Market Musings

  • Bitcoin has been trading in a narrow range between $29,311 and $31,630 over the last seven days. Ethereum has been trading between $1,911 and $1,731. The trading range for both coins over the last 30 days has been a little wider, with bitcoin trading between $32,000 and $26,780 and ethereum trading between $2,437 and $1,724. That’s a fairly tepid month for crypto. But it could have been much worse. Let’s enjoy this breather for as long as it lasts.
  • Keep an eye on next week’s Fed meeting. The Fed is expected to raise interest rates again to try and get inflation under control. How the markets respond to that rate hike will give us some insight on whether we’ve hit the bottom of this bear market. 
  • Startup investing and crypto investing have much in common — beyond the fact that most cryptos are startups. One of the most startling commonalities is that many great companies were born during incredibly difficult economic times. Airbnb (2008), Uber (2009), Microsoft (1975) and Electronic Arts (1982) make up just a partial (and wholly inadequate) list of companies launched in the midst of economic crisis. Crypto projects tend to do their best work during bear markets. They focus on the hard work of building and don’t worry about price movements and the markets. That’s why Ember Fund is so interesting. Ember Fund is a crypto startup that enables a different form of crypto investing by utilizing indexes and some interesting hedge fund-like strategies. Ember Fund’s raise on Republic is oversubscribed. That’s pretty impressive given the state of the crypto markets. And it’s a good reminder that good ideas that are well executed can grow and thrive even in difficult circumstances.

What Vin Is Thinking About

Looks like bipartisanship isn’t dead yet in Washington. On Tuesday, Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced legislation that would classify most cryptocurrencies as commodities. The Commodity Futures Trading Commission (CFTC) would be responsible for regulating crypto.

Crypto transactions of less than $200 won’t be taxed under the proposed legislation. Stablecoins will be required to comply with disclosure and asset backing rules. And it will also clear up confusion surrounding what happens if an exchange goes bankrupt and protect wallet providers and software providers from certain tax reporting requirements.

This proposal is a good first step toward a workable regulatory framework for crypto. But it’s just the first step. Now that legislators and lobbyists have something to work off of, there will be extensive discussions — and lobbying — on how to (hopefully) improve the bill or make it more palatable for key stakeholders.  

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It’s highly unlikely that we’ll see final legislation this year. With midterm elections coming up, there aren’t that many days remaining on the legislative calendar. That means we’ll have to wait for the new Congress to take up similar legislation before we can even think about getting a regulatory framework in place. 

Despite the uncertain timeline, this is the first time I’ve ever been optimistic about potential crypto regulations. The proposed regulatory framework isn’t perfect. But it’s reasonable.

The CFTC has experience regulating crypto. And treating crypto like a commodity instead of a security (which the SEC would regulate) gives crypto a chance to grow and thrive.

Whether this reasonable approach survives the legislative process is an open question. But we’re (finally) off to a good start. And that’s worth celebrating.

And Finally…

Block (formerly Square) CEO/Twitter co-founder and former CEO Jack Dorsey has joined forces with rapper/businessman extraordinaire Jay-Z to create free bitcoin education classes for residents of the Marcy Houses, a public housing complex in Brooklyn, New York. Marcy Houses is where Jay-Z grew up. The classes will take place online and in person. And they’ll run from June 22 through just after Labor Day.

If crypto is going to succeed, every part of society will need access to the crypto ecosystem and to understand how it works. And that makes programs like this critically important. Hopefully, we’ll see more classes like this in the future.



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