Tether’s investment arm has invested in Ark Labs, the developer of Bitcoin Arcade’s programmable infrastructure, as part of a $5.2 million funding round to expand stablecoin capabilities on the Bitcoin network.
According to Thursday’s announcement from Ark Labs, the investment is intended to support infrastructure that will allow stablecoins such as USDT (USDT) to be issued, transferred and settled in Bitcoin (BTC) more efficiently.
The Lugano, Switzerland-based startup is developing an execution layer designed to support instant and programmable transactions in Bitcoin. The funding round brings the company’s total funding to $7.7 million.
Other investors in the seed round include Sats Ventures and Contribution Capital with participation from Anchorage Digital. Details on the size of the various stakes have not been disclosed.
Currently, Bitcoin does not appear among the stablecoin host chains, according to DefiLlama, which shows about $161 billion of stablecoins on Ethereum (ETH) and about $86 billion on Tron (TRX), out of a total stablecoin market capitalization of about $315 billion.
Tether’s independent investment team directs capital from the company’s profits and reserves to companies that build infrastructure around digital assets and related technologies. Its portfolio includes sectors including financial services, artificial intelligence, energy and digital media.
Arkade aims to give developers and institutions the ability to build applications such as payments and financial services on Bitcoin by enabling more complex transaction logic than the underlying layer currently supports.
The investment comes about a week after Tether, the issuer of USDT, the largest stablecoin by market capitalization, completed a $50 million investment round in sleep technology company Eight Sleep, which aims to support the integration of artificial intelligence agents into its products.
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Companies are expanding financial infrastructure on Bitcoin
While Bitcoin has not traditionally been known for supporting complex financial applications, a growing number of companies are building infrastructure that aims to expand the use of Bitcoin beyond simple transfers to payments and financial applications.
In 2023, Bitcoin infrastructure company Lightning Labs released the main alpha of the Taproot Assets network, a protocol designed to mine stablecoins and other assets in Bitcoin and transfer them over the Lightning network.
Other initiatives include Rootstock, a smart contract platform powered by Bitcoin co-mining that supports decentralized finance (DeFi) applications connected to the network.
Institutional players have also started integrating Bitcoin-based financial layers. In February, crypto storage provider Fireblocks said it would integrate Stacks blockchain, a decentralized Bitcoin financial layer, to provide institutional clients with access to Bitcoin-based DeFi-based lending and yield opportunities.
In March, Bitcoin infrastructure developer Babylon Labs said it would work with Ledger, a hardware wallet maker, to allow users to lock Bitcoin in programmable vaults while maintaining ownership of their assets.
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