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July 3, 2022 | Issue 22 🇺🇸 BITCOIN DROPPED 37% IN JUNE – SECOND BIGGEST MONTHLY LOSS Business publications feature daily headlines about the dismal state of the stock market and crypto. The Wall Street Journal: "Markets Had a Bad First Half of 2022. It Can Get Worse." "Crypto's Domino Effect Is Widening." Bloomberg: "Rattled Stock Bulls Keep Paying Punishing Price for Hopefulness." "Crypto's Brutal Week Ends With a Trading Halt and a Bailout." June was a tough month for crypto supporters. On June 1, bitcoin traded over $31,000 and dropped as low as $17,000 mid-June. On June 30, it recovered slightly at $19,209. When I started this newsletter 22 weeks ago, bitcoin was $42,379 and crypto influencers posited that crypto was a safe haven against inflation. However, as inflation started to creep upwards, crypto investors began moving their money elsewhere and prices started to drop. Crypto started to mirror declining tech stocks and the selling accelerated in May as stablecoin USD Terra imploded. In June, crypto lender Celsius and crypto hedge fund Three Arrows Capital collapsed. Weaknesses in the crypto ecosystem are being exposed. Add the Russian invasion of Ukraine, a 40-year high for inflation, the Fed's 0.75% increase in the Fed Fund's rate, and the growing likelihood of a recession. This is a challenging time for the crypto industry and crypto investors. Crypto is not alone. Most industries are being tested. Don't give up on crypto. Use this bear market to learn about crypto and how it will impact real estate. In each issue of Crypto News for Realtors, I report about companies on the brink of disaster and companies who are thriving. Look for the parallels to the real estate industry. Real estate professionals who have been through a cycle or two have observed investors, brokerages, and agents who weathered the tough markets. If you have any questions or want to talk about crypto, reach out to me. The best part of my week is meeting colleagues and discussing crypto. If you'd like me to speak to your office about crypto, have your sales manager contact me. My presentation covers: 1) Crypto fundamentals (cryptocurrency, NFTs, blockchain, and stablecoins); 2) Real estate deals involving crypto; and 3) Transaction challenges. Enjoy your July 4th weekend. In the spirit of our founding fathers, here's an inspirational quote from Alexander Hamilton that could be applied to learning about crypto – “Men give me credit for some genius. All the genius I have lies in this; when I have a subject in hand, I study it profoundly. Day and night it is before me. My mind becomes pervaded with it. Then the effort that I have made is what people are pleased to call the fruit of genius. It is the fruit of labor and thought.” Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. You can find all CNR newsletters here. PSS. 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 ▸ Crypto Exchange FTX Gets Option to Buy Battered BlockFi BlockFi, a crypto lender based in Jersey City, experienced losses over the past month from the decline in crypto prices and faced a liquidity crisis. Last year, BlockFi was valued at $5B. Crypto Exchange FTX signed an agreement on July 1 with BlockFi that gives FTX the option to buy BlockFi for $240M. It also provides a $400M revolving credit facility. (A credit facility is a type of business loan. It is subordinate to client funds.) BlockFi's CEO, Zac Prince, explained on Twitter that BlockFi customers started withdrawing funds when competitor lending platform Celsius froze its customers' assets. BlockFi also had provided loans with the failing hedge fund Three Arrows Capital and this resulted in an $80M loss. Earlier this year, BlockFi paid a $100M fine to the Securities and Exchange Commission (SEC) for violating investor-protection laws. BlockFi needed an infusion of cash and FTX stepped in to bail them out. FTX has also talked about helping crypto miners. ▸ SEC Sued by Grayscale For Rejecting Grayscale's Petition For Bitcoin ETF Grayscale sought to convert one of its crypto products into an exchange traded fund (ETF), but the request was rejected by the SEC on grounds that there were not adequate investor protections in place. Grayscale said the SEC currently allows several futures products tied to bitcoin. (Futures-based ETFs trade on the price of bitcoin in the future.) The rejected application is for a spot bitcoin ETF. (Spot ETF trades on the current price.) According to a Nasdaq survey of financial advisors, 72% would be more comfortable investing in crypto if there was a spot ETF. The Wall Street Journal quoted Grayscale's CEO, Michael Sonnenshein, "It is curious in our minds… how it is that the SEC is comfortable with approving bitcoin futures-based ETFs, but not spot-based ETFs.” ▸ Stablecoin Legislation in 2022? An intergovernmental group of financial regulators discussed introducing legislation that would regulate stablecoins. After last month's collapse of Terra USD, an algorithmic stablecoin, the working group is exploring setting safeguards to protect investors. ▸ MicroStrategy Buys $10M in Bitcoin MicroStrategy CEO Michael Saylor announced the company purchased another 480 bitcoin. The company holds a total of 129,699 bitcoin, currently valued at $3.98B. Saylor has been a vocal proponent of bitcoin and his advocacy has not wavered during past few months. CRYPTO CLASS – BITCOIN MINING Bitcoin miners are central to maintaining the Bitcoin blockchain. They verify new blocks of bitcoin transactions and store the entire bitcoin blockchain. (See Blockchain and Proof-of-Work & Proof-of-Stake.) Bitcoin mining is an expensive operation and revenues are tied to the price of bitcoin. The falling price of bitcoin is stressing the industry. According to an article in the Wall Street Journal by Paul Vigna, miners are being forced to sell some of their bitcoin holdings to finance new equipment because lenders are reticent to provide loans to crypto businesses. Miners hold 800,000 bitcoin. Publicly traded mining companies sold 30% of their bitcoin from January to April 2022. When miners sell bitcoin it contributes to falling prices. The breakeven bitcoin price for miners is $17,600 according to Glassnode, a crypto data analysis firm. If the price of bitcoin does not start climbing, more bitcoin miners will be forced to use their reserve bitcoin to finance their operations. This will inevitably lead to miners closing their businesses. INFLUENCERS - People to follow Paul Vigna – @paulvigna Vigna is a reporter for the Wall Street Journal and co-author of two authoritative works on crypto and blockchain – "The Age of Cryptocurrency" and "The Truth Machine." RESOURCES – Books, websites, podcasts, interviews, articles Wall Street Journal video explaining the collapse of crypto lending platform Celsius. CRYPTO WORD – dApps Decentralized applications or "dapps" are applications that run on a distributed network. OH, ONE MORE THING – Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.

June 26, 2022 | Issue 21 ** SPECIAL ISSUE ** UNDERSTANDING THE ECONOMY I am taking a break from reporting the crypto news and instead writing this special issue about the economy. I'm doing this for two reasons. First, I won't be tracking the news because I'll be on vacation. I'll be hanging out at the DAOU vineyard, relaxing in San Luis Obispo, and flying in my brother-in-law's four-seater plane with my wife Jody and her sister. And second, I've discovered that it is not possible to understand the crazy dynamics of crypto without having basic knowledge of the economy. We are at a point where we are saying good bye to rising asset prices, stable pricing of consumer goods, a red hot housing market, a rising stock market, record low unemployment, and a crypto market that has outperformed all investments. This issue will help you make sense of the headlines so you can discuss economic conditions with your prospects and clients. Here we go... ▸ The Federal Reserve (The Fed) The Fed is mandated to use monetary policy to achieve maximum employment and stable pricing. Their goal is to keep inflation at 2 percent. Inflation is a measure of the decline of purchasing power and is tracked by the US Bureau of Labor Statistics. They calculate the Consumer Price Index (CPI) by measuring the average change in price, over time, of a "basket" of selected goods and services. The CPI is based on 94,000 price quotes from 23,000 retail and service establishments, and 43,000 rental housing units. The inflation report for May was higher than projected. It was 8.6%. That is alarmingly high and explains why you cringe when pay for gas and groceries. The Fed can slow down inflation by making it more painful for people to spend money. They do this by raising the "Fed funds rate." ▸ The Fed Funds Rate The Fed funds rate is the rate that banks charge each other for lending cash or excess reserves. It is also the rate that commercial banks lend to each other. Significantly, the rate influences what banks charge their customers for loans. When banks are charged more, they pass that increase onto borrowers. When the Fed got the news about May's 8.6% inflation, it hinted that they would raise the current fund rate by 75 basis points (100 basis points equals 1 % and 75 basis points is 0.75%). This was an increase from the anticipated 50 basis points. The Fed acted as expected on June 15th and raised the funds rate to 1.75%. This was the largest rate hike since 1994. When the Fed meets again in July, they will likely increase the rate another 75 basis points. The Fed's longer term projections were also revealed. The "terminal rate" is a mapping of projected rates over time on a "dot plot." It shows that the Fed will raise rates to 3.4% by the end of 2022 and it will peak at 3.8% in 2023. Inflation is projected to drop from the current 8.6% to 5.2% by the end of the year. ▸ Recession The risk of the Fed's action is that they will slow the economy too much and we will end up in a recession. The National Bureau of Economic Research (NBER) defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." Is a recession inevitable? Over 60% of CEOs expect a recession over the next 12 to 18 months according to the Conference Board. ▸ Mortgage Rates The Fed wants to see a cooling of the housing market and they have a powerful tool to do it. In addition to increasing or decreasing the Fed's fund rate, the Fed can either sell assets from its $9 trillion balance sheet or buy assets. After the COVID-19 pandemic, the Fed purchased over $4 trillion of US Treasurys and mortgage-backed securities (MBS). US Treasurys are treasury bonds (mature in 20 or 30 years), treasury notes (mature in two and ten years), and treasury bills (mature in four weeks to one year). Mortgage-backed securities (MBS) are mortgage loans that are bundled and sold in the bond market. Between April 2020 and April 2022, the Fed's holding of MBS doubled from $1.35 trillion to $2.7 trillion. This represented an increase from 15% to 32% of the entire MBS market. When the Fed sells its MBS, it pulls money from the economy. This is also likely to increase the costs of loan originations. As mortgage rates climb, demand falls. After Memorial Day weekend, demand for mortgages hit a 22 year low. NAR reported that home sales have fallen for six straight months. ▸ Housing Homebuilders are seeing a plummeting demand for new homes while supply costs are rising. Residential construction material is up 19% year-over-year. Another slowdown in homebuilding is going to cause a housing shortage after inflation is under control. After the last financial crisis, home building dropped below historic norms for more than a decade. This resulted in the housing shortage that we have been experiencing. If new housing starts continue to fall, there will not be sufficient inventory for the tens of millions of millenials looking to buy a house over the next decade. Thanks for reading! Please send me an email and let me know if you learned anything about the economy. See you next week. Best, Rich Go to Crypto News for Realtors to read previous issues.

June 19, 2022 | Issue 20 ANOTHER POSITIVE, UPBEAT, WEEK FOR CRYPTO – NOT! This week began with shocking news. Crypto lending platform Celsius announced on Sunday night that it was preventing customers from withdrawing their funds. What? Can they do that? Yes. Investors who put their crypto into Celsius for a high return gave Celsius an unsecured loan. Celsius is not a bank and there are no customer safeguards. Ironically, many of the articles this week about the company's crisis show a photo of Celsius CEO Alex Mashinsky wearing a Celsius t-shirt with the tagline, "Banks are not your friends." Celsius had managed up to $11.4 billion in assets and had 1.7 million customers. It's now trying to survive. According to the Wall Street Journal, the Texas State Securities Board is investigating Celsius and is working with New Jersey, Kentucky, Alabama and Washington. On Wednesday, Three Arrows Capital, a multi-billion dollar hedge fund, failed to meet its margin call and is on the brink of insolvency. These are tough times in crypto and the bumpy ride will continue. Hang on tight. I am using the barrage of bad news to learn about a failing company's business model and what went wrong. When one crypto lending platform fails, that does not mean all crypto lenders will vanish. The same is true for stablecoins. Crypto is global, expansive, and revolutionary. It is still developing and you are witnessing its growing pains. On a positive note, I hope you enjoyed your Father's Day weekend. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO NEWS ▸ Crypto Legislation Sponsors Discuss Their Approach to Balancing Innovation and Investor Protection Senators Cynthia Lummis, R-WY, and Kirsten Gillibrand, D-NY senators introduced the Responsible Financial Innovation Act which proposed a regulatory framework for digital assets in the US. Last week, I reported on some of the most important sections of the bill. This week I will dive into how the Senators describe their process in drafting the legislation and their objectives for the legislation. Their quotes are from a terrific interview on Coindesk's The Breakdown with NLW. Sen. Gillibrand explained that the "purpose of the legislation is to create a regulatory framework for finance, democracy building, and the art world." The bill defines "ancillary assets" as digital assets that meet certain security requirements and are above a financial threshold. It would trigger SEC public disclosure requirements. However, once the asset is decentralized (not connected with the purchase or sale of a security constituting an investment contract), the asset issuer can file a certificate with the SEC that would allow them to stop filing disclosure requirements. Sen. Gillibrand said some digital assets "have become adequately distributed to be considered a commodity..., but a lot of the initial offering of tokens are going to be securities at the beginning." The asset would then be regulated by the Commodities Futures Trading Commission through spot markets and futures markets. A spot market is where financial instruments are traded for immediate delivery. A futures market delivers the underlying asset at a future date. Sen. Lummis discussed connecting the statutory definitions to common sense. Lummis wants to look at the purpose of the digital asset. "A community organizer in Oakland wanting to spread democracy and other social services, voting rights, that is not a broker-dealer offering a security. That is a community organizer organizing his community." Stable coins would be backed 100% by fiat, government-issued, currency. It would be the instrument that would be direct to retail. The senators mandated a study of Central Bank Digital Currency (CBDC) and want to look closely at the Chinese digital yuan. Sen Gillibrand, who also sits on the Senate Intelligence Committee said, "The digital yuan has nothing to do with money. It has everything to do with intelligence gathering and spying on the Chinese people. We need to understand what they’re doing, how they’re doing it, and why they are doing it. We can inform ourselves if America ever wants to consider having a digital dollar…. If it was consumer facing, you’d have 100% transparency on every transaction, forever." She added, “We do not support a retail CBDC. We want it to be wholesale to wholesale, central bank to central bank." The Senators believe it is important that the US engages with other countries on these issues. "We want to make sure the US markets aren't left behind." ▸ SEC Chair Indirectly Commented on Crypto Bill SEC Chair Gary Gensler spoke at the Wall Street Journal's CFO Network Summit. He said that the crypto bill could "undermine" other market protections. He also said the he wants to protect SEC's role in overseeing how companies raise money from the general public. ▸ Bitcoin Approach $20,000 Bitcoin has become a global macro asset and it has been behaving like equities. It has been losing value for 12 weeks and has lost 30% over the past week. Nik Bhatia of the The Bitcoin Layer, wrote that bitcoin is correlated to the stock market and its price is collateral damage. "Bitcoin has its own fundamentals, but it has been unable to escape this wave of weakness in risk markets due to global macroeconomic conditions." ▸ Propy Selling Avatars As headlines in business publications scream additional Fed tightening to fight inflation and avoid recession, mortgage rates hit 6%, and real estate companies announce layoffs, Propy announced "Big News." They are selling "Meta Agents and Shredders NFTs." Big News? With all due respect to Propy's marketing folks, in the context of the non-virtual real world, this is not even small news. Propy's launch of its NFTs and another recent announcement to offer title services through partnerships, has not insulated Propy from market conditions. Propy's market cap is at $64 million, down from a high of over $300M in January. CRYPTO CLASS – DECENTRALIZED FINANCE Decentralized finance (DeFi) seeks to remove the role of banks and financial institutions by using the blockchain as a decentralized ledger. In traditional finance, there are 1) Investors seeking to earn fees and interest by lending money; 2) Borrowers seeking a loan who want to pay minimal fees and interest; and 3) Merchants looking to pay minimal fees for the privilege of using a credit card network. Crypto lenders provide these services. They entice customers to deposit cryptocurrencies by offering attractive interest rates and then lend out the crypto for a return. Many crypto borrowers use the funds for high-risk projects. When projects fail and borrowers cannot pay their loans, the crypto lending system stops working. Crypto lending is unregulated. They don't seek approval to operate as a bank or money manager. Their interest bearing accounts are not registered with the FDIC or SEC. Crypto lender BlockFi Lending LLC, which had over $14 billion in assets, settled an enforcement action brought by the Securities and Exchange Commission last year. BlockFi agreed to pay the SEC a $100 million to settle the matter. INFLUENCERS - People to follow CZ – @CZ_Binance CZ is the founder of Binance, the world's largest crypto exchange by volume. CZ, age 44, graduated from McGill University with a computer science degree. He worked on the Tokyo Stock Exchange and then joined Bloomberg Tradebook where he developed futures trading software. In 2005, CZ founded a company that built a high-frequency trading platform. He launched Binance in 2017 after raising $15 million in an initial coin offering. In 2022, Binance invested $500 million to support Elon Musk's twitter acquisition. RESOURCES – Books, websites, podcasts, interviews, articles SEC Chair Gary Gensler discussed crypto with WSJ financial editor Charles Forelle. Gensler discusses crypto at 7 minutes into the interview. Watch it if you want to understand how crypto will be regulated. CRYPTO WORD – "IF IT'S NOT YOUR KEYS, IT'S NOT YOUR COINS" Crypto owners who do not hold their private key (password) relinquish control of their crypto to their exchange. OH, ONE MORE THING – Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.

June 12, 2022 | Issue 19 EXPERTISE IS ALWAYS RELATIVE I began learning about crypto last April when the graphic artist Beeple sold an NFT at Christie's for $69M. I had never heard of NFTs and I wondered how an artist could make so much money selling a jpg. That spark of curiosity led me to learn. I listened to podcasts and watched videos, documentaries, and interviews about crypto. I took online classes, read books and journals, and subscribed to paid and free publications. I also discovered two family connections who helped me understand the basics. One is a savvy investor and the other is an industry insider who works at one of the top crypto exchanges. Fast forward a year and I am writing a weekly crypto newsletter, giving presentations, and writing a column, two times a month, for Inman called "Crypto Corner." When I speak with crypto professionals, I'm a little bit beyond newbie status. When I am introduced to an audience, I'm called an expert. Expert? How did that happen? I found a new field that was intriguing, interesting, controversial, widely covered in the media, and had the potential to radically change real estate. I want to keep learning and share what I learn. If you have questions, please call or text. If you work at CØMPASS, participate in our crypto Workplace group, ask your sales manager to invite me to speak to your office. If you don't work at CØMPASS, I'm happy to speak with you and your colleagues. Hope you had a great weekend. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO NEWS ▸ Crypto Legislation Introduced by Senators Cynthia Lummis, R-WY, and Kirsten Gillibrand, D-NY The senators introduced the Responsible Financial Innovation Act which proposed a regulatory framework for digital assets in the US. The bill's legislative purpose is to "encourage responsible financial innovation, flexibility, transparency and robust consumer protections while integrating digital assets into existing law." There are several significant aspects to the bill. First, it's bipartisan. The extreme political divisions on the Hill are not conducive to the Democrats and Republicans cooperating on anything. Yet, these two senators came together to introduce a comprehensive bill that addresses many thorny issues. Second, future discussions about regulating crypto are likely to be framed in the context of this bill. This includes not just legislation, but reports and recommendations from the executive branch agencies and departments that are due to the President over the next six to twelve months. Third, the bill tackles complex crypto issues and does not shy away from supporting the nascent crypto industry. This is not a surprise given the power of its lobby. As reported in Bloomberg, political donations from the crypto sector in 2021 and the first quarter of 2022 has exceeded contributions by internet companies, pharma, and the defense industry. The bill tries to strike a balance between protecting consumers and promoting the crypto innovation. Sen. Gillibrand wrote, "As with any new technology, there are real risks to consumers, businesses, national security, and our financial system. These risks make sound regulation key." She warned that if the US does does not develop a clearly defined regulatory framework, digital asset companies would leave the country. "The bottom line is that is is absolutely critical that the US plays a leading role in this new frontier." Here are the key portions of the legislation. ● Security or Commodity? One hot issue is how to characterize a digital asset. Securities & Exchange Commission Chair Gary Gensler takes an expansive view and has said that most cryptocurrencies meet the legal test of being a security. Securities are tradable financial instruments like stocks and bonds. However, cryptocurrency exchanges and issuers have disagreed and declined to register with the SEC. The bill solves this dispute by defining when a digital asset is a security or commodity. Commodities are tradable goods that typically fall into four groups – energy, metals, livestock, and agriculture. The bill gives the Commodity Futures Trading Commission (CFTC) authority to regulate "digital collectibles and other unique digital assets." A digital asset would be a security if it is debt, equity, or provides profit sharing. Otherwise, the digital asset is a commodity and the parties would not be saddled with the registration, potential liability, and costs of complying with the securities rules. The CEO of the crypto trade industry group Association of Digital Asset Markets, Michelle Bond, commented, "We're really excited about this bill, and we think it landed in a really great place." ● Stablecoins Stablecoins are cryptocurrencies tied to a stable currency, like the US dollar. It represents about ten percent of all cryptocurrencies. Last month, one stablecoin, TerraUSD crashed and over $18 billion in value vanished. The legislation requires that stablecoins maintain 100% in reserves so that a stablecoin holder could redeem the coin with an equivalent amount of US dollars. ● Study Energy Consumption Digital assets that are created by crypto "miners" using the "proof of work" methodology, consume a lot of electricity. The bill directs the Federal Energy Regulatory Commission to study asset mining and innovations to harness existing and renewable sources. Crypto commentators do not expect any crypto legislation to advance in either the Senate or the House until after the mid-term elections. ▸ SEC Investigating TerraUSD The SEC responded to the collapse of TerraUSD stablecoin that rocked the crypto world in May. Bloomberg reported that SEC is investigating Terraform Lab for violating rules that protect investors. TerraUSD allegedly failed to back up its stablecoin with adequate US dollar reserves. ▸ Galaxy Digital Holdings CEO Predicts Two-Thirds of Crypto Hedge Funds Will Fail Bloomberg reported that Mike Novogratz, CEO of Galaxy Digital Holdings Ltd., said hedge funds invested in cryptocurrencies are going to restructure or fail. Novogratz pinned the drop in crypto prices on the Federal Reserve's removal of stimulus. Galaxy Holdings was also heavily invested in TerraUSD, the stablecoin that collapsed last month. ▸ Treasury Deputy Discusses Unhosted Crypto Wallet Rules US Treasury Dept. Deputy Secretary Wally Adeyemo spoke about the government's security concern of allowing people to hold crypto anonymously. Crypto holders can either allow their crypto exchange to hold their crypto as a custodian, or they can hold their own crypto on an unhosted wallet. Adeyemo said, "Unhosted wallets are effectively just addresses on a blockchain. It can be difficult to determine who really owns and controls them, creating opportunities to abuse this heightened anonymity." The Treasury may include a plan to regulate unhosted wallets when it submits its crypto plan to President Biden as required under the President's executive order. ▸ Jack Dorsey Announces New Decentralized Platform Jack Dorsey, co-founder of Twitter and founder/CEO of Block, presented a proposal for a decentralized web platform that keeps personal data from third parties. "It lets devs focus on creating delightful user experiences, while returning ownership of data an identity to individuals." CRYPTO CLASS – TITLE ON THE BLOCKCHAIN The title insurance industry protects parties in a real estate transaction by scrutinizing public records for “defects" in the title. Defects include outstanding mortgages, judgments, liens, ownership claims by neighbors, prescriptive easements (use of land by others over time creating a permanent right), claims by unknown heirs of a previous owner, forgeries, falsified documents, and clerical errors. According to ALTA, 25% of all residential real estate transactions have title issues that need to be resolved before closing. Title insurance professionals and attorneys correct the problems. Title insurance policies protect lenders and owners against title defects. Even if property records move to the blockchain, title insurance is still needed. Generally, data on a blockchain is more secure because it’s decentralized. It’s also transparent if it resides on a single blockchain and if all historical property records were properly added. Migrating data to the blockchain will require support from all real estate industry participants and will be a major investment of resources. Cook County, Illinois and Burlington, Vermont were two communities that demonstrated the possibility of recording property transactions on blockchain. However, paper copies needed to be filed with the local recorder’s office. [For more info, read Why Blockchain Technology Won’t Replace Title Insurance] INFLUENCERS - People to follow Joseph Lubin – @ethereumJoseph Joseph Lubin is the cofounder of Ethereum and founder of ConsenSys, a blockchain software technology company. ConsenSys develops software for the Ethereum blockchain. RESOURCES – Books, websites, podcasts, articles Vitalik Buterin, Ethereum founder, gave a 25-minute presentation in 2016 on Ethereum's structure. CRYPTO WORD – AIRDROP When promoters of a new project issue free crypto tokens to encourage community action. OH, ONE MORE THING – Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues and more.

June 5, 2022 | Issue 18 IS CRYPTO ENTERING ITS "DOT COM CRASH" PHASE? In November 2021, bitcoin approached its record high price of $70,000. Business publications and newspapers extensively covered the story. Agents curious about crypto reached out to me with a sense of panic. They wanted to learn about crypto, but didn't know where to begin. They were overwhelmed by crypto's complexities. The urgency to learn was fueled by crypto dominating the news, sports, and entertainment. Sports stadiums sold naming rights to crypto companies and celebrities bragged about owning Bored Ape Yacht Club NFTs. That was crypto in a bull market. Now we're in a bear market and the urgency to learn has dissipated. However, the agents who read articles and not just headlines understand that crypto is not going to fade away. Crypto is simply entering a new phase. The internet experienced the same growing pains. If you are older than 40, you remember the Dot Com Bubble. In 1999 there were 457 IPOs and many were grossly overvalued because of the internet frenzy. In March 2000, the Nasdaq hit a high of 5,048 and a month later it dropped by 34%. Internet startups focused on marketing and hoped to build a successful business model before running out of cash. Most failed and this led to the Dot Com crash. The classic example of a failed business model during this time was Pets.com. They sold pet products online, but lost $147 million in the in first nine months of 2000 and they shut down later that year. A key reason Pets.com failed was because they were too early. In 2000, when Pets.com was being built, there were no plug-and-play solutions for eCommerce, warehouse management, and customer service. Cloud computing didn't exist yet and only 250 million consumers were on the internet. Seventeen years later, after these business tools were available, Petco purchased Chewy.com and today Chewy is valued at $12 billion. Is crypto in the Pets.com phase? How long will it take for NFTs, decentralized finance (DeFi), blockchain, decentralized autonomous organizations (DAOs), cryptocurrencies, and web3.0 to find its footing? When will the real estate brokerage, title, and mortgage industry embrace these crypto tools? Who knows? But one thing is crystal clear – a lot of money has been invested in building the crypto industry and it is very influential in Washington. Bloomberg reported that political donations from the crypto sector in 2021 and the first quarter of 2022 has exceeded contributions by internet companies, pharma, and the defense industry. (Follow the money, right?) Don't write off crypto. It's powerful, it's global, and it's here to stay. Join your colleagues who are learning about crypto and its potential impact on real estate. Kudos to the CØMPASS sales managers and agents who have asked me to talk about crypto fundamentals to their agents. If you work at CØMPASS, participate in our crypto Workplace group and ask your sales manager to invite me to speak to your office. If you don't work at CØMPASS, I'm happy to speak with you and your colleagues. Hope you had a great weekend. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO NEWS ▸ NY State Legislature Passed Bill Banning Cryptocurrency Mining The bill sitting on NY Gov. Kathy Hochul's desk would enact a two-year moratorium on crypto mining that operates at reactivated fossil-fuel power plants. Crypto currency miners set up large banks of computers to solve complex mathematical problems that allow them to earn crypto. Their work supports the security and immutability of the blockchain. Crypto miners are attracted to off-the-grid power plants because the electricity is cheaper than plugging into the grid. Some environmentalists oppose this type of mining. According to a WSJ article by Jimmy Vielkind, the Blockchain Association's executive director, Kristin Smith, said that if the governor signs the bill, it would "send a clear signal that the crypto industry is unwelcome" in New York. ▸ Gemini Exchange Had Tough Week – Layoffs & Sued By CFTC Gemini Exchange announced on Thursday that it was laying off 10% of its workforce. Company founders Cameron and Tyler Winklevoss wrote in a memo, "This is where we are now, the contraction phase that is settling into a period of – what our industry refers to as 'crypto winter.' This has all been further compounded by the current macroeconomic and geopolitical turmoil. We are not alone." Shortly after the layoffs were announced, the Commodity Futures Trading Commission (CFTC) sued Gemini for making "false and misleading statements" in how it would prevent bitcoin prices from being manipulated when it sought approval for a bitcoin futures product. The suit focuses on how traders would fund their bets. ▸ Insider Trading Charged Against Former NFT Marketplace Employee Nathaniel Chastain, a former product manager at NFT marketplace OpenSea was arrested by the FBI for trading on inside information. As part of his job, Chastain selected NFTs that were featured on OpenSea's homepage. He secretly purchased NFTs before they were on the homepage and then sold them for two to fives more than he paid. US Attorney for the Southern District of New York said, "NFTs might be new, but this type of criminal scheme is not. Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself." We think of insider trading as applying to stocks, but the Department of Justice says it is not limited to securities. Also, "insider trading" is not a legal cause of action. The criminal indictment against Chastain was for wire fraud and money laundering. Legal commentators explained that misappropriating an employer's confidential information is fraud. Moving proceeds from that action through the monetary system triggers money laundering. Former US Securities Exchange Commission lawyer Alma Angotti said the case could provide an avenue for the government to argue that NFTs are securities. CRYPTO CLASS – REGULATIONS One of the biggest unknowns for the future of crypto is how it will be regulated. If the regulations are too onerous, crypto advocates will claim that the crypto industry will simply leave the US. If regulations are minimal, crypto naysayers will argue that consumers will not be protected from crypto's vicissitudes. However, articles in both the mainstream and crypto publications gloss over the regulatory process. Anyone interested in understanding regulations should understand the process by which regulations are created. I have experience in Washington, DC as an attorney with a regulatory agency and on Capitol Hill with a congressional committee. Here is how it works. Departments and agencies in the executive branch, such the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), have legal authority to write regulations if they received regulatory ("rulemaking") authority through legislation enacted by Congress. President Biden issued an executive order on March 9, 2022 requiring a multitude of the executive branch agencies to study crypto issues and report back to the President with their findings. Essentially, he asked them to recommend what explicit authority they need to regulate the industry. It is likely that many departments will ask for additional authority and more funding. After the administration resolves the turf battles, lawyers in the White House and departments will work closely with select members of the House and Senate to draft legislation (bills) that will work its way through the legislative process. There will be hearings in subcommittees and full committees in the House and Senate. This could culminate with the passage of legislation that will be sent to the President for signing. After the president signs the bill, it becomes law. There will be provisions in the law granting rulemaking authority to the departments and agencies. They will go through the regulatory process of issuing a proposed rule and inviting comments from the public. The "public" will include interest groups representing crypto exchanges, crypto miners, stablecoins, NFT creators and exchanges, banking, finance, environmental groups, consumer protection, and others. The agencies will review the comments, group them into categories, and publish their response. The agency may then jump to issuing a final rule or an interim final rule. When the final rules are published, they have the power of law which can be enforced, civilly or criminally. Trade associations unhappy with the the final rule will likely file lawsuits claiming that the agency exceeded its authority and that the rules are not enforceable. Once the regulations are in place, agencies will often write policies and guidances which will address issues that were inadequately explained or not anticipated in the regulations. The entire process from Biden's mandated crypto reports to legislation and then final agency rulemaking will take at least two to three years. However, this does not mean the agencies must sit on the sidelines. They will attempt to use their existing authority to issue rules. Likewise, President Biden may issue executive orders to regulate some aspects of the industry. INFLUENCERS - People to follow Marc Andreessen – @pmarca Marc Andreessen is a cofounder and general partner of one of Silicon Valley's most influential venture capital firms – Andreessen Horowitz. He created one of the first internet web browsers and sits on multiple boards, including Facebook. RESOURCES – Books, websites, podcasts, articles a16zcrypto is the homepage for Andreessen Horowitz's crypto arm. There are links to their podcasts, reports that are macro and niche, and resources on all aspects of crypto. CRYPTO WORDS – LAYER 2 Layer 2 refers to a secondary software framework on top of an existing blockchain system. They solve the transaction speed and scaling difficulties that are common to major cryptocurrency networks. OH, ONE MORE THING – Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.

MAY 29, 2022 | Issue 17 Search: "crypto real estate" What do journalists write about when there is nothing new or interesting to report? I guess they either write a "soft" news story, interview an industry expert, or skip the segment. I have been looking for crypto real estate news and some weeks there simply isn't anything worthy to write about. This is one of those weeks so I decided to omit the "Crypto & Real Estate News" section. In future issues when there aren't any crypto real estate news stories, I will profile a crypto real estate person or company. If you have any suggestions, send them to me. However, there is no shortage of crypto news so I'll keep reporting on how the crypto industry is managing during this economic downturn. Now is a great time to increase your knowledge about crypto. Learn during the slow times so when things turnaround, you will be a crypto real estate leader in your market. Read crypto stories in business publications and read Crypto News for Realtors. Be a smart real estate professional. Spend five to seven minutes each week reading what takes me 15 hours to research and write. If you work at CØMPASS, participate in our crypto Workplace group and ask your sales manager to invite me to speak to your office. If you don't work at CØMPASS, I'm happy to speak with you and your colleagues. Enjoy this long weekend. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO NEWS ▸ Courts Asked to Decide If Crypto Tokens Are Securities A class-action lawsuit against crypto exchange Coinbase claimed that 79 tokens are unregistered securities. Plaintiffs are seeking reimbursement for trading fees and market losses. As the crypto markets continue to lose money, more class-action lawsuits are likely. The Wall Street Journal reporter Paul Kiernan quoted Joseph Grundfest, former SEC commissioner, "The more money at stake, the higher the probability of litigation, and with the sharp downturn in crypto values, the incentives to litigate have turned up as sharply.” Crypto trading platforms are not regulated and the SEC has stated that many crypto products are securities. Government department heads are debating which departments should have regulatory authority. Meanwhile, Congress members are introducing bills with their preference. The battle over who regulates the crypto industry will be fought in congress, the administration, and the courts. ▸ Elon Tweets & Dogecoin Jumps 10% In December, Elon Musk tweeted that his beloved dogecoin could be used to purchase Tesla merchandise. On Friday morning, Musk tweeted that dogecoin could also be used to buy SpaceX swag. DOGE increased in value by 10%. ▸ Fed Reserve Vice Chair Brainard Discusses CBDC With House Financial Services Committee Could a central bank digital currency (CBDC) be a safe alternative to private-sector crypto currencies such as stablecoins? Brainard said, "it could provide a safe, central bank liability as the neutral settlement layer in the digital financial ecosystem." The CBDC would be issued and backed by the US central bank. While the US government continues to study the feasibility of issuing a digital currency, other countries such as China, have already done so. Commercial banks see a CBDC as a threat. It would likely siphon dollars away from banks which would cause banks to charge higher fees for loans. Greg Baer, head of the Bank Policy Institute, said that a "CBDC would seriously disrupt the financial system, significantly harming consumers and businesses." Privacy rights advocates are also resisting a CBDC unless the government can ensure that digital currency transactions will not be tied a user's identity. CRYPTO CLASS – LIGHTNING NETWORK The Lightning Network allows people to send and instantly receive small amounts of bitcoin. Bitcoin, the world's most widely used cryptocurrency, has drawbacks to its decentralized design. Transactions can take up to an hour before they are settled. Small transactions could have high fees making paying with bitcoin impractical. On the Lightning Network, payments are quick and the fees are nominal. This is because the transactions aren't initially validated on the blockchain. The parties close their own transaction. INFLUENCERS - People to follow Lyn Alden – @LynAldenContact Alden is an investment strategist who writes about crypto and macro trends. She is cited by many top crypto commentators. Her "Strategy Investment Newsletter is free and has tens of thousands of subscribers. RESOURCES – Books, websites, podcasts, articles CoinMarketCap provides financial data on cryptocurrencies, exchanges, NFTs, and other things crypto. CRYPTO WORDS – BEAR MARKET A bear market occurs when there is a prolonged drop in price. For securities, it is when prices fall 20% or more from recent highs. Bear markets can be either short term or long term. Like stocks, crypto is in a bear market. OH, ONE MORE THING – Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.

MAY 22, 2022 | Issue 16 Who Is Still Interested in Crypto? This past week, I began presenting to my CØMPASS colleagues about crypto. I spoke to two offices and I have four more talks scheduled. I suspect that my calendar will fill up with presentations as word spreads inside the company. Why are agents and sales managers interested in crypto when crypto’s financial performance is as poor as other markets, and sometimes worse? Some “seasoned” agents like me remember the internet’s spectacular ascent in the mid-1990s and the dotcom crash in the early 2000s. This was followed by social networks, online video streaming, cloud computing, and smart phones. Is crypto analogous to the internet with its best days ahead? Or, is crypto, decentralization, blockchain, NFTs, and web3 going to die? I have been watching the crypto space intensely for a year and I remain optimistic. The Silicon Valley venture firm Andreesen Horwitz published a State of Crypto Report this week. The report begins with a discussion about market cycles and where crypto sits today after a significant price drop. It states: “Whereas prices are often a lagging indicator of performance in some industries, in crypto they are a leading indicator. Prices are a hook. The numbers drive interest, which drives ideas and activity, which in turn drives innovation.” If high prices drive interest and crypto prices have plummeted, has interest in crypto waned? Of course. So then why should agents pay attention to crypto? The simple answer is because many of their prospective clients own crypto and crypto is significant to them. According to a Pew Research Center report, 31% of Americans between 18 and 29 have invested in or used cryptocurrency. When agents meet with first time home buyers (median age is 34 according to NAR), an agent who is conversant in crypto has an advantage over an agent who is crypto clueless. I am astutely aware of how difficult it is to become comfortable talking about crypto. Crypto is a difficult topic. However, maybe this is a good thing. Let me quote Ryan Holiday, an author who writes about stoicism: “It’s good that it’s hard. It deters the cowards and it intrigues the courageous.” Be courageous, learn about crypto. Continue reading Crypto News for Realtors. If you work at CØMPASS, participate in our crypto Workplace group and ask your sales manager to invite me to speak to your office. If you don't work at CØMPASS, I'm happy to speak with you and your colleagues. Now is a great time to build your foundational knowledge. You will be prepared for the next wave of interest in crypto. I hope you enjoyed your weekend. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO & REAL ESTATE ▸ Startup Builds Real Estate Trading Platform on Blockchain Startup company, Parcl, has a mission that anyone should be able to invest in real estate and reap the rewards. However, Parcl users won't acquire ownership of physical real estate. Instead, they will own tokens tied to real estate. A user would invest in a digital square foot of an actual building. The price of the digital square foot, or Parcl, is determined by Parcl's price index which mirrors property market values. According to their website, users will have "access to price exposure without the burdens of owning or transacting hard assets." Uh oh, my spidey senses are tingling. Parcl claims there's "immediate liquidity, anytime you want to sell your position" and, transaction fees so low they are "almost unnoticeable." Yikes! Transaction fees "almost unnoticeable" and "immediate liquidity"? I'm not schooled in finance, but I know that if I want to sell something, it's meaningless unless there is a buyer. If there isn't a buyer on the other side of my Parcl that I want to sell, how can I sell it? There are not any details on the website, but the company envisions liquidity coming from "Parcl Liquidity Pools." This structure seems a lot like the the stablecoin TerraUSD backed by the LUNA coin. As the world witnessed over the last two weeks, that did not turn out so well for the investors. ▸ Propy Jumps Into the Title Business The company that brought us two homes sold as NFTs, a crypto agent certification course, and an offer management/transaction platform, announced this week that they are now in the title business. Why title? Why isn't Propy focused on selling homes as NFTs? They shouted from the rooftops that selling homes as NFTs would be the future of real estate. Are they changing their business model? In February 2022, a Tampa homeowner who was planning on listing her home, hired Propy to help her sell her house as an NFT. Propy marketed her property as the first home to be auctioned as an NFT and the NFT auction was successful. However, Propy encountered many challenges in transferring ownership from the seller to the NFT buyer. One insurmountable challenge was that title insurance was not allowed. This is a risk most buyers would not accept. Perhaps Propy has realized that title is a key to growing their business. ▸ Fannie Mae Issues Crypto Guidelines The Federal National Mortgage Association, known as FNMA or Fannie Mae, is a government-sponsored enterprise. Its role is to securitize mortgage loans as mortgage-backed securities. Lenders must follow Fannie Mae's requirements to be an approved seller and servicer of residential mortgage loans. On May 4, 2022, Fannie Mae published these revisions to its cryptocurrency requirements – ▪ Income paid in the form of virtual currency may not be considered when qualifying a borrower. ▪ Assets used to establish continuance for certain income types cannot be in the form of virtual currency. ▪ The purchase price of the property and any earnest money deposit may not be designated in virtual currency. ▪ The payment used as rental income must be in U.S. dollars. ▪ Payment on any installment debt secured by virtual currency must be included in the debt-to-income ratio calculation. CRYPTO NEWS ▸ Goldman Sachs Co-Leads $70M Fund Raise for Crypto Platform Elwood Technologies Elwood's platform will provide institutional-level access to cryptocurrency markets. Institutions are seeing increased demand for cryptocurrencies. Matthew McDermott, global head of Digital Assets at Goldman Sachs, said that Goldman is "broadening its market presence to appeal to client demand." In a Goldman-Sachs Research Newsletter interview with Michael Novogratz, CEO of Galaxy Digital Holdings Ltd., Novogratz commented on the current crypto price decline. Novogratz said, "Everyone from the major banks to PayPal and Square is getting more involved, which is a loud and clear signal that crypto is now an official asset class. There’s still a lot of volatility, so people will wash in and out. But crypto is not going away." ▸ Insider Trading and Crypto The Wall Street Journal reported that a handful of crypto investors made early trades on crypto currencies based on inside information. When a crypto coin is listed on a crypto exchange, it is common for the price to rise. Crypto coin Gnosis was mentioned in a blog post by crypto exchange Binance and within an hour its price jumped from $300 to $410. When crypto is exchanged, the identification of the parties (in alphanumeric characters) is visible on the blockchain. The Journal reported that four minutes after the listing announcement by Binance, the owner of the wallet sold over $500,000 in Gnosis coins within four hours, netting a 40% return. The wallet owner did the same thing with three other tokens. Major crypto exchanges have policies to prevent employees from sharing news about upcoming listings. However, insider trading laws for stocks or commodities have not yet been applied to crypto trading. ▸ Upcoming Senate Bill to Regulate Stablecoins Following last week's spectacular crash of stablecoin TerraUSD, Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) announced they will release a draft bill focused on stablecoins and agency authority. Gillibrand was a securities lawyer and Lummis was an early bitcoin enthusiast. It has been reported that their bill will give greater regulatory jurisdiction to the Commodity Futures Trading Commission (CFTC). CRYPTO CLASS – CRYPTO WALLET Cryptocurrency owners have a password, known as a private key, that gives them access to their crypto. A crypto wallet holds the private keys and keeps them secure. Crypto wallets hold access to crypto, not the actual crypto. The actual bitcoin lives on the blockchain and is only accessible with a private key. If a private key is lost, the crypto cannot be accessed. When a crypto exchange such as Coinbase or Gemini holds a customer's private key, the exchange has custodial ownership. There are several types of crypto wallets. Hardware wallets, similar to thumb drives, are only connected to a computer when the owner needs access to their crypto. Online wallets store private keys on an app or in software. They are more convenient than a hardware wallet, but less secure. INFLUENCERS - People to follow Balaji Srinivasan – @balajis Balaji is a tech founder, angel investor, former CTO of Coinbase, and General Partner at venture firm Andreesen Horowitz. He is a macro thinker and a frequent guest on business podcasts. I first heard him on Tim Ferriss. It's a 4-hour interview. (I watched it twice!) RESOURCES – Books, websites, podcasts, articles Blockchain Revolution, a book by Don Tapscott and Alex Tapscott, is a comprehensive review of how blockchain has changed some industries and is poised to impact others. CRYPTO WORDS – CHAOS MONKEY While not a pure crypto word, I am seeing it used frequently by crypto commentators. Chaos monkey is a software tool created by Netflix that tests resiliency. OH, ONE MORE THING – Michael Saylor, CEO of MicroStrategy and highly-visible bitcoin maximalist whose company holds 129,218 bitcoin ($3.91 B) in corporate treasuries, just tweeted how bitcoin will prevail. Now, I understand! Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.

MAY 15, 2022 | Issue 15 A HISTORIC WEEK FOR CRYPTO Let's begin with the TerraUSD Luna stablecoin saga. I cover it in more detail below, but the highlight is that TerraUSD, like all stablecoins, was designed to trade for $1 USD per coin. Terra had a unique mechanism to ensure it stayed at $1, but it failed this week. As I am writing this early Saturday morning, TerraUSD is trading for under $0.01. Its collapse during the week destroyed $40 billion in value. As Terra tanked, panic ensued in crypto world. Other stablecoin investors got nervous and then millions of crypto investors began questioning whether crypto is the future of all money. The "adults in the room" cryptocurrencies, Bitcoin and Ethereum, fell 20% and 27% respectively. Where does that leave the crypto industry? Is it going to disappear based on what happened this past week? Nope. Let's put crypto in perspective. "Market cap" is one way to size up a company or an asset by looking at the total dollar market value. The US dollar has a market cap of $40.7 trillion. Gold is $11.49 trillion and cryptocurrency is $1.3 trillion. Crypto is not as big as gold or USD, but $1.3 trillion is significant. Cryptocurrencies, blockchains, and stablecoins backed by real assets, are here to stay. The price volatility will remain as will its correlation with tech stocks. Nevertheless, many crypto investors who were spooked by this week's price drop and all the headlines may decide to move their money into real estate. Be prepared for them. I see some crypto savvy sellers and developers proclaim in their marketing material that they will accept cryptocurrency. (Sellers may still require that the crypto is converted into USD before the closing.) If you have a buyer who wants to pay with crypto or a seller who is willing to accept a crypto buyer, educate yourself on the potential pitfalls and the process. Read past issues of Crypto News for Realtors and my other crypto blog posts. As always, if you have any questions, reach out to me. Also, I am scheduled to give several crypto talks to Compass offices over the next two weeks. If your office is interested in having me speak, please reach out to me. I hope you had a wonderful weekend. Have a productive week and stay crypto curious (in spite of the headlines)! Rich Hopen richard.hopen@compass.com | 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO & REAL ESTATE ▸ East European Developer Using NFTs to Lure Investors The developer, Maison Group, in the Black Sea resort town of Batumi, Georgia, is selling NFTs on OpenSeas. The NFTs are sold as fractional ownership shares in a residential development project which is targeted for completion in 2024. The NFTs represent different amounts of square footage – 290 SF, 592 SF, and 1,507 SF. The developer's marketing material states, "The optimistic forecast is 1,000% + investment income. Pessimistic forecast is 130% of investment income." A project like this in the US would likely run afoul of Security & Exchange Commission rules. I suspect it would trigger the SEC's crowdfunding regulations which require the transactions to take place through an SEC-registered intermediary, limit the amount of crowdfunding offerings, limit the amount for non-accredited investors, and disclose information in SEC filings. CRYPTO NEWS ▸ Stablecoin TerraUSD Collapsed and Delisted From Several Exchanges Stablecoins are a type of cryptocurrency whose price is tied to a stable government-issued currency. Stablecoins are designed to provide predictable pricing in the volatile cryptocurrency world. There are two broad categories of stablecoins. Tether and USD coin, for example, are backed by assets such as cash, short-term US government securities, and commercial paper. TerraUSD is different. It is an "algorithmic stablecoin" and is not backed by assets. Instead, it used a system that balanced the value of two coins. Terra is tied to the US dollar and whenever its value slipped and fell below $1, some of the Terra was removed from the market ("burned") and it was replaced by $1 worth of the company's sister coin, Luna. The bottomline is that people were allowed to exchange Terra for Luna. It worked well and the market cap reached $41 billion in April. However, the platform was challenged last weekend when several large withdrawals caused instability. People lost confidence and the price started dropping. It then went into a tailspin. There was a reserve fund set up to protect against investors pulling out. However, it wasn't adequate to offset the withdrawals. As I'm writing this, the Terra (Luna) price is light years away from $1.00 per coin. It is $0.00076. Understand? Sometimes, a simple explanation makes the most sense. CZ, the CEO of the world's largest crypto exchange Binance, tweeted, "The design flaw: minting coins (printing money) does not create value, it just dilutes the existing coin holders." The broader crypto community knows what is coming next – regulation. ▸ NFTs for Fundraising – Finally, An Issue That Both Parties Support The Wall Street Journal reported that some mid-term candidates are using NFTs to raise campaign money. Candidates are still required to comply with the Federal Election Commission's rules, but it's a new a way to reach an untapped voter pool. A successful NFT launch can be much more efficient than phone calls and typical in-person fundraising events. The candidates featured in the WSJ article are Shrina Kurani, Blake Masters, and Steven Olikara. ▸ US Treasury Sec. Yellen on Digital Currency and Stablecoins Sec. Janet Yellen underscored the need for Treasury to study the pros and cons of a Central Bank Digital Currency (CBDC). Yellen was testifying at a U.S. Senate panel on Tuesday as the stablecoin market was plummeting. She said stablecoins are "a rapidly growing product, and that there are risks to financial stability, and we need a framework that's appropriate." Sen. Pat Toomey drew a distinction between Terra, the stablecoin that was in a free fall, with other stablecoins. Terra is an algorithmic stablecoin that "is not backed by cash or securities." Yellen acknowledged that this an important distinction. CRYPTO CLASS – NETWORK EFFECT Network effect is a term in economics that describe how the value of a service or good may depend upon the number of users. As more users join the network, the network becomes more valuable to other users. When the telephone was invented, its value increased as more people purchased phones. When cell phones, social media platforms, and smart phones launched, their success hinged upon the size of their networks. To illustrate this concept, two phones make one connection, five phone have 10 connections. Twelve phones make 66 connections. With 100 phones, there are 4,950 possible connections. Cryptocurrency protocols like Bitcoin, have strong network effects. However, a company that grows through strong network effects, is not invincible. At some point, enough users could abandon Facebook or Amazon and weaken their network. Assessing the strength of Bitcoin network effect involves looking at a long list of factors, such as investor holding periods, adoption of Bitcoin, and engagement. The crypto network is strong. INFLUENCERS - People to follow Matt Levine – @matt_levine Levine is a Bloomberg Opinion columnists who sends out frequent emails entitled Money Stuff. The emails are free and always insightful, witty, and sometimes laugh-out-loud funny. I don't always agree with him, but I always learn something new. RESOURCES – Books, websites, podcasts, articles Wall Street Journal In addition to crypto books, articles, podcasts, and tweets, I always comb through the main business publications. The WSJ has great financial reporters who have a deep understanding of crypto. CRYPTO WORDS – STABLECOINS Cryptocurrencies are notoriously volatile and that makes it challenging for parties to transact in crypto. Stablecoins have a value pegged to a stable currency such as the US dollar. One stable coin equals one dollar. Also, stablecoins trade fast and don't have multi-day delays that occur with government issued currencies. OH, ONE MORE THING – Opportunist traders (wait, aren't all traders opportunistic?) are still betting on a short-term price recovery from TerraUSD. All this is occurring while Terra's creator is trying to save the platform. This reminds me of the Monty Python and the Holy Grail movie scene – "I'm not dead yet!" Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.

MAY 8, 2022 | Issue 14 "HELLO? CRYPTO ENTHUSIASTS, WHERE ARE YOU?" When I joined CØMPASS in November 2021, I spoke with several colleagues and managers about creating a crypto community for agents. I received a lot of support. Crypto was front page news because bitcoin was poised to hit a new high. Excitement was in the air and agents wondered how crypto would impact real estate. I launched a Workplace group and shortly afterwards, I wrote my first issue of Crypto News for Realtors. Support for the newsletter, as measured by comments and open rate (over 70 percent) was high and it remains high. This past week has been tough for all investors, not just crypto investors. However, I don't think the falling price of crypto will deter buyers who have considered using crypto to buy real estate. Low crypto prices mean that a buyer's capital gain would be lower. Or, the buyer may even have a capital loss. This would appeal to crypto holders who may want to move some of their volatile crypto to real estate. Anyway, that's my theory. As a wise friend has told me over the years – only time will tell. Keep reaching out to me with your ideas and questions. I hope you had a wonderful Mother's Day weekend. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO & REAL ESTATE ▸ NAR Studying Crypto Opportunities For Agents Inman reported this week that NAR's presidential advisory group is examining crypto's impact on the real estate industry. The group is tasked with delivering a report by November. Kristin Smith, a Dallas Realtor, is heading the group and spoke at a midyear conference. Smith mentioned Propy, a crypto real estate startup that received funding from NAR's venture arm, Second City Ventures. Smith discussed developing a new crypto real estate product or platform. It would provide agents with an opportunity to invest and reap financial rewards if the product was adopted and became successful. CRYPTO NEWS ▸ Bitcoin Price Drops As Investors Sell Risky Assets When the central bank Chair Jerome Powell announced a half-point rate hike, the markets fell as investors sold their risk assets, like growth and tech stocks. When did investors start treating crypto like a Nasdaq stock? In May 2021, when I first started following crypto, the sentiment that bitcoin was an inflation hedge, echoed throughout Twitter and crypto Youtube videos. Retail investors perpetuated the narrative that investors would flock to bitcoin once inflation took hold. Crypto believers ("maximalists"), drawn to the promise of decentralized money, held onto their crypto as a long-term investment. The "hodlers" scoffed at speculators who were trying to time the market for a quick buck. Then things started to change. A handful of corporate titans like Michael Saylor of MicroStrategy and Elon Musk captured headlines when they invested their corporate securities in bitcoin. NYDIG, a subsidiary of the asset management company Stone Ridge, introduced Bitcoin products to banks, insurance, and fintech. Institutions started jumping into crypto and as adoption increased, a surge of Wall Street professional money managers left the sidelines. According to Wall Street Journal reporter Dion Rabouin, this happened for three reasons. First, crypto's market cap shows greater mainstream acceptance and professional money managers saw an opportunity to earn management fees, trading commissions, and other revenue streams. Second, the market increased from $150 billion in March 2020 to $1.77 trillion in March 2022. This allowed the money managers to make big trades without moving the entire market. Also, they profited from crypto's volatility, whether or not the price went up or down. And third, highly regarded hedge fund leaders like Paul Tudor Jones, publicly discussed bitcoin's value in a market where stocks and bonds are not attractive. ▸ SEC Hires 20 Crypto Enforcers SEC Chair Gary Gensler announced that the Crypto Assets & Cyber Unit added 20 people to its staff, bringing the total to 50 employees. Their focus is virtual currency offerings, decentralized finance, trading platforms and stablecoins. The SEC has investigated marketplaces that offer certain types on non-fungible tokens, and companies that offer crypto-lending products. Furthermore, according to CoinDesk, $200 million in crypto went missing over the past two weeks. Given Gensler's propensity to lead with enforcement instead of policy or rulemaking, it's not surprising that he expanded to cyber unit. As Gensler seeks to grow the SEC's crypto role, the crypto industry is responding. A bipartisan group of House representatives support a bill that would bring crypto exchanges, like Coinbase and Gemini, under regulatory authority of the Commodity Futures Trading Commission ("CFTC"). The proposal defines tokens as "digital commodities." This would wrest control from the SEC. CFTC would not, however, regulate crypto assets used to invest in or buy a piece of a business. Any real estate venture that tokenizes property would still be considered a security and thus regulated by the SEC. ▸ Senator Warren Dislikes Fidelity's Plan to Add Crypto to Its 401(k) Program In response to Fidelity's announcement that they will offer bitcoin in their 401(k) plans, Sen. Warren (D-MA) sent a letter with Sen. Tina Smith (D-MN), expressing concern that bitcoin's volatility is not appropriate for retirement investments. The letter was sent to Fidelity's CEO. Sen. Tommy Tuberville (R-AL) introduced a bill stating that retirement investors should not be restricted in how they choose to invest their retirement funds. ▸ Central Banks Looking at Digital Currencies The Bank for International Settlements (BIS) is owned by 63 central banks and represents 95% of the world's GDP. It surveyed the banks, and 81 banks reported that they are working on developing digital currencies. Two thirds of the banks are likely to issue a retail CBDC in the "short or medium term." The paper, Gaining Momentum – Results of the 2021 BIS survey on central bank digital currencies, states that the rise of stablecoins and other cryptocurrencies motivated the banks to accelerate their plans to explore developing digital currencies. CRYPTO CLASS – BITCOIN PIZZA DAY Congrats to Debra Brown, a CØMPASS agent in McKinney, TX. Debra provided the correct answer to my question in the April 24, 2022 newsletter, "Who is this guy?" I showed the below photo of Jeremy Sturdivant. Sturdivant is famous in the crypto world. In 2010, Sturdivant replied to a post which offered 10,000 bitcoins in exchange for two large pizzas. He sent two Papa John's pizzas and received the BTC. It was valued at $41. Had Sturdivant held onto the 10,000 bitcoins, he would be worth $360 billion!! Alas, he spent it all in 2010. The bitcoin-for-pizza transaction was the first exchange of value for bitcoin. It is celebrated on May 22 as Bitcoin Pizza Day. Debra's prize – two large pizzas. INFLUENCERS - People to follow Nathaniel Whittemore – @nlw NLW hosts a podcast, The Breakdown, which I've cited several times. I listen to it everyday because of the stories he covers, his analysis, and perspective. NLW gives a lot of air time to macro economic issues. I have learned a lot from his reporting. RESOURCES – Books, websites, podcasts, articles The Block is a paid service that offers high quality, professional information, news, and analysis on crypto. If you don't want to pay, the site offers a lot of valuable content for free. CRYPTO WORDS – WHALE Whales are crypto investors who hold a large amount of bitcoin. They are called whales because, when they buy or sell large amounts of crypto, their actions disturb the waters where the little fish, like us, are swimming. Purported whales include Satoshi Nakamoto, Cameron and Tyler Winklevoss, and VC Tim Draper. According to statista, an investment site that provides statistical analysis, crypto whales own 92 percent of BTC, but only represent two percent of ownership. OH, ONE MORE THING – During the Berkshire-Hathaway annual shareholders meeting, Warren Buffet opined on bitcoin. I guess Warren was trying to make a point.

MAY 1, 2022 | Issue 13 "HOW LONG WILL IT TAKE BEFORE I UNDERSTAND CRYPTO?" I am asked a version of this question at least four times a week. The answer depends upon your background and how much time you invest in educating yourself. It won't take you long to learn how crypto fits with real estate if you are conversant with economics, finance, monetary policy, fiscal policy, the regulatory process, tax rules, global economics, anti-money laundering, politics, cryptography, currencies, foreign exchange, decentralized ledgers, computer hardware, software, venture capital, and digital currency, What??? You don't have that knowledge base? Then it may take a while. But that's fine, because until crypto becomes mainstream, your familiarity with it won't be essential. However, if you want to be early to the crypto real estate party, you'll need to carve out a few hours every week. The most efficient way to learn almost anything, is to learn from others. I spend a lot of time every week researching and writing Crypto News for Realtors so you can learn what I've learned. In turn, I learn from reading major publications (Wall Street Journal, New York Times, Bloomberg), crypto sites (CoinTelegraph, CoinDesk), listening to crypto podcasts (The Breakdown and Unchained), and reading a paid crypto newsletter (The Bitcoin Layer). There are certain experts whose styles resonate with me. This is how I learn. Find what works for you. Check out my recommended "resources" and "influencers" in each newsletter. Also, if you want to jumpstart your crypto literacy by taking a comprehensive paid course on crypto and real estate, please reach out to me. I am getting requests to create a course, and I am considering it. In the meantime, reach out with your questions. The best part of writing this newsletter has been meeting agents and others around the US. As always, I'm here for you! I hope you had a fun weekend. Have a productive week and stay crypto curious! Rich Hopen richard.hopen@compass.com 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO & REAL ESTATE ▸ Crypto Lender Abra Partners With Propy Abra, one of several companies offering loans to crypto holders, announced a partnership with Propy. Propy is a crypto real estate startup that facilitated two recent home sales in Florida that used NFTs to transfer the deed. Borrowers with significant crypto holdings can use their crypto as collateral for a cash loan. This allows them to purchase real estate without having to sell their crypto and incur a potential capital gains tax liability. Crypto's price volatility can impact a borrower who uses a lender such as Abra. If the price of crypto drops below a designated amount, there will a "margin call" to restore the value of the collateral. The borrower will be required to increase their crypto balance. Conversely, if the crypto price rises, the lender may release some of the crypto back to the borrower. The Propy and Abra partnership should benefit Propy in their next "real estate as an NFT" transaction. Propy's two NFT house transactions stipulated that buyers had to pay with crypto. The first house was purchased with Ethereum and the second with a crypto "stable coin" that was linked to the US dollar. If Propy's third transaction allows a borrower to pay with cash provided by Abra, would ownership of the property still be transferred to the buyer through an NFT? If so, Propy's value proposition seems to be getting even murkier. ▸ Realtor Celebrity Launches Crypto Real Estate Startup Christine Quinn announced the launch of RealOpen, a company that will "make digital assets accessible everywhere." There is not much information about RealOpen's services on their site. Other press reports state the company will list properties and target buyers who want to pay with crypto. Their platform will confirm the buyer's crypto holdings and convert it to cash at closing. While I did not discover anything unique about RealOpen other than using a celebrity to tap into crypto buyers and star struck real estate agents, I did learn a new word. Their home page states, "We are the bridge between the bright future of digital assets and the anachronistic industries in need of disruption." ▸ Fidelity Will Offer Bitcoin to Its 401(k) Accounts. US Department of Labor Expressed Concerns. Over 23,000 companies use Fidelity to administer their retirement plans. Later this year, employees will be able add cryptocurrencies to their retirement accounts. Dave Gray, head of Fidelity's retirement offerings, said, "There is a need for a diverse set of products and investment solutions for our investors. We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term." Fidelity will cap transfers and new contributions of bitcoin to 20% of 401(k) account balances. Employers, however, can provide a lower percentage. The Labor Department's Ali Khawar said that the crypto market's volatility and valuation methodologies make it challenging to investors. He said it is too early for crypto to be part of Americans' retirement savings. Fidelity responded, "At a time when foundations, endowments and now pension plans are investing in cryptocurrency, blocking access puts everyday Americans at a structural disadvantage, deepening an already wide retirement gap." ▸ Central African Republic Becomes Second Country To Adopt Bitcoin As Legal Tender Central African Republic (CAR) is one of the poorest countries in the world and has been involved in decade-long conflict. While poverty is rampant, the country sits on vast mineral deposits of gold, uranium, and diamonds. Like other French colonies in Africa, CAR's currency is the French-backed CFA franc. After CAR announced its adoption of bitcoin, many commentators reported that the adoption of bitcoin is an attempt to breakaway from reliance on the CFA. President Fausin-Archange Touadera countered that it would "improve the conditions of Central African citizens" and transform CAR into one "of the world’s boldest and most visionary countries.” Economist Yann Dawaoro told the BBC, "Businessmen will no longer have to walk around with a suitcase of CFA francs that will have to be converted into dollars or other currency to make purchases abroad." ▸ New York State and Fort Worth, Texas Take Different Approaches to Crypto Mining New York State Assembly passed a bill that restricts future crypto mining to those powered by renewable sources. If a companion bill is passed by the state senate, the restriction becomes law. If the New York Senate enacts a companion bill, New York will send a strong signal to the crypto industry that any future crypto mines must be powered by renewable sources. Conversely, Fort Worth, Texas, is the first U.S. city to start its own mining operations. Fort Worth partnered with the Texas Blockchain Council and launched a pilot project with three mining computers. Texas aggressively pursued crypto miners following China's ban of the crypto industry. ▸ "The Mooch" Is Back Anthony Scaramucci was the White House Director of Communication for 11 days in July 2017 under President Trump. Today, he's becoming a common guest on business shows talking about how his hedge fund is focused on blockchain. A new fund, UNLOX, will target institutions to securitize property, corporate securities and venture capital with crypto assets. SkyBridge was an early entrant among hedge funds in acquiring bitcoin. ▸ Goldman Sachs Offers Bitcoin-Backed Loans Goldman provided its first loan that was collateralized by bitcoin. The loan broadcasts that Goldman's digital-assets team is pursing crypto lending. Currently, lending against crypto is dominated by crypto-centric firms. CRYPTO CLASS – TOKENIZING REAL ESTATE Some real estate developers are exploring selling digital shares of their projects as tradable tokens. The benefits are enticing. Carving up a project into small tokens will broaden market participation, increase liquidity, lower costs, increase transparency, and provide additional capital. If a developer is willing to embrace the regulatory challenges, they will typically take the following path. 1) Form a special purpose vehicle (SPV) that creates a subsidiary entity to limit financial liability, or include the project in a REIT or Real Estate Fund. 2) Select a platform that will create the tokens and the "smart contract" that will outline the terms of the agreement between the buyer and seller. 3) Create and issue the tokens on the blockchain in a Security Token Offering (STO). After the tokens are offered, they could be traded on a secondary market, such as SolidBlock. The St. Regis Aspen resort is an example of a successful tokenization project. The resort owner, Elevated Returns, offered its hotel ownership through token sales. The STO was through a REIT structure and complied with security regulations. Elevated Returns sold Aspen Coins, the tokens, on the Ethereum blockchain, and raised $18 million. INFLUENCERS - People to follow Anthony Pompliano – @APompliano Anthony Pompliano has 1.5 million followers on Twitter and 379,000 subscribers on YouTube. He has an investor newsletter and podcast. His YouTube videos are worthwhile because he provides long term perspective on hot crypto news. RESOURCES – Books, websites, podcasts, articles Investopedia defines and clearly explains any terms related to money, finance, or business. Their crypto words have terrific entries and provide useful links. More common terms also have "explainer" videos. CRYPTO WORDS – NORMIES Crypto investors disparage people who don't embrace crypto as normies. Normies typically don't understand crypto and dismiss it as a craze, bubble, or a tool for criminals to launder money or engage in activities on the dark web. "Normies don't get it." OH, ONE MORE THING – Thanks for reading! See you next week. Btw, regarding the contest announcement last week, no one provided the correct answer. So, here's a clue – pizza. Go to Crypto News for Realtors to read previous issues.

APRIL 24, 2022 | Issue 12 WILL ENERGY MARKET PRICING GO FROM USD TO BTC? Several weeks ago, I wrote about energy companies that have bitcoin mining operations at their shale oil fields. Shale oil produces excess natural gas, mostly methane, that is released into the atmosphere. Methane is right behind carbon dioxide as the second worst culprit in causing global warming. Bitcoin miners capture the methane and use it to power their computers. The output is bitcoin. Are bitcoin miners paying their landlords, e.g. Exxon, in BTC or USD? If some of the payment is in BTC, we may be seeing the beginning of a closed-loop bitcoin-energy economy. One of my favorite authors who writes about crypto and monetary policy, Nik Bhatia, speculated, "At the beginning, we might see electricity prices for miners priced in bitcoin, but eventually nations that amass bitcoin reserves or oil conglomerates that have mined bitcoin will tap markets where the buyers only use bitcoin. This will force the first crude oil bitcoin-denominated contract." This is another interesting path for crypto adoption that's worth watching. On the crypto real estate front, I'm encouraged that many of you are reaching out to me to discuss how crypto might fit into your seller's marketing plan. I'm here for you! I hope you had a wonderful weekend. Have a great week and stay crypto curious! Rich Hopen richard.hopen@compass.com 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO & REAL ESTATE Inman, a real estate news publisher, held their conference – Inman Connect New York. Lane Hornung, CEO of zavvie, talked about the promise of blockchain to drive efficiencies in title process. He said there are 10,000 county clerks that would have to switch their current system onto the blockchain. "I'm not holding my breath for that." Hornung is encouraging others to pay attention to virtual real estate, but he is most bullish on lending platforms that use crypto as collateral. CRYPTO NEWS ▸ Moonbirds NFT Launch Sold Over $200 Million This week's profiled influencer is Kevin Rose. Rose is co-creator of PROOF Collective which sold the NFTs. PROOF Collective is a private NFT community that entitles its members access to a Discord channel, in-person events, and opportunities to invest in upcoming projects including virtual real estate. PROOF launched the Moonbirds NFT. The NFT comprises 10,000 computer-generated pixel owls with an opening price or $7,700. Currently, the lowest price on the secondary market is $144,600 for a Moonbird. So far, the highest payment for a Moonbird has been $612,600. The market cap is $1.4 billion. It's currently the top selling NFT according to coinmarketcap. ▸ Crypto & NFT Markets Have Cooled, But VC Funds Keep Flowing Crypto currencies and NFTs (other than Moonbirds) have been languishing, yet $5 billion has been invested in crypto/blockchain in the first quarter. Bloomberg cited data from Pitchbook and said investment has doubled over 2021 first quarter. However, 9 out of the top 10 investors are focused exclusively on crypto. ▸ US Treasury Sanctions Russian Crypto Miner The Treasury's Office of Foreign Assets Control added Russia-based crypto miner BitRiver to its sanction list. Treasury's release said, "By operating vast server farms that sell virtual currency mining capacity internationally, these companies help Russia monetize its natural resources." ▸ New York State Considers Banning Some Crypto Mining Crypto mining servers use up to 44 megawatts for their mining operations. A bill is before the New York state legislature that would enact a two-year moratorium on reactivating fossil-fuel power plants. Some miners pay less for electricity by locating their operations at closed power plants. The crypto industry is lobbying against the New York ban because it could become a model for other states seeking to do the same thing. The National Conference of State Legislatures said more than 160 crypto-related bills are being considered in 37 states. ▸ Hacker Steals $182M From Stablecoin Project This week's hack of stablecoin project, Beanstalk, netted the criminals $76 million. Beanstalk used a DAO, or decentralized autonomous organization, whereby users could dedicate funds to the project and vote in governance and protocol changes. The hacker borrowed close to $1 billion worth of stablecoins and added it to Beanstalk's funds. That massive infusion of funds gave the hacker a large portion of voting power. The hacker proposed donating funds to Ukraine and when voting occurred, the vote included code that sent all Beanstalk's funds to the hacker's wallet. Once the funds were stolen, the loan was repaid and the hacker kept the difference. According to Beanstalk's website, the hacker profited $76 million. CRYPTO CLASS – NFTs Surprisingly, I haven't written a crypto class on Non-fungible tokens (NFTs). I've covered NFTs in the context of NFTs and real estate, but I haven't explained how they are evolving. Essentially, NFTs are a crypto assets that prove ownership of real or digital items. Investors who purchase a plot of virtual land in Decentraland, for example, will acquire an NFT. It's a virtual deed. Purchasers of digital art obtain an NFT documenting that they own the art. Anything digital is fair game to become an NFT. It could be a jpg, GIF, or an audio clip. While we normally don't think of a digital file as being unique, when it is "minted" (created) as an NFT, it has metadata that identifies each file. It's like an artist who makes 1,000 prints and each one is numbered. Many NFT creators change backgrounds of images to delineate a rare group of an NFT series. The authenticity of an NFT is verifiable since it is recorded on the blockchain from its creation to each time it is bought and sold. Unlike cryptocurrencies which are bought and sold on exchanges like Coinbase and Gemini, NFTs are listed and traded on NFT marketplaces such as OpenSea, Rarible, and Nifty Gateway Bloomberg reported that the NFT market grew to $41 billion in 2021. The conventional art market was $50 billion in 2022. Investment bank Jeffries projects the NFT market-cap will exceed $80 billion in 2025. INFLUENCERS - People to follow Kevin Rose – @kevinrose and kevinrose.com Kevin Rose, 45, is a successful entrepreneur and investor. He was on the cover of Business Week in 2006 with the headline, "How This Kid Made $60 Million In 18 Months – Digg.com's Kevin Rose leads a new brat pack of Silicon Valley Entrepreneurs." Rose was a general partner at Google Ventures. He was an early investor in Twitter, Facebook, Square, Medium, and Nextdoor. Currently, he's a partner at venture capital firm True Ventures that focuses on NFTs, crypto, and DeFi. RESOURCES – Books, websites, podcasts, articles MIT Open Course – Blockchain & Money I began my crypto education by watching a full semester course taught by Prof. Gary Gensler in 2018. There are 24 classes and I was riveted by most. If you're as crypto curious as me, watch either the first class or the last one to get a taste of his teaching style. Gensler is the current Chair of the Securities & Exchange Commission. CRYPTO WORDS – HASH RATE Hashrate is the combined computational power that is used to mine and process transactions on a Proof-of-Work blockchain. It is important because the more machines dedicated to discovering the next block, the higher the hashrate. And the higher the rate, the more secure the network. OH, ONE MORE THING – Exciting News! Crypto News for Realtors is having a CONTEST!!! Be the first CNR subscriber to tell me who this guy is, why he's famous in the crypto world, and the date he is honored. (The prize will be obvious to the winner.) Send your submission to richard.hopen@compass.com. Deadline is April 28, 2022. Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues.

APRIL 17, 2022 | Issue 11 TO REPORT OR NOT TO REPORT? For many of you, it's a holiday weekend and I'm expecting that crypto news is taking a back seat to family, festivities, and last minute tax issues. I deliberated whether or not to skip this week. However, I woke up motivated to kick out an issue. It's a bit more concise than recent issues, but I am sure you'll find this issue just as valuable. I hope you had a wonderful weekend. Have a great week and stay crypto curious! Rich Hopen richard.hopen@compass.com 908.917.7926 PS. You can find all CNR newsletters here. CRYPTO & REAL ESTATE On April 13, 2022, Propy sold its second NFT property for $215,000. The sale was not profitable given that public records show that Propy was the seller and they paid $215,000 for the property on January 24, 2022. The NFT was listed on the MLS for $185,000 even though the listing agent shared a CMA showing a $220,000 market value. It will be interesting to see if NFTs become a more profitable way to sell houses than today's traditional method. CRYPTO NEWS ▸ Congress Focusing on Stablecoins Republican Senator Pat Toomey, said "Stablecoins are the logical place to start and the place where there's the most interest in starting." Stablecoins are a cryptocurrency that is tied to fiat (government issued) currency. The purpose of stablecoins is to counter crypto's volatility. The stability comes from linking the coins to a reserve of fiat currency or a commodity like gold. Congress is looking at safeguards to ensure that adequate reserves exist so that buyers can redeem their stablecoins for currency. The debate will focus on ho strictly to regulate the stablecoins. They could be regulated similar to banks or given a lot more leeway. In 2021, the largest stablecoin, Tether, was investigated by the Commodity Futures Trading Commission for misrepresenting its dollar reserves. A $21 million settlement was reached. Common sentiment among industry leaders is that no legislation will be enacted until the next congressional session. The stablecoin market is $185 billion. The Wall Street Journal reported that dozens of the top stablecoins have grown 500% this past year. Circle Internet Financial announced it will apply for a banking license. Circle issues USD Coin and announced this week that it raised $400 million from BlackRock and Fidelity. ▸ NFTs in Hollywood An all-things-NFT event in Los Angeles, lots of celebrities promoted their favorite NFTs. Mark Cuban talked about the metaverse and his projects. Cuban brought Charlie Sheen on stage who admitted he didn't understand NFTs. An event highlight was a metaverse installation that combined virtual reality with sensory feedback. ▸ Michael Lewis on Crypto Markets – "It's far more egalitarian than the stock market." Best-selling author Michael Lewis who has written numerous books about finance, sports, and government, was asked in a Yahoo! Finance interview about the SEC only regulating a small part of where wealth is created. Lewis agreed with the premise that most of the money earned goes to private equity firms, venture capital firms, and investment banks. He said that crypto is building a separate financial structure unlike our current system and "it eliminates the middlemen." "When money is on a crypto exchange, you're not paying a broker to move your money. There aren't high frequency traders who pay for faster information about the exchange." Lewis said, "The whole gerry-rigging of the stock market isn't happening there. It's really clean. The mechanisms to build this are far more egalitarian. Participants in the marketplace aren't privileged in relationship to one another in the same way they are in the stock market." CRYPTO CLASS – DOUBLE-SPEND PROBLEM When bitcoin's creator Satoshi Nakamoto announced "a new electronic cash system that uses a peer-to-peer network" he proclaimed that it prevents double-spending. If a bitcoin, or any cryptocurrency, could be used more than once, it wouldn't have any value. The double-spend problem doesn't exist with physical currency because when I pay $10 to buy a sandwich, I surrendered the money to the seller. With digital currency, what prevents a buyer from sending the same bitcoin to more than one seller? Short answer, the blockchain. Every single transaction is posted on the blockchain, time-stamped, and verified by a confirmation process (see Blockchain). The first transaction would be verified, but the second payment with the same bitcoin would not be approved because there is a record of the first transaction. INFLUENCERS - People to follow Jack Mallers – @jackmallers Jack Mallers jumped from the crypto bitcoin stage to the national stage when he appeared on 60 Minutes last Sunday. The 60 Minutes interview highlighted how El Salvador worked with Mallers' financial services firm, Strike, to enable El Salvador to implement bitcoin as El Salvador's official currency. It uses the Lighting Network which is a payment protocol that works with the bitcoin blockchain. Mallers said, "If we can help make the Bitcoin network more accessible and usable we believe we can change the world." RESOURCES – Books, websites, podcasts, articles Layered Money - From Gold and Dollars to Bitcoin and Central Bank Digital Currencies by Nik Bhatia. It's hard to discuss cryptocurrency without touching upon the meaning of money. In this fascinated book, Bhatia dives into how money evolved into the global monetary system. He then explains how bitcoin, the US dollar, and central bank digital currencies are reshaping the world. CRYPTO WORDS – CRYPTO WINTER In December 2017, bitcoin hit a high price of $19,850 and then it began to drop in price. Bitcoin plunged more than 84 percent and panic ensued through the rest of the crypto market. It bounced back to a $68,990 high in November 2021. It is now $41,019. OH, ONE MORE THING – I added my crypto spin to this New Yorker comic.... Thanks for reading! See you next week. Go to Crypto News for Realtors to read previous issues. Rich Hopen