October 23, 2022 | Issue 38
A WORKABLE APPROACH TO CRYPTO
Former SEC Chair Arthur Levitt and CEO of Lumida, a digital-asset advisory firm, Ram Ahluwalia, wrote an opinion piece in the Wall Street Journal advocating that the SEC, Congress, and crypto industry work through the thorny regulatory issues.
The authors caution that "[t]his regulatory standoff poses a risk to the growth of blockchain and cryptocurrency technology."
"No matter what regulators do, they shouldn’t stifle the innovation that is at the heart of this market. Blockchain is the first technology that enables two parties to transact without a centralized intermediary such as an exchange, broker or bank. The implications are profound."
They state the crypto industry needs to accept oversight and the regulators need to go beyond enforcement. Currently, there is not a clear path to compliance.
The SEC should provide constructive guidance to the crypto market and congress should develop stablecoin audit standards.
They conclude that if agreement is reached among the parties, "The US can strengthen its standing as the world's leading capital market and global reserve currency."
I will be pleasantly surprised if any clear guidance from regulatory agencies or bills from Congressional committees emerge before the Congressional session begins in January.
In the meantime, let's keep learning more about crypto.
If you have any questions about crypto, reach out to me and I'll find the answers.
Also, check out my YouTube videos and Podcast Crypto News for Realtors wherever you get your podcasts. Listen in and, hit SUBSCRIBE. All past issues of Crypto News for Realtors can be viewed on my website.
Have a productive week and stay crypto curious!
Rich Hopen
richard.hopen@compass.com | 908.917.7926
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CRYPTO NEWS
▸ Bitcoin Mining Operators Flock to Texas in Search of Stranded Energy
"Stranded energy" in west Texas typically looks like natural gas that is burned off and wasted. Bitcoin miners search for stranded energy and use the gas to power their computers which can operate 24 hours a day.
The large petroleum reserve in the area, known as the Permian Basin, contains an abundance of natural gas that isn't captured by a pipeline. Instead, it is released into the atmosphere.
Texas welcomes bitcoin miners, these miners can impact the grid. Miners claim they stabilize the electric grid because during peak electricity demand they can power off their computers. This past summer, on July 11th during a record heat wave, every bitcoin miner shut down their operation and it prevented the need to have blackout.
Miners, however, would like to run their operations continuously. One interesting venture run by former Twitter CEO Jack Dorsey is a $12M bitcoin mining pilot project in West Texas powered by solar panels. The project stores electricity in Tesla batteries so the computers can run during the night. The pilot project is currently unprofitable, but the founders expect to find a path to profitability.
▸ Mastercard Offers Crypto Service to Banks Mastercard partnered with Paxos Trust Company and launched a crypto trading and custody program for banks. Paxos will provide the crypto services and Mastercard will integrate the services into the banks' user interfaces.
Recently, Visa launched a partnership with crypto exchange FTX to offer debit cards in more than 40 countries.
▸ Galaxy Reports $1.8B In NFT Royalties Galaxy, a crypto analytics firm, reported that over $1.8B in royalties were paid to creators of Ethereum-based NFT collections. The average royalty paid on OpenSea doubled to 6% from 3% last year.
The major NFT brands earned "hundred of millions of dollars in income from royalties generated on secondary sales." The report found that 10 entities brought in 27% of all royalties and 482 NFT collections accounted for 80% of all royalties.
Here are the top 10 entities and their earned royalties
1) Yuga Labs (BAYC) – $147M
2) Art Blocks – $82M
3) OpenSea Storefront Creator – $77M
4) Chiru Labs – $52M
5) PROOF Collective (Moonbirds) – $31M
6) The Sandbox – $26M
7) Doodles – $24M
8) VeeFriends (Gary Vaynerchuk's NFTS) – $21M
9) NFT Worlds – $15M
10) World of Women – $13M
CRYPTO CLASS – Will Blockchain Upend Banking?
The existing payments system used to send money inside the US and internationally is cumbersome, slow, and costly to the sender and receiver. It's also highly profitable to banks.
Over 11,000 entities currently use the SWIFT messaging system. It allows member banks to communicate with one another. SWIFT is currently overseen by central banks in the
US, UK, Canada, France, Belgium, Italy, Japan, Netherlands, Sweden, and Switzerland.
SWIFT sends 42 million messages per day. SWIFT does not, however, send the funds. It sends the payment orders and the money is processed through intermediaries. Each intermediary charges a fee.
International payments take longer and have higher fees. For example, if someone in the US wanted to send part of their paycheck to someone in London, they might need to pay a $25 flat fee for a wire transfer and additional fees up to 7%.
Blockchain technology with its decentralized ledger could facilitate faster payments at lower fees than banks.
Bitcoin transactions take an average of 25 minutes to settle and sometimes longer. This is significantly quicker than the average 3-day processing time for domestic bank transfers and international payments.
INFLUENCERS - People to follow Hal Finney Finney graduated from California Institute of Technology and worked as a software engineer in California. He was a cryptographic activist and wrote, "The computer can be used as a tool to liberate and protect people, rather than control them."
In 2004, Finney created the first reusable proof of work system before bitcoin was launched. He embraced bitcoin when it launched and on January 12, 2009. He received the first bitcoin transaction from bitcoin's creator, Satoshi Nakamoto. Finney died in 2014 from complications related to ALS.
RESOURCES – Books, websites, podcasts, interviews, articles, videos
Thanks to Emma Taub who sent me a link to a terrific primer on NFTs.
CRYPTO WORD – Satoshi (SATS)
The smallest unit of bitcoin with a value of 0.00000001 BTC. Like any other fiat currency, cryptocurrencies can also be divided into smaller units. Just as the U.S. dollar can be divided into cents and the pound into pence, the smallest available unit of Bitcoin is a satoshi.
(From CoinMarketCap)
OH, ONE MORE THING – Bitcoin is defiance...
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