Welcome to the new digital world where (as I write) the big cryptos are looking to end the week on a high. Behind the scenes, we learn what’s going on in Washington, DC, Cardano (ADA USD), helium (HNT USD), and more. Here are the details.
Source: Marie Shearin Images / Shutterstock.com
Regulators and politicians are getting loud about crypto
SEC Chairman Gary Gensler doesn’t just have a Twitter account… He posts a lot of videos there. Looking at his latest, I suspect he will continue to piss off people in the crypto industry.
In Thursday’s video, Gensler said he urged staff to “get [platforms] registered and regulated to ensure these crypto tokens are also received and registered as securities where appropriate.” Otherwise, we could “risk undermining 90 years of securities law.”
Gensler also criticized that crypto exchanges work differently than exchanges. Namely for “act[ing] as a market maker” as “this creates inherent conflicts of interest. I asked the staff to consider whether it would be appropriate to separate the market-making functions on these crypto platforms.”
For what it’s worth: Decentralized market makers are available for crypto trades. In other words, there is no (human) middleman. The decentralized exchange (DEX) itself uses a protocol that defines prices and provides “pools of liquidity” – automatically.
Many of the most popular DeFis are in this business. There is Uniswap (UNI USD), a mainstay of ours Crypto Investors Network Portfolio for almost two years. Other automated market makers include Curve (CRV USD), pancake swap (CAKE USD), Raydium (RAY-USD) and cyber (KNC USD) to name a few.
If crypto exchanges feel compelled to operate more like the NYSE or Nasdaq, I would expect them to benefit – and proliferate. For example, there are over 500 market maker firms for the Nasdaq alone.
Also looking for crypto: Commodities and Futures Trading Commission (CFTC). They are the preferred regulator in Republican Senator Cynthia Lummis and Democratic Senator Kirsten Gillibrand’s new crypto law (which is expected to come into play in 2023). In preparation, CFTC Chairman Rostin Behnam is setting up an “Office of Technology Innovation”.
We’ve also heard from three Democratic senators that it seems “unwise” for Fidelity Investments CEO Abby Johnson to allow this to happen Bitcoin (BTC USD) in 401(k)s…
While the Federal Deposit Insurance Commission also entered the chat!
On Thursday: The FDIC (along with the Federal Reserve) sent a cease and desist letter to struggling “crypto bank” Voyager Digital.
According to them, Voyager’s marketing implied that she was FDIC-insured, so customers would be insured if Voyager were to collapse. “In reality, the company simply had a deposit account with the Metropolitan Commercial Bank, and clients investing through the company’s platform did not have FDIC insurance, regulators said,” according to Reuters.
How to check: Check the legal guidelines on your crypto app’s website. It’s often just like Voyager: they’re not directly FDIC-insured — they’re sending deposits to someone who is. If you go to the FDIC’s BankFind website, you can confirm the Voyager (Metropolitan Commercial Bank) partner coin base (NASDAQ:COIN) like partners silver gate (NYSE:AND), for example.
Cardano upgrade postponed “a few weeks longer”.
Cardano (ADA USD) the developers were expected to do a “hard fork” of the blockchain this Sunday, July 31st, to push out some major upgrades for a brand new version of Cardano…
But yesterday, in the July Cardano360 video, we learned that the team needs more time.
“When we create a rollout plan, we provide dates to help the community plan their own rollout… [But] From here it could be a few more weeks before we move on to the actual Vasil hard fork,” explained Kevin Hammond, the project’s technical lead.
“All the benefit [cases] must be ready to move on to the hard fork to ensure there is a smooth process. Both for them, but also very important for the end users of the Cardano blockchain.” Hammond came off very sanely in the video…
And ADA prices haven’t reacted badly to the news. Like many other major cryptos, Cardano is up around +6% since then (as of this writing).
Context: Nicknamed “Vasil,” this upgrade is all about scalability. The goal is to “increase throughput and decrease block transfer latency to “allow the network to process a larger number of transactions…without impacting network performance,” as I wrote earlier.
Cardano hasn’t done such a hard fork since last September, when “Alonzo” introduced smart contracts (so developers could build apps and NFTs). ADA has a long history of recovering heavily before each major upgrade.
Helium Hotspot Proceeds Controversy
Liron Shapira, who created a dating coach website called Relationship Hero and shares the wisdom he learned in this Bloated MVP blog, trolled helium (HNT USD) all week on Twitter.
First he wrote: “Helium, often cited as one of the best examples of a Web3 use case, has received $365 million in investments, led by @a16z. Ordinary people have also been persuaded to spend $250 million to buy hotspot nodes in hopes of earning passive income.
“The result? Helium’s total revenue is $6.5K/month,” Shapira concludes his tweet, citing this report from The Generalist. It went viral and landed Shapira an interview with popular crypto YouTuber Tactical Investing, who is in has posted excited videos about helium hotspots in the past.
Helium founder Amir Haleem responded with some corrections in his own Twitter thread and provided context.
“So why are they only paying for $6,500 worth of data? Unlike cellular networks, there aren’t millions of devices that can switch to @Helium. The best applications aren’t built yet, and they take months or years to build,” Haleem addresses the main criticism.
“Broaden your time horizon and focus on projects that get real work done and keep your head down during tough times. Anything else is just noise,” Haleem advises in his most recent tweet.
For what it’s worth: The generalist’s conclusion on helium was very different from the guy who quoted it on Twitter. And I generally find their content valuable, although you should note that their sources typically work at venture capital firms.
“It is clear that Helium’s network has room to grow. Indeed it must. While it has done an excellent job of scaling the supply side of the project with nearly 1 million hotspots, more demand is needed. 5G adoption could skyrocket this side of the market… In fact, winning the 5G war could pave the way to one of the world’s most valuable entities,” concludes The Generalist report.
Crypto wallet maker is getting into NFTs – and they are very popular
If you go to OpenSea to check out the best NFTs over the past 7 days, you’ll see a surprising face among the monkeys, “Potatoz,” and otherside metaverse plots…
Ledger just launched its own NFT marketplace that you can access directly in its hardware crypto wallets. “Ledger Market will simply be the only safe place to mint and buy NFTs,” the company claims… And to celebrate, Ledger has launched its own NFT collection. It was a great success:
10,000 [ Ledger ] Market Passes – Genesis Edition sold out in less than 24 hours.
THANKS. pic.twitter.com/l2kT4vC3jY
— Ledger (@Ledger) July 26, 2022
Ledger’s NFT was basically a VIP ticket. You’ll get “privileged access to new Ledger hardware” and your own limited edition “black on black Nano X” wallet, as well as exclusive NFT collaborations.
Targeting luxury brands in the fashion world, Ledger is a French company… so maybe we should pronounce it “Ledgé” when it comes up in conversation.
Speaking of: “Redeem-and-retain NFTs are the future of luxury goods,” states this thoughtful essay by Nic Carter.
The depth and enthusiasm for NFTs is remarkable because Carter was better known as a poster child Bitcoin (BTC USD) on financial TV and media… Until he was “excommunicated” after investing in a Web3 startup that spans multiple chains – not just Bitcoin/Lighting Network. gasp! Well, his essay is great reading to see why a hardware company (or any consumer company) would find NFTs worthwhile.
At the time of publication, Ashley Cassell held no position (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publicity guidelines. To receive more news from The New Digital World in your inbox, click here to sign up for the newsletter.
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