February 16, 2022 | Issue #208

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 MUST READS 

The Revolution Will Not Be Televised

Super Bowl Sunday, as many of you are aware by now, came with a flux of crypto commercials from big industry brands such as Coinbase, FTX, eToro, and Crypto·com. As crypto enthusiasts ourselves, it was entertaining to see the creative lengths each brand went, such as Coinbases's QR code stint, to appeal to the masses on the big screen.

Now, there's no debate that the recent crypto commercial showdown had a tremendous impact on crypto adoption. For example, one QR code/ad placement drew more than 20 million hits to Coinbase's landing page in one minute and helped the exchange rocket from 186th place on Apple’s App Store to 2nd.

But what if we told you that the best ad of the week wasn't televised on Super Bowl Sunday, and was instead, hiding between the lines inside one of the most ludicrous court orders we've seen in years?

Crypto's Shining Moment:
This week, the Canadian government for the first time invoked the Emergencies Act in a bid to restrict the flow of funds to truck drivers protesting the country's COVID-19 restrictions.

Under the act to curb "terrorist financing," the government gave banks, credit unions, loan companies, securities dealers, and insurance companies full discretion to freeze and seize funds held in bank accounts, target Bitcoin crowdfunding campaigns, and take a number of other actions to force an end to the demonstrations.

The move comes after weeks of (mostly peaceful) protest by a group of truck drivers dubbed the "Freedom Convoy," which has taken to blocking roadways, flouting mask rules, and honking their horns to voice their displeasure with vaccination mandates.

Pro Freedom Convoy or not, this is a hand-gifted PR opportunity for Bitcoin. The fact that the Canadian government has the power to unilaterally freeze any bank account (not to mention, they already froze a $9 million crowdsourced GoFundMe campaign) runs awfully close to egregious Authoritarianism.

The adoption of crypto won't only be fueled by Lebron James, Larry David, and QR codes. No, it will be fueled by the ongoing government infringements on your civil rights and individual freedoms.

If you are your own bank, holding your own keys, sending and receiving funds in a truly peer-to-peer fashion – no government can stop you.

This is why we Bitcoin.

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“Crypto God” Invests Over $100 Million In Unexpected Alternative Asset

There's a new alternative investment we needed to tell you about. Justin Sun, an early BTC billionaire aka "the Crypto God" just invested over $100 million in it. It's not a new alt coin, NFT, and has nothing to do with blockchain.

Shockingly enough, it's real multimillion-dollar contemporary art.

Sun and certain other crypto bulls love this alternative asset because, like BTC, art's supply is limited but can also decline. In other words, top-tier paintings are non-fungible. This scarcity has caused the prices of some paintings from top tier artists to explode:

Although not guaranteed, here are a few examples:

Picasso’s Marie-Thérès: +1,400% (1998-2021)...
Basquiat’s Skulls: +5,286% (1982-2018)...
Davinci’s Salvador Mundi: +624,999,990% (1958-2017)...

Want more? Good, strap in. Contemporary art prices also outpaced S&P 500 returns by 164%, with little correlation to stocks from 1995 to 2021. That's especially incredible considering the historic bull run over that period.

How can you get access? Historically this type of art has a $1-$20 million price floor. But, we've partnered with the only platform that lets you invest in million-dollar paintings for a fraction of the original cost.

With Masterworks.io, the $1B fintech unicorn, you can easily invest in paintings by legends like Banksy, KAWS, and Basquiat.

Ultra-exclusive investments at a starting point that's less than a few BTC? Sounds good to us...

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 DEEP DIVES 

Opportunities In The Metaverse

You may already be familiar with how Mark Zuckerberg views the metaverse. But what if you wanted to know how big banking and finance are viewing the metaverse?

In their report, titled Opportunities in the Metaverse, JP Morgan sheds some light on its projected "$1 trillion market opportunity," outlines its version of Web3, and explains how the bank plans to operate in the digital world, much like it already does in the real world.

But it doesn't stop there...

Alongside the report, JP Morgan has unveiled its virtual 'Onyx Lounge' inside Decentraland... because apparently we all want to virtually visit bank lobbyrooms during our free time.

Crypto Gone Mainstream

For the first time, the number of US citizens holding crypto has surpassed the number of citizens with a savings account, according to a recent global survey published by Morning Consult.

The share of US adults who report owning cryptocurrency (24%) is roughly equal to the share who report owning a certificate of deposit (23%), and not a far cry from the share who report having a brokerage account (31%).

Other Key Insights:

• Latin American countries still have among the highest rates of cryptocurrency ownership, but European nations Germany, Spain and the U.K. have grown significantly in the past six months.
• Despite the bull market, baby boomers remain largely disinterested in cryptocurrency. Their reported cryptocurrency ownership has stayed relatively stable throughout the year, ranging from 6% to 8%.
• High-income individuals represent a disproportionately high share of cryptocurrency owners, a quarter of whom report annual household incomes of $100,000 or more, compared with 15% of the general population.

Related: Number of Ethereum Addresses Holding 0.1 ETH Hits All Time High

A Guide to DeSci, the Latest Web3 Movement

Blockchain continues to disrupt industries, with the latest being modern science in what has become known as the decentralized science movement, or DeSci.

The goal of the DeSci movement is to enhance funding, unleash knowledge from silos, eliminate reliance on profit-hungry intermediaries such as publisher conglomerates, and increase collaboration across the field.

Although in it's early stages, this writeup from Sarah Hamburg is the perfect place to start for those wanting to learn more.

Related: A Decentralized Future With Credit Ratings

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Join the joint revolution before the campaign closes this Friday, 2/18.

 REGULATORY FRONT 

BlockFi Settles with SEC; Agrees to Pay $100 million

The SEC seems to be keeping itself busy this week with major probes into the crypto economy.

On Monday, crypto lending company, BlockFi, agreed to pay $100 million to settle allegations that they violated securities law. BlockFi will pay $50 million to the SEC and $50 million to 32 state governments with no party admitting or denying any wrongdoing.

“Today’s settlement makes clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940.” - SEC chair, Gary Gensler

This comes after more than a year of scrutiny from the SEC and state regulators towards BlockFi, and the overarching theme of the SEC targeting crypto lending.

How Did We Get Here?
Founded in 2017, BlockFi raised tens of millions of dollars to become a crypto-based bank. In March 2019, BlockFi began offering customers a chance to lend the company digital assets and earn interest on those loans, amassing hundreds of thousands of customers in the process.

Why Does The SEC Care?
Regulators said the program was essentially an investment contract, in which customers lent their money with the promise they would be repaid more at a later time. The SEC believes that BlockFi should have registered its offerings as securities as well as registered itself as an investment company.

BlockFi Must Be Shook... Right?
Well, not really. The day after the settlement was reached, the company said it was formally registering a new cryptocurrency lending project called BlockFi Yield that would be SEC-compliant. As of March 31, 2021, BlockFi had more than $15 billion in AUM and more than 350,000 funded accounts.

Our Take:
This settlement doesn't really help anyone but the SEC and BlockFi.

There were no guidelines established and no clarity for future companies. As Matt Levine from Bloomberg puts it, the SEC is simply engaging in “regulation by enforcement.” This is akin to your mother telling you to do something "because they said so."

If the SEC believes that tokens are securities, they should outline the rules. SEC chair, Gary Gensler, has previously said that crypto companies should come in and talk to regulators, but remember that Coinbase did that and then got spat on.

Also, how does the SEC come up with these numbers? BlockFi offers people interest on their crypto holdings... the result? A $100 million settlement. Block One raises $4 billion in an ICO which the SEC calls an "unregistered securities sale"... the result? A $24 million settlement. Seems fair. 🤷

Binance Is Staying Busy

The SEC seems to have a new target in its crosshairs: Binance US, the US division of Binance.

On Tuesday, The WSJ reported that the SEC was examining the relationship between the world's largest exchange and two trading firms with ties to the company's founder, Changpeng Zhao (CZ).

Merit Peak Ltd. and Sigma Chain AG act as market makers on Binance US, helping level out price fluctuations when markets are choppy by continually buying and selling. In doing so, they collect a small percentage of the trade.

According to the WSJ, corporate documents tie CZ to the two firms, and former executives say that as of late last year CZ controlled them both. Now, in and of itself, having a single entity own both the market maker and the exchange isn't illegal (FTXs owner SBF also owns the market maker Alameda), but the SEC is exploring whether Binance US properly disclosed the information and/or gave the market makers an unfair advantage.

Meanwhile, Binance is distancing itself from its native blockchain and token, by renaming them. The company's blockchain ecosystem, previously known as Binance Smart Chain, will now be known as BNB Chain, and its token BNB –previously Binance coin –will now been be renamed "Build and Build."

As if that wasn't enough, Binance has also made a $200 million investment into Forbes to help the company go public through a SPAC.

 TWEET OF THE WEEK 

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Analyzing The Heck Out Of Alternative Assets

Your portfolio has probably been getting hammered lately. Especially if you're all-in on tech stocks and crypto.

It might seem like this is a temporary blip. But if you're wise, you know it's time to diversify.

For example, did you know that comic books are way up? Or that tickets are mooning? Or that farmland is completely unaffected?

To understand more, read Alts. It's a newsletter that analyzes alternative investment markets. Stefan and Wyatt provide original research that help you become a better investor.

Oh, and they don't just track these markets, they are actually crushing them. While everything else in the world was down last week, their own recommendations were up 1.4%.

Join 28,000 others and see what you've been missing.

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