Dispatch #98: FTC Says ‘No’ to Meta Owning the Metaverse

4 min read

In this patch of your weekly Dispatch:

  • Concerns about Zuck’s ambitions in the metaverse
  • Americans are not stoked about CBDCs
  • The relationship between the money supply and crypto

The Big Idea

The FTC Throws in for Metaverse Decentralization

A lot of the big themes of the past week are similar to what we've been seeing throughout this crypto bear. In the US, markets reacted to another 75 basis point rate hike from the Fed, even as GDP was negative for the second quarter in a row – one of the basic definitions of a recession. Surprisingly, they saw the Fed's actions as a dovish turn, with the best two-day rally off a Fed meeting in years.

For this week's big idea, however, we turn to the continued turbulence in the relationship between institutions and regulators. The Federal Trade Commission, the group that deals with antitrust and monopoly issues in the US, is suing to stop Meta from acquiring a virtual reality fitness app.

Their complaint is about Mark Zuckerberg's ultimate ambition. "As Meta fully recognizes, network effects on a digital platform can cause the platform to become more powerful — and its rivals weaker and less able to seriously compete — as it gains more users, content, and developers. If they were allowed to complete the acquisition, they "would be one step closer to its ultimate goal of owning the entire 'Metaverse.”

Who knew the FTC was a supporter of the web3 vision of decentralization!

The Latest In…

US Regulations

US regulations continue to come to a head. Last week, we discussed the unusual breach of protocol when a CFTC Commissioner condemned the SEC’s actions against a former Coinbase employee as “regulation by enforcement.” According to reports this week, the SEC is also looking into whether Coinbase itself has listed securities without registration. At a conference, the head of the CFTC said that they would be expanding their regulatory efforts in the space rather than waiting for Congressional authorization. Meanwhile, in Congress, one of the most anticipated pieces of legislation, a forthcoming Stablecoin bill, is having debate paused until after the August recess.

The Latest In…

Central Bank Digital Currencies

CBDCs continue to be a major point of discussion. In Europe, efforts proceed full steam ahead both for a digital euro as well as for individual member countries exploring CBDCs:

  • France started the second stage of wholesale (not retail) CBDC experiments.
  • The Head of the Bank of Central African States has put out a call to create a regional digital currency.
  • And in the US…well, in the US, sentiment isn’t necessarily pro-CBDC. The Federal Reserve has invited citizens to comment on the potential for a digital dollar, and according to the Cato Institute, two-thirds of the responses are objections of some kind.

Now, the US government hasn’t done much education, but so far, Americans seem not so keen.

The Latest In…

Big Tech and Institutions

One of the interesting things to watch is how different financial institutions and big tech companies shift their strategies (or stay the course) when it comes to crypto and web 3. A few notes on that front:

  • Meta reported a $2.8B loss on their metaverse division in Q2 - ouch!
  • Cathie Wood’s ARK sold over 1.4M shares of $COIN at a big loss.
  • EY has built a product on Ethereum to help other companies achieve their carbon goals.
  • JP Morgan says Robinhood and Coinbase shareholders face significant dilution.
  • Billionaire Ken Moellis’ investment bank has a new blockchain division.
  • Barclay’s is investing in crypto custodian Copper.

The Week’s Most Interesting Data Story

The Relationship Between M2 and Crypto

One of the things that have become very clear in 2022, is that crypto is now a macro asset that is correlated with the big picture shifts that shape equities, commodities, and other global markets. As that realization has become clear, some analysts have tried to look at it from less obvious dimensions. Decentral Park Research shared a chart that showed the relative change in M2 (i.e. whether the global money supply was going up or down) compared to growth or decline in crypto prices. The chart is pretty remarkable. Money supply increasing? Crypto goes up. Money supply down? Crypto goes down. If this holds over the long term, the big question is then what one believes is likely to happen over the long term to global M2?


Hot Topics

What the Community Is Discussing

What do you think, should we change the whole game back?

Eeeks. Still overvalued?

Deep, man.

What to Watch for Next Week:

  • Can the post-FOMC meeting rally be sustained?
  • Will August bring its normal market quiet?
  • Will anyone be discussing NFTs?

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