Over the past two years, the Coin Bureau team has been working tirelessly to bring you the best crypto content we can. It’s been an incredibly busy and stressful time – especially in the last few weeks.
So, I have decided that the team deserves a well-earned break. I am currently away from the studio and in Zanzibar enjoying a bit of R’n’R and the rest of the team is under orders to take it easy! Therefore, you may see less content this week as we recharge our batteries.
However, we managed to record a number of videos to hold you over till we’re back up and running again. Videos which I hope will give you that “Coin Bureau fix.” Rest assured, we’ll be back at it before you know it.
And, the first one that I have for you is a summary of the recent FSB report on crypto regulations. You can watch that here.
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I’ve been keeping a close eye on crypto regulations since the crypto market crashed last May. One of the things I’ve been waiting for regulations-wise has been an enforcement action by the SEC against a well-known crypto project. Well, it looks like my prediction is starting to come true, because the SEC is officially going after BAYC company Yuga Labs (more on that below).
I’m tempted to say that this enforcement action is the tip of the iceberg. After all, the SEC has been getting increasingly aggressive with the crypto industry over the last few weeks. It looks like some politicians have been encouraging the SEC to crack down on crypto as well. I’m quite certain that the SEC will go after a regular, high-profile crypto project in the coming weeks, but the crypto bear market could change this.
If you watched the video today about the FSB’s crypto regulation recommendations, you’ll know that I speculated that regulators might not be all that interested in the crypto market anymore. That’s simply because it’s crashing. When many of the crypto projects regulators are concerned about suddenly fall off the face of the earth, it’s hard to justify allocating time and resources towards them.
As it so happens, acting Comptroller of the Currency Michael Hsu recently came out to warn that regulators are spending too much time going after crypto projects. That’s just because there are bigger issues to address, such as all the insider trading that US politicians continue to do. It looks like a few regulators are also starting to go after Elon Musk, after he confirmed he’s going to buy Twitter. Funny that.
Now, even though many regulators have probably turned their attentions to more important things, it seems like the SEC is still obsessed with cracking down on cryptocurrency. This doesn’t seem to be winning Gary and the gang any friends, and it really makes me wonder whether politicians will reign in the regulator after the November midterms. Until then, I’m sorry to say we’ll just have to live with all the SEC-created uncertainty.
🤔 Was This The Bottom? 🤔
I know it’s a silly question, but it’s one that needs asking every now and then. To clarify, I’m personally not convinced that we’ve seen the bottom. I think we’re going lower – a lot lower (like 50%). The thing is, this idea that we’re still waiting for the other shoe to drop is starting to become mainstream. As more people start to price in and expect this outcome, then chances are it’s already happened.
It’s that age-old idea of going against the grain – buy when there is blood in the streets, etc. When investors have come to a consensus about something, then chances are it’s wise to bet against that consensus. This approach doesn’t always work, but it can be very rewarding then when it does. That’s just because the rewards for going against the grain tend to be asymmetric relative to the risk.
And so, I ask again: was this the bottom? Well, there is a case to be made based on previous cycles. BTC has never spent too much time below its previous bull market high, which you’ll recall was around 20k. The caveat is that the high of the previous bear market should arguably be measured from a solid top, not from the wick. For example, think about BTC being at 20k for a few hours vs. BTC being at 14-16k for days.
When I look at the charts, I get the sense that BTC’s actual previous high (in this measurement) should be between 14-16k. Feel free to disagree. In fact, the more the merrier. One of us will be right and we’ll all be better off. Just bear in mind that it’s not just the charts we need to pay attention to. There is no shortage of macro factors that have been moving the crypto market.
Although it doesn’t look like the macro picture is getting brighter, I can’t help but notice that Russia has been reminding Europe that it can still restore flows to one of its pipelines. At the same time many leaders and personalities have been calling for peace. Western citizens also do not want the conflict to escalate. If a ceasefire or peace deal is secured, then it would mean that the bottom is already in.
🐒 SEC vs. Monkey NFTs 🐒
Crypto’s favourite monkeys have finally caught the eyes of crypto’s (arguably) least favourite uncle. That’s right, I’m talking about the SEC’s ‘private’ probe into Yuga Labs, the creators of the popular Bored Ape Yacht Club NFT project. Well, not so private anymore, since all of us have now caught wind of it, after someone leaked the info to Bloomberg.
But, to be honest, I can’t say I didn’t see this coming. We witnessed some foreshadowing at the beginning of this year when the SEC sent out multiple queries and subpoenas to NFT creators and crypto exchanges. It was only a matter of time before they approached one of the biggest names in the space.
So, what’s the probe about?
Well, according to the report, the SEC is trying to figure out if Yuga’s monkey NFTs are more akin to stocks and therefore should follow the same disclosure rules. If you ask me, I don’t really see this being the case for artwork NFTs like those of the BAYC or MAYC. There needs to be evidence that shows there is a promise or expectation of profit. Yuga Labs hasn’t issued any promises to holders that they would make money by holding the NFTs.
At most, the NFTs are similar to memberships of, or access passes to, an exclusive club. The ‘ownership’ aspect is limited to the specific NFT the holder holds. It would be a stretch to say holding a Bored Ape grants ownership claims over Yuga Labs, or even the entire Bored Ape collection. The only thing being granted to users is permission to use their particular NFT artworks commercially.
This is different from stocks, which confer an ownership stake in a centralised corporation that works towards making a commercial profit. But then again, I’m no legal expert. Certain works of art are already considered securities under US law and must be registered as such. And, according to some actual legal experts, we could see this happen to NFTs as well.
I’d like to remain blissfully ignorant on that front: I need to keep my sanity intact, after all. That said, I’ll concede that I do believe there is one particular type of NFT that might actually qualify for ‘security’ status – fractional NFTs or f-NFTs.
If you’re not sure what f-NFTs are, allow me to explain:
A fractionalised NFT is an NFT that has been broken down into, well, fractions, to be sold individually. This allows for a larger number of investors to claim a stake of ownership for a popular NFT. In my opinion, this structure is uncomfortably akin to stocks in a company, and I have talked about it in much more detail in this video.
Having said that, there have been whispers about whether Yuga’s Otherside project might potentially fall under a ‘securities’ umbrella too. Though this all depends on whether you see Metaverse land parcels as fractionalised NFTs that form part of a larger NFT land surface. Something to think about.
The report states that the regulator is also looking into the distribution of ApeCoin, despite the token being issued by the ApeCoin DAO, which is an organisation independent from Yuga Labs.
There’s certainly much that will unfold in the days to come. We’ve already seen this news cause a surge in the levels of trading activity of the BAYC and MAYC collections. I reckon we’re on the brink of a massive regulatory shift in the world of crypto. However, there is no need to get too worked up just yet. The probe, after all, is just that – a formal dialogue between the regulator and the party in question. Just some quality Q&A. It is not an accusation that Yuga Labs is breaking the law. Yet.
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That’s all for now and I look forward to sharing holiday snaps with you guys. Thanks for the understanding and all your support.
Guy your crypto guy