFT collection for the day was Guild of Guardians Heroes on the Immutable blockchain, with a daily sales volume of $531,721, down slightly from the previous day’s $591,119. The Polygon-based Kgirl collection secured the third position with daily sales of $475,659. Solana NFTs filled the fourth and fifth spots, with DeGods achieving $332,921 and the DogeZuki Collection securing $311,838 in sales.

Despite DMarket’s leading position in sales, the Mythos blockchain did not top blockchain sales rankings. On Sunday, Ethereum emerged as the leading blockchain with $2.7 million in sales, while Solana followed with $1.94 million. Notably, last Thursday, Mythos led all blockchains in sales, with DMarket topping the Ethereum network.

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