Dispatch #78: United States of Crypto

In this patch of your weekly Dispatch:

• The Executive Order on crypto is finally here
• 4 new assets & 139 new pairs on the Nexo Exchange
• Private equity doubles down on crypto

The Big Idea

The Long-Awaited Executive Order Is Finally Here

After months of delays and debates, President Biden has signed his Executive Order on crypto. Many have seen it as something to be feared; a likely signal of a broad U.S. crackdown on crypto. So is that what we got? In a word: no.

The order has none of the rushed rulemaking that had been feared. Instead, it’s almost entirely dedicated to bringing the full force of the administration to the task of researching and better understanding the crypto industry.

The document walks the classic political line of acknowledging and focusing on problem areas, such as law enforcement and consumer protection. It also makes it pretty clear that crypto represents an important new technology that the US has a vested interest in being a leader of.

The main outcome of the report is a so-called “whole-of-government strategy”, i.e. а slew of studies that each bring together a wide cross-section of government bodies. Indeed, it appears that some of the few “losers” in the report are any political appointees jostling to make their agency the defacto crypto regulator.

It is also clear that this administration views the exploration of a central bank digital currency (CBDC) as something of perhaps more urgency than we’ve seen from the Federal Reserve in the past.

The crypto industry is breathing a sigh of relief. But that doesn’t mean industry advocates should get any less vigilant. Indeed, now is perhaps the best chance we’ve ever had to influence the direction of US crypto policy.

The Latest In…

Nexo: All-Swap & Four New Assets

• Fresh from the Nexo product kitchen: All-Swap. We’re pleased to unveil this brand-new feature that allows you to swap between 139 rare pairs like ADA/DOT and DOT/BNB on the Nexo Exchange. You won’t find these pairs anywhere else!
• AAVE, CRV, GALA & SUSHI are now on Nexo, available for swapping and top-ups. The four DeFi tokens can also be used as collateral for our credit lines and the Nexo Booster. Read more or get straight to business and start exchanging!

The Latest In…

Institutions

There is a growing feeling in some corners of the market that maybe, just maybe, we really are going to get another crypto winter. DeFi seems to many to be moribund. NFT volumes and prices are down. Bitcoin and the blue chips are range-bound and entirely caught in the macro moment. Yet one major counterpoint remains – the steady influx of institutional engagement with this space and the massive amounts of dry powder. One story from this week captures both sides of that – investing giant Bain announced a new $560M fund that will make equity and token investments with a focus on DeFi and Web 3 and even liquid tokens. Interesting times.

The Latest In…

DeFi Defections

DeFi had an abrupt shock last weekend when a longtime collaborator of “I test in prod” Andre Cronje and his close partner Anton Nell announced they would be leaving DeFi and crypto altogether, shutting down a set of apps as they went. Keep in mind this isn’t some casual dev. This is the creator of Yearn Finance and many other key DeFi protocols. Since the departure, the community has been speculating about Andre’s motivations… Sick of the drama? Made too much money already? Rug pull?

The episode is a reminder that a protocol can’t live or die by its founder. Indeed, that idea seems to undermine the very notion of decentralized finance itself. Still, founder mythology is deeply embedded in our collective psyche and that’s a hard thing to change.

The Week’s Most Interesting Data Story

War Brings New Buyers to Bitcoin

One of the indicators analysts track to get a sense of the health of the Bitcoin network is “New Entities.” It’s a measure of how many new people are buying BTC. When it’s on the way down, it can show waning interest in the space, and the inverse is also true. Looking over the last few months we’ve seen a steady decline since all-time highs. This makes sense – once a new ATH is reached, there are fewer new buyers. As war broke out in Ukraine, though, we saw a massive, immediate reversal with around a 10% jump in new entities in a single week. How much of this are citizens of impacted areas moving into Bitcoin versus speculators is hard to tell, but whatever the case, the trend is notable.

Hot Topics

What the Community Is Discussing

Another celebrity NFT Medici outs themselves.

A watershed moment!

Inflation numbers are out.

What to Watch for Next Week:

• Will foreign companies continue to leave Russia?
• Will we see a bill from Congress or Senate around crypto regulation?
• Will more NFT Medicis out themselves as celebs?