The crypto markets hit an all-time high of $3 trillion earlier this week, and both bitcoin and ether also made new records in price -- bitcoin at $69,000 on Coinbase, and ether at $4,865.
As Sam Trabucco, co-CEO at Alameda Research, put it on my show, "the fact there hasn't been any negative news is the most important thing, I think ... there hasn't been a 'China banning crypto' level thing happening in the US or in any jurisdiction besides China." He also cites the launch of Bitcoin Futures ETFs a few weeks ago as one of the drivers of the bitcoin price rising.
He also discusses why Solana has risen so much this year, how he views Solana and Ethereum competing, and how Terra's burn of $4.5 billion worth of LUNA should affect that ecosystem. Be sure to check out the whole interview to find out why crypto has been on such a tear.
Besides price, it was a busy time in crypto this week.
On November 5th, the United States House of Representatives passed the Infrastructure Investment and Jobs Act, which contains two provisions that could heavily affect cryptocurrency tax reporting. So-called crypto "brokers" must report customer gains via a 1099 and any transactions over $10,000 to the Internal Revenue Service. To many in the crypto community, including advocacy groups such as Coin Center and the Blockchain Association, the bill defines a "broker" too broadly and could potentially impose reporting requirements on entities such as crypto miners and wallet developers for whom it will be impossible to comply.
In addition to the broad definition of broker, the bill includes an amendment to tax code section 6050i, which would require entities to report personal data on trading partners, like Social Security Numbers, for digital asset transactions over $10,000. Coin Center described the requirements of the bill as "unworkable" and possibly "unconstitutional." Even more striking, not reporting such an event would now be deemed a criminal felony, according to Abe Sutherland in his appearance on Unchained in October. (On Twitter, @DreamerHyena had a funny take.)
Jake Chervinsky, the newly hired executive vice president and head of policy at the Blockchain Association, explained that getting the language changed is most likely a lost cause in the short term. "Importantly, nothing will happen right away,” he said. “The crypto provisions don't go into effect until 2024. We can try to get them repealed or amended before then." He also noted the 2022 midterm elections could reshape Congress’s attitude toward crypto.
However, if nothing can be done to amend the legislation by 2024, a redefinition could fall to the Treasury Department. "It's up to the Treasury Department to decide who is subject to the provisions," Ivory Johnson, founder of Delancey Wealth Management, told CNBC. "Similar to the 'broker' definition, the Treasury Department will have to provide guidance."
Twitter announced a new business unit dedicated solely to crypto. The news was first reported by the Financial Times.
Tess Rinearson, formerly of Interchain Foundation, will be leading a team named, simply, Twitter Crypto. Rinearson said the new unit will be focused on supporting the existing crypto community on Twitter. "Twitter truly "gets" crypto (hello bitcoin tipping & NFTs!), but there's so much more to explore here," she said.
She went on to cite dapps and crypto communities as areas the team is looking forward to exploring. Twitter Crypto will be "working closely" with Bluesky, an off-shoot of Twitter looking to build a decentralized social network.
Twitter was far from the only web2 social media giant to dip its toes into the web3 waters this week. At the Solana Breakpoint conference, Reddit CEO Alexis Ohanian announced a $100 million investment into the Solana ecosystem through his Seven Seven Six venture company.
Additionally, Discord CEO Jason Citron posted a sneak peek of Discord's future, showing a direct integration with MetaMask into the popular gaming discussion platform.
However, after a wave of negative responses to his tweet, Citron walked back the hint, saying, "Thanks for all the perspectives, everyone. We have no current plans to ship this internal concept. For now, we're focused on protecting users from spam, scams, and fraud. Web3 has lots of good but also lots of problems we need to work through at our scale. More soon."
Changpeng Zhao, co-founder and CEO of Binance, hopes to secure status as a digital asset service provider in France in 2022. "France will be a natural choice for a regional, and even perhaps global, head office," said Zhao in an interview with Les Echoes (according to a translation from The Block).
Zhao went on to add, "We want to be regulated. At this stage of our development, this will allow us to grow faster. 5% of the world's population — 400 million people — have already adopted crypto, they are pioneers. We now want to convince the remaining 95%."
Zhao's words come as Binance faces regulatory scrutiny from the United Kingdom, Japan, Germany, the United States, and other jurisdictions.
Third-quarter earnings reports have slowly begun filtering out, and the numbers for crypto companies have not been pretty.
Coinbase cofounder and CEO Brian Armstrong (Steve Jennings / Stringer / Getty)
Coinbase, for example, saw a decline in monthly transacting users (by 16%), trading volume (by 29%), and net revenue (by 39%) between Q2 2021 and Q3. In response to the earnings report, Coinbase (COIN) shares fell roughly 10% on Tuesday afternoon in after-hours trading. As of press time, COIN is down 4.1% on the week.
Other centralized crypto companies saw similar dips between Q2 and Q3. Square's Cash App reported a 23% drop in its Bitcoin profits in Q3. Robinhood's numbers were even more drastic, as crypto revenue fell 78% between Q2 and Q3. Accordingly, total revenue shrank from $565 million to $365 million between earnings reports.
The US Securities and Exchange Commission (SEC) stopped a Wyoming-based decentralized autonomous organization (DAO) from registering two tokens as securities. The DAO, named the American CryptoFed DAO LLC, was legally recognized in Wyoming as a limited liability company (LLC) back in July, following Wyoming's decision to allow such an action.
The SEC alleges that the DAO "filed a materially deficient and misleading registration form known as a Form 10" that "failed to contain certain required information" about the DAO's business or tokens. The SEC alleges that the tokens, Ducat and Locke, are equity securities rather than utility tokens, as the DAO attempted to describe them.
According to Gabriel Shapiro, general counsel at Delphi Digital, it appears American CryptoFed DAO LLC was a sham. "To be clear, I don't fault the SEC for this,” he said. “It clearly was a troll. But does show that the "come in and register "not so easy of a thing." He added, "This is getting farcical...We need a better way."
Ethereum Name Service (ENS), the company behind .eth domain names, began an airdrop of its governance token, $ENS, to existing name registrants this week.
Shortly after the airdrop, which gives users the power to vote on how ENS will function going forward, the $ENS token price skyrocketed, shooting up to a high of $85.69 on Wednesday morning. At such high prices, users are reporting their airdrops are now worth upwards of $20,000.
Interestingly, to claim a drop, users had to vote on the ENS governance constitution. Furthermore, claimants were required to delegate tokens, aka their voting power, to addresses, owned by the likes of Coinbase, that applied to be delegates.
As of press time Thursday afternoon, $ENS was at $63.57, a 100% increase from its initial trading price of around $30 -- good for a market cap of approximately $930 million.
Fun Bits
CityCoin has the full support of Eric Adams, the next mayor of New York City, to launch its NYCcoin. Said Adams, who takes office January 1st, 2022, "We're glad to welcome you to the global home of Web3! We're counting on tech and innovation to help drive our city forward."
Anyone can mine NYCCoin, and 30% of funds spent mining the coin goes to a crypto wallet reserved for the municipal government. A similar program in Miami, dubbed MiamiCoin, which is already live, has already generated $20 million, according to CityCoin.
Speaking of MiamiCoin, Miami Mayor Francis Suarez announced that it will be the first city to give a bitcoin yield directly to residents by using the proceeds of MiamiCoin.
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(Cover photo credit: NurPhoto / Contributor / Getty Images)
