Crypto Rules

It was a crypto week. I didn’t think it would but that’s mostly what I worked with this week. The week started with conversations about inflation, mostly on how to talk about it lest our communications make it worst. It’s too late for that with so much news showing the highest measure of this or that inflationary measure in this or that number of decades.

Bitcoin hit a record price. So did ethereum.

At about the same time, the U.S. Treasury Dept. released its report on stablecoin regulation. It’s a high-drama assessment as reported by the New York Times DealBook: “In an eagerly anticipated report that the Treasury Department released Monday, officials warned that without more oversight, the rise in reliance on stablecoins could result in bank runs, consumer abuse and payment snafus, and potentially threaten the wider financial system.”

One of Tuesday’s projects focused on emerging retail and ecommerce payments, including digital wallets, contactless payments, and embedded payments. It seems that retail customers are starting to get interested in mobile wallet-based payments including Venmo. I asked about digital currency-based payments, thinking that was a little bit out there for retailers using banks. Not so. They’re high interest.

Wednesday, I attended some of the sessions of the Global Digital Asset and Cryptocurrency Association’s decentralized finance conference. Sam Bankman-Fried, founder of the FTX crypto exchange, spoke on the initial panel, in a follow up to his appearance last week at the FIA Futures and Options Expo. Bankman-Fried focused on the need for regulatory compliance and a desire for clear guidance. He’s on the speaking circuit, and his firm announced Friday an expansion of its offices in Miami.

What struck me in listening to speakers on a panel made up of DeFi product innovators is how highly technical DeFi is. It can be difficult for me to picture how the services work, though my wandering online attention span doesn’t help. I got a lot of agreement on that at the evening reception, where I met several people in person for the first time.

I also saw a product manager at a Chicago exchange that helps institutions trade crypto. We first met six years ago when I screened the film the Rise and Rise of Bitcoin. How far the industry has come since then. We remembered planning a business-oriented blockchain panel six years ago and had difficulty finding speakers doing real business. On Wednesday, we marveled that we were in a whole room full of them. Too technically arcane or not, the crypto business is moving fast.

By Thursday, I’m seeing more news on nonfungible tokens (NFTs) starting with the hook that they are taking the world by storm. Blockworks reports that Yorke Rhodes, Microsoft’s director of blockchain, says NFTs are “a first toe in the water” and will drive mainstream crypto adoption for banks and brands. The article lists half a dozen large brands that are betting on NFTs.

The week ended on another regulatory note: the U.S. Securities and Exchange Commission rejected the application for a spot bitcoin ETF after its approval of a bitcoin futures ETF. I write quite a bit about how U.S. regulators are spending the year carving out their territory. Treasury and the SEC drew their boundaries more tightly this week as the crypto business continues to boom.

– Collin Canright