🌵 The ‘Crypto Wild West’ Is Finally Over
The EU introduces the world’s most comprehensive Bitcoin and crypto regulation, Coinbase is losing patience with the U.S.’s hostility, and Taylor Swift was too smart for FTX.
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Hey everyone,
Are you a fan of outlaw westerns? Where the bad guys win, or at least get away with it? Then I have bad news because that time is now passing in the crypto space. We also look at Coinbase's contingency plans as they get frustrated with the US. And we cover how Taylor Swift was too smart to fall for FTX.
In case you missed it last week: We just launched the first edition of our Relai Bitcoin Report, a quarterly research report covering the most significant developments in Bitcoin. Head over to our blog and get the report for free.
By the way: This weekly newsletter is also available in German; you can sign up here.
Quote of the Week:
“This regulation brings a competitive advantage for the EU. The European crypto-asset industry has regulatory clarity that does not exist in countries like the U.S.”
🌵 The ‘Crypto Wild West’ Is Over In Europe and the U.S.
2023 is turning out to be the year of reckoning. FTX’s spectacular downfall took the reputation of an industry with it, which will go down in history as one of the craziest and most audacious speculative bubbles ever. Now, we slowly start to see a new playing field in the ruins of it all. And the rules of this game look like to be very different in Europe and in the U.S. To the surprise of many, the EU now leads by introducing MiCA, a uniform crypto licensing regime that regulates digital assets. Sadly, anonymous cryptocurrency transactions were more or less abolished in the process. MiCA requires companies to obtain a license to operate throughout the EU, with complete implementation expected in 12 to 18 months. In contrast, the U.S. focuses on enforcing existing securities laws, with the SEC accusing major exchanges like Coinbase of selling unregistered securities.
My take: The EU is now at the forefront of regulating cryptocurrencies, while the U.S. wants to make companies and assets apply to its existing rules. We’ll see whether those approaches protect consumers from predatory businesses like FTX and shady crypto tokens. If you want to read more about MiCA, I recommend this excellent article by Patrick Hansen.
🇺🇸 Coinbase Is Considering Leaving The U.S.
The strict regulatory approach in the U.S. is already showing: Coinbase, America's largest Bitcoin exchange, is contemplating focusing more on Singapore, Brazil, the UAE, Canada, and Europe, and even acquiring a license from an offshore jurisdiction like the Bahamas due to the United States unfavorable regulations on cryptocurrencies. The company has expressed frustration In the previous months, summarized in a telling blog post titled ‘We asked the SEC for reasonable crypto rules for Americans. We got legal threats instead.’ In the past, Coinbase emphasized that it was U.S. based and wants to play by the rules, to no avail. Since the start of the year, it has faced several regulatory challenges, including a recent $100 million fine and possible SEC charges for securities law violations. This uncertain regulatory environment extends to other major cryptocurrency exchanges like (offshore) Binance and (U.S.-based) Kraken, which have also faced penalties and increased scrutiny from authorities.
My take: Many of Coinbase’s offerings are questionable. I don’t think exposing newbie investors to dozens of dog-themed crypto tokens is a good idea. On the other hand, it’s understandable that Coinbase is losing its patience. Bitcoin, of course, doesn’t care about any of this.
🧠 Taylor Swift Was Too Smart to Fall for FTX
Sam Bankman-Fried's fraud-ridden cryptocurrency exchange, FTX, managed to attract numerous wealthy and influential endorsers, but singer-songwriter Taylor Swift wasn't one of them. The pop star had considered a $100 million endorsement deal with FTX in the fall of 2021 but backed out after questioning the legality of the FTX-issued cryptocurrency. Swift's prudence paid off, as the Securities and Exchange Commission later confirmed the currency was not properly registered. According to attorney Adam Moskowitz, who is leading a lawsuit against FTX and its celebrity spokespeople, said that the singer actually asked: “Can you tell me that these are not unregistered securities?”. While Swift avoided the scandal, celebrities like Larry David, Gisele Bundchen, Tom Brady, and Stephen Curry weren't so fortunate (and clever). They now face a $5 billion class-action lawsuit for promoting the deceptive crypto exchange during the 2022 Super Bowl. Swift's financial wisdom might stem from her family history—her great-grandfather once chaired a renowned Pennsylvania bank.
My take: Healthy skepticism pays off – especially regarding sponsorships at the height of the crypto hype. I certainly wouldn't want to be in the shoes of those celebrities who weren't as bright as Swift.
Short news:
Highlights from Relai:
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