ARKB and Chainlink Set New Standard for ETF Transparency

Ark Invest and 21Shares boost ARKB ETF transparency with Chainlink Proof of Reserve on the Ethereum mainnet, allowing investors to directly verify Bitcoin holdings.

Ark Invest and 21Shares have implemented Chainlink Proof of Reserve on the Ethereum mainnet to increase the transparency and security of the ARK 21Shares Bitcoin ETF (ARKB), allowing real-time verification of its Bitcoin holdings. This initiative, using off-chain reserves data from Coinbase and on-chain reporting through Chainlink oracles, aims to provide unparalleled insight and safety for investors. Meanwhile, Chainlink's recent partnership with Telefónica addresses some of the latest Web3 security concerns by combating SIM Swap attacks via the GSMA Open Gateway.

Ark Invest and 21Shares have integrated Chainlink Proof of Reserve on the Ethereum mainnet to enhance the transparency of the ARK 21Shares Bitcoin ETF (ARKB). This development,which was announced on Feb. 28, allows investors to verify that the ETF's Bitcoin holdings fully support its value, all thanks to the public accessibility of the underlying Bitcoin reserve and its historical data through Chainlink Proof of Reserve.

The mechanism uses off-chain reserves data sourced directly from Coinbase, with on-chain reporting of reserve information facilitated by Chainlink oracles. Ophelia Snyder, the co-founder and President at 21 Shares US, shared her excitement about the collaboration: “This collaboration allows us to offer an unmatched level of insight and safety for our investors’ holdings for ARKB, reinforcing 21Shares’ commitment to leading the way in secure, transparent asset management.”

This move towards transparency comes after Bitwise, a Bitcoin ETF issuer, shared the on-chain address for its BTC holdings in January and received wide praise from industry experts who called for other ETF issuers to do the same.

Johann Eid, the Chief Business Officer at Chainlink Labs, also commented on the Chainlink Proof of Reserve: “Chainlink Proof of Reserve is not just enhancing the security and transparency of the ARK 21Shares Bitcoin ETF, but also empowering institutions and market participants with the confidence to actively engage with on chain finance.“

Since the US SEC's approval of several Bitcoin ETFs for trading in January, these investment vehicles have seen a very positive trend and widespread adoption. Among the launched spot Bitcoin ETFs, ARKB is one of the top performers, although it is still behind BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Trust (FBTC) in terms of assets under management (AuM). Currently, the ETF holds around 33,000 BTC, valued at approximately $2 billion.

Its integration with Ark Invest and 21Shares is not the only major partnership on the plate for Chainlink. Earlier this month, Telefónica, a leading global telecommunication services provider, embarked on a partnership with Chainlink to battle security in the Web3 domain, especially in the context of the increasing "SIM Swap" attacks and other Web3-related security vulnerabilities.

This collaboration plans to improve the security framework for smart contracts by using the GSMA Open Gateway, an organization that consists of over 1,000 mobile operators and businesses. The GSMA Open Gateway introduces Application Programmable Interfaces (APIs) designed to integrate telecom technologies with the Web3 ecosystem.

One of the main goals of this initiative is to enhance the functionality and security of Web3 applications, thereby contributing to a more secure and verifiable digital landscape. A highlight of this collaboration is the introduction of the first GSMA Open Gateway API, dubbed SIM SWAP, in Brazil by Telefónica. This will add an extra layer of security to blockchain transactions by enabling smart contracts to verify if a device's SIM card has undergone any unauthorized changes.

The initiative addresses the issues around SIM Swap attacks, which is a form of cyber attack that involves identity theft and the false impersonation of financial account holders. These attacks have been increasingly used in the Web3 industry, with one of the most high-profile cases involving the theft of $400 million from Sam Bankman-Fried's FTX during its collapse in 2022.

Through this partnership, Telefónica and Chainlink are setting a new standard for security in the digital age, offering much better protection mechanisms for blockchain transactions and setting a precedent for the integration of telecommunication technologies into the blockchain space.

Chainlink is a cornerstone in the blockchain landscape, ingeniously designed to forge a secure link between blockchain networks and the external world through a decentralized oracle network. The platform addresses a critical challenge faced by smart contracts on blockchain platforms like Ethereum: accessing real-world data in a secure and reliable way. By serving as a bridge for off-chain data sources—ranging from financial markets to weather forecasts—Chainlink allows smart contracts to operate based on accurate, real-time information, thereby expanding their applicability across various sectors.

The backbone of Chainlink's ecosystem is its native digital currency, LINK. This token plays a crucial role in the network's economics, serving not only as a reward for node operators who facilitate the data processing and validation necessary for the network's operation but also as a means of securing the smart contracts through collateralization. This ensures the reliability and integrity of the data fed into the blockchain.

While Chainlink is built on the Ethereum blockchain, benefiting from its robust and secure infrastructure, it differentiates itself through its singular focus on data integrity and security. Chainlink's commitment to transparency and community involvement is also seen in its open-source nature, inviting developers and enthusiasts to contribute to its evolution and growth. As a specialized tool, Chainlink enhances the functionality of blockchain technology, making it indispensable for the development of complex, real-world blockchain applications by providing a secure, reliable bridge between on-chain and off-chain worlds.