Tether’s investment arm has invested in Ark Labs, the developer of the programmable Bitcoin infrastructure Arkade, 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 enables stablecoins such as USDT (USDT) to be issued, transferred and settled more efficiently on Bitcoin (BTC).
The Lugano, Switzerland-based startup is developing an execution layer designed to support instant and programmable transactions on 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. Specifics on the sizes of the various stakes were not disclosed.
Currently, Bitcoin does not appear among chains hosting stablecoins, as per data from DefiLlama, which shows about $161 billion in stablecoins on Ethereum (ETH) and about $86 billion on Tron (TRX) out of a total stablecoin market capitalization of around $315 billion.
Tether’s independent investment arm deploys capital from the company’s profits and reserves into companies building infrastructure around digital assets and related technologies. Its portfolio spans sectors including financial services, artificial intelligence, energy and digital media.
Arkade is intended 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 base layer currently supports.
The investment comes about a week after Tether, the issuer of USDT, the largest stablecoin by market capitalization, led a $50 million investment round in sleep technology company Eight Sleep aimed at supporting the integration of artificial intelligence agents into its products.
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Companies expand financial infrastructure on Bitcoin
While Bitcoin is not traditionally known for supporting complex financial applications, a growing number of companies are building infrastructure aimed at expanding Bitcoin’s use beyond simple transfers into payments and financial applications.
In 2023, Bitcoin infrastructure company Lightning Labs released the mainnet alpha of Taproot Assets, a protocol designed to enable stablecoins and other assets to be issued on Bitcoin and transferred over the Lightning Network.
Other initiatives include Rootstock, a smart contract platform secured through merged mining with Bitcoin that supports decentralized finance (DeFi) applications tied to the network.
Institutional players have also begun integrating Bitcoin-based financial layers. In February, crypto custody provider Fireblocks said it would integrate the Stacks blockchain, a decentralized finance layer for Bitcoin, to give institutional clients access to lending and yield opportunities tied to Bitcoin-based DeFi.
In March, Bitcoin staking infrastructure developer Babylon Labs said it would work with Ledger, a hardware wallet maker, to enable users to lock Bitcoin into programmable vaults while maintaining self-custody of their assets.
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