Tag Archives: Crypto

Solana Is the Most Popular Crypto of 2022

In what’s begun as a tough year for cryptocurrencies, Solana has attracted more investors than any other coin. The high speed network landed $6 million in inflows so far this year.

Larger competitors like Bitcoin and Ethereum have seen outflows in the tens and hundreds of millions of dollars.

What I find particularly striking is that Solana’s market cap is only a fraction the size of its larger peers. Bitcoin has a total value around $800 billion, and Ethereum nearly $400 billion.

Meanwhile, Solana is worth just $44 billion. Nonetheless, it managed to beat these much larger protocols in attracting investors.

This is a pattern I expect to continue long term. Solana can process tens of thousands of transactions per second for virtually nothing.

Compare that to Ethereum, where completing a single transaction costs about $46!

Would merchants accept a credit card that cost them $46 in transaction fees every time someone used it? Of course not.

Ethereum’s high fees will severely limit its use cases until the fees come down.

Bitcoin looks better at about $2 a transaction. But Solana charges mere fractions of a cent.

A new technology that’s dramatically faster and cheaper will win, regardless of the market. I expect Solana to continue to gain value relative to the older protocols.

At least until a swifter competitor enters the ring!

More on tech:

How Solana Could Wipe Out Visa and MasterCard

A Day in the Life of an Angel Investor

Is Fathom the Future of Blockchain?

Photo: “Solana Beach, CA Neon Sign” by JoeInSouthernCA is licensed under CC BY-ND 2.0

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Amazon Business American Express Card

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Is Fathom the Future of Blockchain?

I was blown away when I read how fast Solana can process transactions. But there’s a new kid on the block: Fathom.

Fathom is even faster than Solana on one important metric:

Solana averages 50,000 transactions per second, versus 14 per second on Ethereum. Fantom is not as fast as Solana, but it’s still way ahead of Ethereum; in a test run back in 2018, its blockchain processed 25,000 transactions per second. But Fantom has a pretty solid claim to being the fastest blockchain if you look at time to finality. This is arguably the most important statistic, as that’s the moment when a transaction has been fully validated on the chain. Fantom’s time to finality is about a second, versus 13 seconds on Solana and more than a minute on Ethereum.

To me, the metrics that matter are:

1) How long until my transaction is done?
2) How much does it cost?

Both Solana and Fathom are very cheap to run, and Fathom seems a little faster in finalizing transactions.

Both are light years ahead of Ethereum. I would expect to see Ethereum slowly fade unless there’s a major update to leapfrog the newer protocols.

Fathom is worth about $7 billion today. Could it one day be worth 100 times that, my bar for highly speculative investments?

I think it’s possible. Visa and Mastercard together are worth $830 billion. Add in American Express, and you’re at almost $1 trillion.

And that doesn’t cover banks that charge tons of wire fees. A protocol that could replace these high fees with near-zero ones could be worth $1 trillion or more.

The question is, which blockchain will dominate? I don’t know.

I would favor backing a lot of promising tokens early in the hope that one of them returns 100 or 1000 times one’s initial investment.

This is the same approach I take investing in startups. It can work well when there are numerous small, promising competitors and the likelihood of a winner-take-all outcome.

But buying all those tokens is a lot of work! An ideal investment vehicle would be an ETF that owns all the major coins (Bitcoin, Ethereum, Solana, etc.) and another that owns high speed smaller coins (Fathom, Near, etc.).

The SEC does not allow ETFs to directly hold cryptocurrency. Like so much of what the SEC does, this policy is counterproductive.

It should should approve crypto ETFs so that investors can spread their bets. If the government’s goal is protecting people’s savings, anything that aids diversification is a plus.

I’m excited to see what the future of finance will look like!

We may soon be living in a world where you can send anyone money in seconds for (almost) free. A world in which politicians can’t devalue your savings on a whim.

That’s a future worth building for!

More on tech:

A Day in the Life of an Angel Investor

How Solana Could Wipe Out Visa and MasterCard

This Week in the Venture Bubble

Photo: “Computer Circuit Board” by Defence Images is licensed under CC BY-NC 2.0

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Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

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Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

GameStop Now Accepting Dozens of Cryptocurrencies

GameStop Corp. is now accepting dozens of cryptocurrencies including Bitcoin and Dogecoin, per a report from Investor Place yesterday.

These cryptocurrencies can be used at any one of GameStop’s locations or online. GameStop is using the Flexa network, which supports a wide variety of cryptocurrencies.

This comes shortly after AMC Entertainment Holdings, Inc. began accepting crypto payments, including Bitcoin and Ethereum.

Meme stocks trying to draw in the adjacent crypto community is a wise move. All marketing costs money, but accepting crypto provides a bunch of press attention for the minimal cost of joining the Flexa network.

Flexa appears quite robust, with tens of thousands of retail locations on its platform. It reminds me of a Square for crypto; easy payment acceptance for merchants.

If GameStop ever delivers streaming games on its own platform, crypto payments could be particularly useful. Unlike with credit cards, customers from all over the world could purchase access with no foreign exchange fees.

Will accepting crypto payments make or break GameStop or AMC’s business? Of course not.

But for businesses that rely on foot traffic, anything that builds buzz at low cost is a huge win!

What do you think of GameStop and AMC accepting crypto payments? And who do you think will be next?

Let me know in the comments below.

This is the last blog for this week. I’ll see you again on Monday.

Merry Christmas!

More on markets:

Hedge Fund Paid Researcher to Write Misleading Reports on Seeking Alpha

Parody Site Sues Citadel to Stop Shutdown

How Did High Dividend Stocks Perform In the Last Crash?

Photo: Photo: “Retail GameStop” by ccPixs.com is licensed under CC BY 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

NFT Market is Growing 38,000% a Year, and AMC May Jump In

At its recent earnings call, AMC Entertainment Holdings, Inc. CEO Adam Aron revealed that the company may create its own non-fungible tokens (NFTs).

These unique pieces of digital art are exploding in popularity, per DappRadar:

In Q3, the NFT space generated over $10.67 billion in trading volume. This represents an outstanding 704% increase from the previous quarter and a colossal 38,060% increase year-over-year.

AMC is in a great position to dominate this market. Its partnerships with movie theaters could give it access to invaluable intellectual property, such as Marvel superheroes.

The movie studios would also gain by partnering with AMC. The theater chain already has a huge following among the young investors active in NFT’s.

Consider that a Degenerate Ape NFT recently sold for $1.1 million. Whatever its artistic merits, I suspect IP with broad recognition like the Avengers will be quite a bit more valuable.

Will minting NFT’s, creating its own crypto token, or accepting bitcoin make AMC a world-beating business all by itself? Of course not.

But AMC is doing what tech startups have done for years: experimenting with different products to find out what the market wants. If it hits pay dirt, it can expand that offering, driving lots of revenue.

I commend Aron and the AMC team for being so innovative. Best of luck!

More on markets:

AMC Fails to Deliver Jump 2700%

Let’s Make Our Own Index Fund!

Citadel Builds Huge Position in AMC Call Options

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You already shop on Amazon. Why not save $100?

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Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Polygon: Crypto’s Killer App?

Everyone loves Ethereum, right? It’s widely used and has a ton of code already out there for developers to slot into their projects.

But there’s one problem.

Ethereum can only process about 15 transactions per second. And the huge amount of computing power needed has gotten expensive. Some transactions can cost over $100 each.

What if there were a way to take the developer-friendly world of Ethereum and make it much, much faster?

That’s where Polygon comes in. Polygon can run at up to 65,000 transactions per second, far faster than even Visa’s huge network.

But developers can still use Ethereum-compatible blockchains and take advantage of the huge amount of code already available on Ethereum.

Similar to an API company like Plaid, the success of a smart contract platform like Polygon is all about developer adoption. The more widely it’s used, the more valuable it becomes.

Given that developers can write code on a platform they’re used to, I think Polygon will have a big advantage over most. It shows in the numbers: daily active users have gone from 750 at the beginning of the year to 192,000 in August.

Polygon is being used for a lot more than price speculation. The most popular project is QuickSwap, which lets you trade 100 cryptocurrency pairs quickly and easily.

My favorite project is Polymarket, where you can bet on real world events like elections or court cases. This could be useful for predicting the weather, a major need of agriculture businesses.

So will I be buying Polygon?

Despite its impressive technology, in a high risk investment like this, I’m looking for the possibility of a 100x return. I’d look for the same in a tech startup.

At a fully diluted market cap of $18 billion, Polygon may have already become so successful that it doesn’t make an ideal investment for me.

But I’ll be watching this awesome team to see what they come up with next!

More on tech:

How Elrond Could Take Over Payments Worldwide

How Tech Could Stop Wildfires

How Solana Could Wipe Out Visa and MasterCard

Photo: “File:Raspberry Pi Bitcoin Mining (14673305874).jpg” by Gareth Halfacree from Bradford, UK is licensed under CC BY-SA 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

AMC May Issue Its Own Cryptocurrency, Per CEO

Fascinating news from AMC:

AMC Entertainment Holdings Inc., already bolstered in the past year by technology, may go even further by issuing its own cryptocurrency.

The Leawood-based company’s CEO, Adam Aron, said on CNBC that the company is getting “hyperactive” when it comes to cryptocurrency, though he added that the idea is one of several the giant theater chain is working on.


I think this is an excellent idea. AMC’s business is on an upward trend, but it still suffers from heavy debt.

Its debt, at nearly $6 billion, far exceeds its cash balance of $1.8 billion, per the most recent quarterly report.

AMC could use a lot more capital to pay off that debt and free itself to pursue a bright future. But shareholders recently voted against the issuance of new shares that could’ve brought in over $1 billion.

They don’t want their ownership position diluted, of course.

But issuing a cryptocurrency dilutes no one. It’s essentially free money.

Given the intense interest in AMC by the meme crowd, I would expect these coins to do rather well. AMC could use that money to pay off some debt and be in a stronger position for the future.

Kudos to CEO Adam Aron for this innovative idea! I hope he pursues it.

More on markets:

Robinhood Exec Dumped AMC Right Before He Limited Trades, Lawsuit Alleges

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

Will Evergrande Spark a Global Financial Crisis?

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

How Elrond Could Take Over Payments Worldwide

I recently sent a wire transfer. The money was destined for a promising tech startup. I was so excited!

Then I logged into my account a few days later and noticed a mysterious $20 charge. Next to it, the dreaded words “Wire Transfer Fee.”

Eww. Why should sending what amounts to a text message cost $20? Because they can, that’s why.

I found another bank that offers free wire transfers, which is very rare. But this experience got me thinking: what if we blew up this system?

That’s where a new cryptocurrency called Elrond comes in. Since its launch last year, this innovative coin’s price has gone vertical:

But what’s even more impressive than that is its capabilities. The Elrond Network can process up to 263,000 transactions per second.

That’s more than ten times Visa’s capacity and over 25 times Ethereum 2.0’s.

It also uses a new technique called adaptive state sharding. This means that the network can create more nodes, which process transactions, as the network grows. It can also merge them if participants leave.

This means a network that scales up and down easily. No other cryptocurrency that I know of has this feature.

So what does it cost to process payments on Elrond?

Practically nothing. In fact, someone recently transferred $17 million for less than a penny on the Elrond Network.

Take that, banksters!

One fly in the crypto ointment could be Know Your Customer (KYC) regulations. These require identity verification for all accounts and payments and are designed to avoid money laundering.

But the entire banking industry handles KYC for just $500 million a year. The blockchain could actually make it easier and cheaper by letting banks share that info. That way, each bank doesn’t have to go through the process again with the same person.

So, does Elrond work as an investment? I’m not sure, and I’m eager to hear your thoughts on that. Leave a comment at the very bottom. (I don’t own Elrond currently.)

For anything this high risk, I’d like to see the possibility of a 100x or greater return, just like with early-stage startups.

The fully diluted market cap currently sits at $8 billion. Can it get to $800 billion?

That will depend on how much of the existing financial structure it replaces.

More on tech:

How Solana Could Wipe Out Visa and MasterCard

Why I Just Invested in Kippo, Where Gamers Find Love

The Hamster Crypto Trader That’s Outperforming Me

Photo: “Hobbit House from Lord of the Rings by Michael Matti” by Michael Matti is licensed under CC BY-NC 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

The Hamster Crypto Trader That’s Outperforming Me

I’ve got a fun one for you today: a German hamster is trading cryptocurrencies. And he’s blowing away the S&P 500:

The livestreamed hamster, named Mr. Goxx, has been independently trading a portfolio of various cryptocurrencies since June 12, and so far its* performance has been impressive. As of Friday, the portfolio was up nearly 24%, according to the @mrgoxx twitter feed that documents daily performance, along with every trade made by the hamster. Mr. Goxx’s performance outpaces bitcoin and the S&P 500 over the same time period.

Here’s a short video of this financial titan at Goxx Capital headquarters:

First, Goxx runs on the “intention wheel” to pick which one of about 30 cryptocurrencies to trade. Once the crypto is chosen, the hamster runs through one of two “decision tunnels” that trigger either a buy or sell trade of the chosen cryptocurrency.

As someone who invests for a living, I’m okay with being outperformed by a rodent. He earned it, and he’s also much cuter.

Whimsical as this example is, we attribute skill to fund managers who have a good run, only to forget them when they underperform. Bill Miller of Legg Mason was lionized for beating the S&P 500 15 years in a row. Shortly thereafter, his fund lost two thirds of its value in the financial crisis and he was out of a job.

I, for one, will be a supporter of Mr. Goxx even if his hot streak runs out.

Follow Mr. Goxx on Twitter, Reddit, YouTube, or Twitch!

Note: I object to the term “it” for this adorable little man!

More on markets:

How Solana Could Wipe Out Visa and MasterCard

China’s Crypto Ban and the Road to Total Control

Where Can We Hide in a Financial Crisis?

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order.

China’s Crypto Ban and the Road to Total Control

You just went to a protest marking the anniversary of the Tiananmen Square massacre. You were scared, but you went. You wore a mask and took a winding route home. No one could have seen you.

You arrive home to your Hong Kong apartment and decide to check your bank account. Did the rent get deducted yet?

But when you log in, you see the balance has gone from 21,000 yuan to zero.

A notice appears to contact your local Party office.

This is the future China wants to bring about. Its tools:

1) The social credit score
2) The digital yuan
3) The banning of cryptocurrencies other than the digital yuan

Today, China banned bitcoin and all other cryptocurrencies. All, that is, except its own digital yuan, which debuted this spring.

It wasn’t hard to see this coming. China banned cryptocurrency mining earlier this year. This is part of a long term trend toward total control under Xi Jinping.

China’s government has cracked down hard on tech companies, Hong Kong dissidents, and even seemingly random targets like celebrities.

What’s next? About five years ago, China’s government created a social credit score. Any action that upsets the government, from farebeating to protesting, can have dire consequences. One may be unable to get a loan, a job, or access the internet.

After the crypto ban, the next logical step for China’s dictatorship is to ban cash and all non-digital yuan. Then, all money is electronic, traceable, and centrally controlled.

Step out of line, and your life savings could be gone.

It’s a dark, dystopian future. But I strongly suspect it’s coming.

We in the United States and the rest of the free world should guard against any such thing being done here. I will be wary of attempts to ban cryptocurrencies or cash as paving the way for similar control. Control that has no place in a democratic society.

More on China tech:

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

How China’s Tech Industry Dies

China Is Crushing One of Its Most Innovative Companies

Photo: “1984” by jason ilagan is licensed under CC BY-ND 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Why is the SEC Threatening Coinbase?

The SEC has threatened to sue Coinbase Global, Inc. over its plans to introduce a crypto lending product called Coinbase Lend :

The U.S. Securities and Exchange Commission has told Coinbase Global Inc (COIN.O) that it plans to sue the cryptocurrency exchange if it goes ahead with plans to launch a programme allowing users to earn interest by lending digital assets, Coinbase said.

Coinbase was working with the SEC prior to the surprise lawsuit threat, per CEO Brian Armstrong:

Why is the SEC Doing This?

It’s not every day that the SEC privately threatens a lawsuit against a major American corporation. What is the SEC’s motivation here? From Cointelegraph:

The Commission could have a reason for not being forthcoming with information related to cryptocurrency lending products and this stance could be related to upcoming enforcement actions against the interests of BlockFi.

If the SEC is preparing to go after BlockFi and other players in the crypto lending scene then perhaps responding to Coinbase’s request for guidance might have constituted revealing its enforcement playbook prematurely.

Behind the Crypto Lending Boom

Behind the rush into crypto lending: incredibly low interest rates. Whether you look at bank deposits or treasury bonds, returns on safe assets are well below the rate of inflation.

Coinbase planned to offer 4% interest in its Lend product.

Is the SEC Right?

It seems likely to me that Armstrong is wrong in saying his Coinbase Lend program isn’t a security, and thus need not comply with typical securities laws. Banks have an exception from these laws when they pay interest on an account.

But Coinbase is not a bank. So it’s hard to see how this product isn’t a security.

SEC Shenanigans

That said, I think the SEC’s behavior here is extreme and bad for American business. If the SEC has determined that Lend is illegal, they should tell Coinbase that. At least Coinbase could move on to other projects.

Instead, they’ve left Coinbase in regulatory limbo. They don’t know if their product is legal or not, they don’t know what the SEC’s standard is, and they can’t launch anything without being sued.

This is a recipe for stagnation, not innovation. How can American businesses compete in the global economy when regulators won’t work with them?

As part of its threats to Coinbase, the SEC is even digging into private citizens:

Apart from the threat of legal action, a move seemingly out of left field from the Commission’s usual approach to enforcement, the SEC also asked Coinbase to provide customer details from its Lend waitlist.

On what authority are they doing this? And what are they planning to do to those prospective customers?

Keeping investors safe has its place, but bringing business to a standstill and snooping on average Americans isn’t part of it.

The SEC needs to clean up its act.

More on tech:

How Solana Could Wipe Out Visa and MasterCard

What if Everyone on Earth Had Super Fast Internet for $1?

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

Photo: “775208327GB00106_TechCrunch” by TechCrunchis licensed under CC BY 2.0

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