Valentine's Weekend Roundup
Super Bowl, BlockFi, IRS, and South Korea
So what happened over the weekend…
Bengals, Rams and Bitcoin: Crypto Ads Invade the Super Bowl (WSJ)
Crypto Companies Got America’s Attention Sunday (Bloomberg)
This past Sunday was Super Bowl Sunday which means a run on grocery store chicken wings and people becoming football fans for an afternoon. People watch the Super Bowl for many reasons - they couldn’t get out of the party, they have money riding on the Bengals, they want to see how gangsta rap sounds when you take out all the profanity, and the ads. Super Bowl ads are the Oscars of the marketing industry and shows off how marketing departments are prepared to spend millions to convince you to buy things between field goals.1
This year, cryptocurrency exchanges made a callback to the early 2000s by being the new upcoming industry with money to light on fire. Companies like FTX, Coinbase, and even TurboTax incorporated crypto into their ads in ridiculous and amusing ways. For example, Coinbase just showed a bouncing QR code for 30 seconds.2 TurboTax advertised their tax prowess to help noob crypto investors with their taxes. FTX and Crypto.com spent some extra cash on Larry David and LeBron James.
Binance skipped advertising at the Super Bowl and is starting an ad campaign this week. They will be extolling the virtues of crypto investing while educating about the risks involved. Using celebrities.
Crypto Lender BlockFi to Pay $100 Million In Settlement with SEC, States (Bloomberg)
BlockFi Moves to Register Lending Product With SEC (CoinDesk)
BlockFi offers a high yield investment account where you can get decent returns to lend out your crypto to others.3 Of course, given the SEC’s recent regulatory spree, it didn’t take too long before the SEC brought down the banhammer and declared this product to be under their regulatory authority.
BlockFi Inc. is poised to pay $100 million to settle allegations from the Securities and Exchange Commission and state regulators that it illegally offered a product that pays customers high interest rates to lend out their digital tokens, according to people familiar with the matter.
Scrutiny has been mounting on crypto-lenders, which have attracted tens of billions of dollars in deposits by promising yields that far exceed those available through traditional savings accounts. As part of its agreement with regulators, BlockFi will no longer be able to open new interest-yielding accounts for most Americans, the people said.
This is definitely a blow to American investors - with fiat interest bearing savings accounts paying out at .05%, this was a great way to make extra income on top of price appreciation.
Although US based accounts will be restricted from further deposits as of today, not all hope is lost.
BlockFi will register its high-yield crypto lending product with the U.S. Securities and Exchange Commission (SEC) as part of a $100 million settlement over the controversial offering
Treasury Signals Crypto Miners Won’t Face IRS Reporting Rule (Bloomberg)
In a technical win for miners and stakers,
The U.S. Treasury Department indicated that it plans to spare crypto miners and stakers from rules that would require digital-asset brokers to turn over information on their clients’ transactions to the IRS.
The most recent US infrastructure bill had a clause that would have treated miners and stakers akin to financial brokers and impose burdensome reporting requirements. Miners and stakers usually do not have access to the data that the IRS would want and there were fears that this might have just shut this corner of the crypto ecosystem down. Although, the language in the bill itself will remain unchanged due to normal US government gridlock, the Treasury Department’s announcement is a sigh of relief.
So, for now, miners and stakers seem to be safe but,
[Treasury Assistant Secretary for Legislative Affairs Jonathan] Davidson said there are other issues Treasury is still considering, including “the extent to which other parties in the digital asset market, such as centralized exchanges and those often described as decentralized exchanges and peer-to-peer exchanges, should be treated as brokers.”
Young, Crypto-Savvy Voters May Hold Key to South Korea's Next Election (CoinDesk)
Presidential elections are underway in South Korea and a new voting bloc has emerged that candidates are tripping over themselves to cater to.
According to Edward Hong, head of platform at crypto venture capital firm Hashed, there are more than 5 million individual crypto accounts across the country’s top three crypto exchanges. Hong estimates that about 10% of this year’s voters are crypto investors.
Many of these investors are younger voters that invest in crypto because the real estate market is no longer accessible to them. Also, there has always been a huge gaming culture in South Korea, thanks to their widespread internet access, so gaming NFTs are increasingly popular.
Crypto investment taxes are a major issue for this voting bloc. Following the attempts to implement a large tax on gains, the current administration faced a backlash. The current candidates have tried to address those concerns to woo investors. The candidates are also presenting soundbites on everything from clarifying regulatons to attract institutional investors, reviving the crypto industry in South Korea, consumer protections, and how exchanges can legally do business.
I have no idea how football works.
QR Code offered $15 free BTC for new signups. This ad also crashed their website when millions of people tried to open a QR code on their phones during a 30 second window. I’m sure someone at Coinbase lost their job today.
It was a modest 10-15% which is not as great as what is available in the more degenerate corners of the DeFi space, but great for someone who just wants to park their long haul BTC or ETH holdings somewhere.