Early Investing

Federal Court Gives the SEC a Deadline to Respond to Coinbase

Federal Court Gives the SEC a Deadline to Respond to Coinbase

Crypto Market Musings

  • Bitcoin is down around 0.7% over the last seven days. Ethereum is down about 0.4% over that same time period. And Monero is up about 1.8%.
  • Conflicting macro narratives appear to be driving the market. Inflation is proving to be stubborn, and the Fed raised rates again this week. The crypto markets have consistently responded poorly to rate hikes over the last year. But continuing problems in the U.S. banking system — this time with First Republic Bank — illustrate the need for a better and more decentralized financial system. And that drives prices up. As long as these two forces are in conflict, a major leg-up for crypto seems unlikely.
  • Bitcoin’s answer to NFTs, Ordinals, has been incredibly active recently. As a result, bitcoin set a record for transactions earlier this week and saw transaction fees jump more than $7. That’s the highest transaction fee in two years. 

What Vin Is Thinking About

Earlier this week, Allison Brickell and I talked about Coinbase suing the SEC in our Crypto Insider podcast. The short version is that last summer Coinbase asked the SEC to undergo a formal rulemaking process to determine which digital assets are securities and which ones are not. The SEC is required to accept or reject the request. The agency has done neither. So Coinbase sued the SEC to make the agency do its job. You can watch the podcast here.

Now, a federal court has asked the SEC to explain itself. It gave the SEC 10 days to respond to Coinbase’s lawsuit. 

It’s nice to know that someone or something can force the SEC to do its job. I’m looking forward to learning why the SEC thinks it can ignore the rules when it sees fit. And I can’t wait to see what a federal judge thinks of the explanation. Things are about to get interesting.

And Finally…

In March, we told you Balaji Srinivasan bet $1 million that the banking crisis would lead to a period of hyperinflation within 90 days, which — combined with money printing — would send the value of bitcoin soaring.

Srinivasan made the bet to make a point about money printing. And this week, he paid off the bet early. Here’s part of the tweet that explains why he made the bet:

Well, I’m not a trader, I’m not John McAfee, and I’m not in the habit of publicly burning a million bucks. The reason I did this was because I do believe in the public good, but unfortunately we can’t rely on the public sector anymore to tell us when something’s wrong.

After all, Yellen knew[1] the 2008 crisis was coming, but didn’t sound the alarm. Bernanke told us on April 10 2008[2] that it would be a “mild recession”, but 158 days later the world economy collapsed. And Powell keeps saying today that we can still have a “soft landing”[3].

So I spent my own money to send a provably costly signal that there’s something wrong with the economy, and that it’s not going to be a “soft landing” like Powell promises — but something much worse.

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