October 9, 2022 | Issue 36
EVERYTHING IS CONNECTED
Last week's special issue of Crypto News for Realtors focused on macro economic issues that impact crypto. I wrote about inflation, CPI, the Fed, treasurys, consumer sentiment index, the prime rate, mortgage rates, and more. This week, while many of these topics were fresh in my mind, I saw how reported data in one area impacted another. For example, on Friday, the unemployment numbers were released. I knew from my research last week that if unemployment had not increased, the Fed would continue their tough stance on rates, and that is what happened. Over 263,000 jobs were added and the unemployment rate fell. The markets expect that the Fed will not ease up on their rate hikes. The stock market dropped and, as I wrote two weeks ago, crypto correlates with stocks and crypto also dropped. What about mortgage rates, which is a major driver in buyer demand? The 30-year fixed mortgage rate follows the 10-year bond. Since the 10-year bond will move up, it is very likely that mortgage rates will do the same. I have discovered that paying close attention to crypto has spillover benefits in my real estate world. I now have a deeper understanding of what drives the real estate market. If you missed last week's issue on the economy, I highly recommend reading it. Enough of the economy, this week's news is 100% crypto. If there is ANY crypto topic that you would like me to cover, let me know. I'll dive in and share what I've learned with everyone else. Also, check out my YouTube videos and Podcast Crypto News for Realtors wherever you get your podcasts. Listen in and, hit SUBSCRIBE. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. This newsletter is supported by home buyers and sellers in NJ who retain me as their real estate agent. If you know of anyone looking to buy or sell a home, please reach out to me.
CRYPTO NEWS ▸ Federal Risk Panel Warns About Crypto Treasury Secretary Janet Yellen chairs the Financial Stability Oversight Council and this week the council issued their Report on Digital Asset Financial Stability Risks and Regulation. Yellen said, "the current regulatory framework has helped largely insulate traditional financial institutions from crypto-asset-related financial stability risks." However, she warned that as crypto grows, if new regulations are not in place, crypto's interconnectedness with traditional finance could pose risks to the U.S. financial system. The Council asked Congress to consider legislation to ensure crypto regulations are enacted. Another federal entity, the Consumer Financial Protection Bureau, reported an increase in consumer complaints against crypto exchanges.
▸ Celsius Founder & CEO Alex Mashinsky Steps Down Celsius was a large crypto lender that built its customer base by paying high interest rates (up to 18%) and claiming that Celsius was safer than a traditional bank. When crypto prices fell in June, Celsius
froze customer accounts and then filed for bankruptcy in July. Celsius owed its customers $4.7B. Bankruptcy filings released this week showed that Mashinsky withdrew $10M in tokens between May and the bankruptcy filing. Mashinsky stepped down as CEO in September.
▸ Kim Kardashian Pays $1.26M to Settle With SEC
In June 2021, Kardashian promoted the crypto token EthereumMax as a good investment. She posted on her Instagram page, "This is not financial advice but sharing what my friends have just told me about the EthereumMax token!"
Kardashian was paid $250,000 by the crypto company for the post.
SEC's Chair Gary Gensler said, "“Ms. Kardashian’s case also serves as a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”
CRYPTO CLASS – MakerDAO
MakerDAO is a decentralized credit system that is fully collateralized and sits on the Ethereum blockchain. It is the longest running project on Ethereum.
The MakerDAO token is a stable coin called DAI. It maintains a one-to-one ratio with the US dollar. Each DAI is backed by Ether.
DAI's collateral ratio is currently 134% and can be confirmed by going to www.daistats.com.
On September 6, the community that governs MakerDAO invested $500M in US Treasurys and corporate bonds. The funds are from the over-collateralized stablecoin.
INFLUENCERS - People to follow Braeden Anderson -@braedenandy Andersen is an attorney at Kirkland & Ellis who defends companies and individuals being investigated by the Dept. of Justice, SEC, and other federal and state agencies. He was recently interviewed about crypto regulation by Pomp.
RESOURCES – Books, websites, podcasts, interviews, articles, videos
Fascinating interview of Vitalik Buterin (Ethereum Co-Founder) by Ezra Klein. Buterin gives brilliantly articulated answers to questions about the crypto industry's maturation, the underlying value of a trustless protocol, governance, aggressive crypto marketing campaigns, and more. CRYPTO WORD – Hash Rate. The hash rate of a mining rig is the number of hashes that it can calculate per second. The combined hash power of a cryptocurrency network is the sum of the hash rates of all mining rigs that are in operation at any given moment. (From CoinMarketCap)
OH, ONE MORE THING – This dog who solicits onlookers for a pat on the head or a treat, reminds me of the SEC asking crypto companies to meet and discuss potential regulatory issues.
Thanks for reading! See you next week.