Upping the stakes: a new wave of financial innovation

Plus: stablecoin payments, macro, markets and JPMorgan

“Any sufficiently advanced technology is indistinguishable from magic.” – Arthur C Clarke ||

Hello everyone, I hope you’re all doing well!

The audio version of our Monday Bits & Bips livestream is out – James Seyffart, Joe McCann, Ram Ahluwalia and I argue about the macro outlook, BTC vehicles, the crypto mood and more. You can watch it here, or listen here (Spotify link).

IN THIS NEWSLETTER:

• Upping the stakes: a new wave of financial innovation

• Stablecoin payments

• Macro-Crypto Bits: softening activity, climbing prices, reactive markets and JPMorgan

If you’re not a premium subscriber, I hope you’ll consider becoming one! You get ~daily commentary on markets, tokenization, regulation and other signs that crypto IS impacting the macro landscape. As well as relevant links and music recommendations ‘cos why not.

WHAT I’M WATCHING:

Upping the stakes: a new wave of financial innovation

Last week saw a big step for staking: it is not a security contract.

This is according to guidance from the SEC, and it marks a stark departure from the stance of the previous Administration which maintained that staking distributes a return in exchange for a financial commitment and an effort. For those not familiar, on proof-of-stake networks such as Ethereum or Solana, token holders can lock up (“stake”) a certain amount of native tokens in exchange for the right to participate in transaction validation and network maintenance, earning an algorithmically determined reward in compensation.

The statement is not a surprise – we knew that the SEC was doing its homework on the concept and had been holding meetings on the topic with industry insiders. Nevertheless, it confirms the forward-thinking and open-minded approach of the new leadership.

And, it officially introduces a profound innovation into capital markets. Investors anywhere will be able to earn native token rewards just for participating in the network’s maintenance. This is similar to earning a passive and stable yield on a bond; but it also isn’t, in that it’s active – there is work being done to earn that reward, even though the staker doesn’t have to worry about actually doing anything.