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BlockProf: Fight Club Edition
Gensler, twitter wars, XRP Army, TradFi loves DeFi
Welcome to a special Fight Club Edition of BlockProf. It seems I’ve been defending crypto a lot lately in some exchanges with the SEC Chairman, former SEC officials, and others.
Blockchain has beaten banking, banking just doesn’t know it yet
11 trillion in payments went through Ethereum last year, while 10 trillion went through Visa. Ethereum now has a higher market cap than Bank of America. Probably nothing?
You’ve Got to Stand for Something, Or You’ll Fall For Anything
On my last day as a member of the SEC’s Investor Advisory Committee, I gave SEC Chairman Gary Gensler some tough love about the harm he is causing to digital assets. Click over to twitter to check it out.
Got into a twitter debate with the former head of internet enforcement for the SEC. He is not a fan of crypto, but we won!
XRP Army! My Chat with John Deaton
Had fun talking with the great John Deaton about his fight against the SEC.
When TradFi Met DeFi, A Love Story
Every day, a new TradFi (traditional finance) firm shows increased interest in crypto and DeFi.
Fintech payment firms built on top of the legacy payment system layer, like Plaid and Paypal, are increasingly offering customers access to bitcoin, but the fees aren't great. And ultimately, crypto endeavors to replace the legacy payment system that these fintech firms are built on. Fintech firms are ironically onboarding the competing currencies that will eventually make them obsolete.
(For example, OpenNode is able to send instantaneous payments globally using the bitcoin blockchain for settlement but without exposing customers to bitcoin price risk, and for a fraction of the cost of correspondent banking transfers)
Jane Street invests in a DeFi lending protocol on the NEAR blockchain, Jane Street is showing increased interest in the DeFi space generally. This is interesting in part because, though a few DeFi dapps do limited KYC, most DeFi dapps do not do any KYC and operate outside the regulatory perimeter by leveraging anonymity, decentralization, and smart contract transactions.
But timing is everything, ICE's crypto experiment in Bakkt is not doing very well.
When Crypto and DeFi Met TradFi, A Hostile Takeover
Things are also quickly moving in the other direction, with crypto firms moving into the TradFi space.
Though most of DeFi trading is focused on unlisted tokens, a number of DeFi applications facilitate the creation of synthetic tokens based on the value of publicly traded securities or indexes. SoFi explainer here. Emerging DeFi dapp Thorswap may eventually mint them on a cross-chain facility, Mirror Protocol has them within the Terra ecosystem (which led to an SEC investigation of Do Kwon).
FTX, Jump, Coinbase and other crypto firms took over the traditional finance scene at the recent annual futures conference in Boca Raton. Traditional futures traders remarked "these guys are running around in T-shirts" and "it reminds me of the dot.com days." FTX's futures clearing application is an example of crypto staking a big claim in the TradFi space.
Japan Securities Reg > US Securities Reg for crypto
In regulatory news, the SEC continues to deny Bitcoin spot ETF applications. Meanwhile Japan is taking an increasingly constructive approach to the crypto token listing process, following in similar constructive initiatives in Canada and Australia.