Crypto Lending Situations - The WAGMI Journal #2

Is asking for an 8% APY savings account too much?

In today’s issue:

Bitcoin price is above $62,000 and all eyes are on the ProShares BTC ETF. Bitcoin dominance is back up to ~46% for the first time in the past 2.5 months. Crypto lending platforms are under a lot of scrutinies. Interactive Brokers enter crypto trading. Politicians becoming louder with their crypto opinions; and many more.

- Curated by Marco Manoppo (@manoppomarco)

📰Market News

⎆NYAG Directs Crypto Lending Platforms

NYAG Letitia James, which was known for leading the case against Tether, has ordered two crypto lending platforms (allegedly Nexo & Celsius) to cease their activities. The argument here is that the platforms are violating securities law by providing interests on customers’ capital. Although these crypto lending platforms have gained traction since 2019, there has not been any serious action from regulators or any explicit statement on whether or not their activities are “appropriate”.

In reality, the situation is a lot more complex. A crypto maximalist would craft and convey arguments that claim crypto lending platforms are not securities. After all, who wants to lose their 8% APY (on USD) when the national average interest rate for US savings accounts is 0.06%.

Matt Levine from Bloomberg Opinion wrote a great piece on this issue, elaborating in detail the different arguments that all involved parties might make. I recommend reading it to get the full picture.

Jen Wieczner @jenwieczner

+1 to @matt_levine's take on Coinbase lending. The securities test has existed since 1946. So Coinbase thinks the SEC is supposed to come and tell crypto companies whether those rules ALSO apply to them? Is anyone at Coinbase asking why WOULDN'T the SEC rules apply to them?

Bloomberg @business

Is a crypto lending program a security, or not a security, or a bank account? https://t.co/STpipfGQnM

If you’re curious what industry players are saying, take a look at Brian Armstrong’s thread from last month.

Brian Armstrong @brian_armstrong

5/ They responded by telling us this lend feature is a security. Ok - seems strange, how can lending be a security? So we ask the SEC to help us understand and share their view. We always make an effort to work proactively with regulators, and keep an open mind.

⎆Interactive Brokers Introduces Crypto Trading

One of the world’s largest global brokerage firms, Interactive Brokers, launched crypto trading for Registered Investment Advisors (RIAs) in the US. The available assets will be BTC, ETH, LTC, and BCH via Paxos Trust Company. This marks another entrance from a more traditional brokerage firm into crypto. All in all, a piece of net positive news but not surprising at all given how lucrative the fees that brokers can receive from crypto trading activities. Remember how Dogecoin accounted for ~60% of Robinhood’s crypto revenue in Q2 2021?

⎆Invesco Drops Bitcoin Futures ETF Plan

One day short of a competing product hitting the market (ProShares), Invesco decided to pull out from the race without much explanation. The firm, however, did state that it will continue to collaborate with Galaxy Digital including in its effort to pursue a physically-backed digital asset ETF. As of the time of writing, Invesco has not filed a notice to formally withdraw its ETF filing.

👨🏻‍💻Decentralized Finance (DeFi)

• Five Polkadot (DOT) Parachains Tipped For Early Adoption

• Yearn (YFI) Developer Matt West Is Running for Congress

• Indexed Finance (NDX) Claims to Have Found Hacker Who Stole $16 Million

🦮NFT & Metaverse

• Why a CryptoPunks Owner Turned Down $9.5M in Ethereum for His NFT

• Steam Bans Crypto Games While Epic Games Welcomes Them

• Facebook to Hire 10,000 People in EU to Build the ‘Metaverse'

Top Sales (Last 24-h); Source: https://dappradar.com/nft

📈Deal Flow & Capital Raise

• PrivacySwap - $1M Seed Round

• Genopets - $8.3M Seed Round

• Good Games Guild - $1.7M Seed Round

• Obol Technologies - $6.15M Seed Round

⚖️Regulatory Update

• Ghana Wants to Make Its CBDC Available for Use Offline

• Senator Lumis Believes Digital Currencies Could Help Avoid A Financial Crisis

• Russia Aims to Replace Us Dollar Reserves With Digital Assets in Long Term

• Huobi Japan Gets Regulators’ Go-Ahead to Offer Derivatives

• Former SEC Official Expects More Bitcoin ETF Approvals

📚Noteworthy Reads

• Bitcoin Futures ETF Primer

• Packy McCormick’s Not Boring Capital Fund I Update II

• Liquidity Mining and Mercenary Capital Thread

For the first week (and maybe a few after), this newsletter is intended for friends and family as we’re sharpening our value offering and content.

Feel free to reach out to manoppomarco@gmail.com — feedbacks and constructive criticisms are much appreciated.

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DISCLAIMER:

All the information presented on The WAGMI Journal publication and its affiliation is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, and any other forms of advice.