Crypto News: 🟪 Out of thin air

September 22, 2024 | Read Online

_{Brought to you by:}

The SEC can't seem to catch a break when it comes to crypto.

This week, Rep. Ritchie Torres, D-N.Y. asked a key question: Was the definition of a "crypto asset security" conjured "out of thin air?"

The hearing on Wednesday as a whole was a tough one for the agency. Robinhood's Dan Gallagher, himself a former commissioner, blasted the SEC for its come-in-and-register rhetoric but decidedly enforcement action-centric approach to policing the industry.

Speaking about Robinhood's pitch to the SEC in recent years, Gallagher said: "It was a fruitful process. It was very cordial with the SEC staff until about early 2023, when we got a very perfunctory note from the Chairman's office telling us that there's no reason to talk anymore."

Meanwhile, two GOP lawmakers want answers from the agency on airdrops — specifically, how the SEC is applying its rules to the distribution of tokens.

In essence, Reps. Tom Emmer and Patrick McHenry want to know whether the Howey test applies to airdropped tokens. And, if so, why such rewards for onchain activities shouldn't be treated in the same vein as airline points or other forms of digital incentivization.

The election season carries significant implications for the SEC's work, especially if, as some polls suggest, control of Congress and the White House changes. It's far from clear whether new crypto legislation will make it past Congress this fall, and if not, those measures would need to be reintroduced in 2025.

Either way, crypto continues to draw support on Capitol Hill, and it remains to be seen how active those supporters become in the new year.

And now, on to the roundup:

— Michael McSweeney

Your all-time favorite newsletter author will be IRL at Permissionless chatting with the top liquid token fund managers on how they seek and find alpha in the digital asset space. Don't miss it!

Buy tickets

Solana's second phone is nearly here — and so are the airdrops

Roughly a year and a half after it debuted the Saga, Solana Mobile has unveiled details about its second phone, the Seeker.

Ring ring — Solana's next-gen phone is coming, it seems. As Lightspeed's Jack Kubinec wrote this week, the phone comes with new tech and, as expected, a fresh slate of airdrops. Stay tuned, as they say.

SEC settlements are becoming the cost of doing crypto business

The SEC claimed the tokens used by Rari to manage pool positions represented interest in the pools themselves.

The Empire team made an important, if unfortunate, point this week: For US crypto firms, SEC fines have increasingly become a "normal" cost of doing business. Rari Capital, which settled with the SEC this week, "embodied DeFi Summer's scrappy spirit."

Powell pitches 50 bps rate cut to support 'strength of the economy and the labor market'

Fed Chair Jerome Powell made clear the intention to reduce rates, noting last month: "The time has come for policy to adjust."

It's the cut heard round the world. Jerome Powell widened more than a few eyes this week with a 50 bps reduction in the Federal funds rate. Keep an eye out for the impact on bitcoin in the coming weeks and months as the market digests, you know, everything there is to digest.

🟣 Trump's Lightning burger

Can Stroom and RGB unlock Lightning's full potential?

Nom nom nom. Trump (probably) became the first presidential candidate to ever use Bitcoin's Lightning network — to buy a burger, no less, in a New York pub. Sure, it was a stunt, and Trump himself is a kind of walking stunt, but you'd be hard-pressed to ignore the historic nature of it. What a timeline.

🟪 Thursday measurable mailbag

Q: Does it make sense to buy altcoins because the Fed cut rates?

Last Thursday was mailbag day over on Byron's newsletter-column. My favorite: "Should I buy altcoins if I think Trump will win?" Given the long-term faceplant of political memecoins, it might be wise to keep your powder dry. But, as Byron notes, the Trump family is about to launch some kind of DeFi contraption. Weird days.