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The Ledger: The Crypto Rebellion, Mastercard Moxie, As Coinbase Turns

American history is replete with uprisings against overbearing government: think of tax-weary colonists throwing tea into Boston harbor or the Reagan Revolution of 1981, where voters demanded a respite from regulation. Today, leading figures in the cryptocurrency industry are at a breaking point of their own, issuing a collective cri-de-coeur against the SEC.

The first outburst came from Circle, the Boston-based exchange whose CEO Jeremy Allaire has for years boasted about his firm’s good relations with regulators. So much for that. A Circle blog post lambasted the SEC for its bewildering thicket of legal tests, and accused the agency of moving the goal posts in its dealings with the crypto industry.

Next came Kik, the Canadian messaging service turned crypto giant, which launched a project called Defend Crypto to make a legal stand against the SEC. Kik donated $5 million and others have put in money of their own, including venture capitalist Fred Wilson, a Kik board member and longtime crypto champion. In a broadside on his blog, Wilson seethed against the SEC’s overreach: “Image if a user had to go to a securities brokerage firm like Schwab to purchase a token in order to be able to use Apple’s App Store.”

Crypto folks, of course, have fulminated for years about the government. Indeed, the founding of Bitcoin itself was very much a declaration of independence by cypher-punks from federal authorities. What’s different this time is the current uprising is being led by people who have long preached patience and compliance with the feds. While their protests are rooted in self interest—looser securities laws would make it easier to raise money—their fears, including of the U.S. losing the crypto lead to other countries, may be legitimate.

That doesn’t mean they will succeed. The “Defend Crypto” strategy of pressuring the SEC and, ultimately, bringing about relief from Congress is an uphill battle. Meanwhile, some say the protests are misguided.

Berkeley academic Nicholas Weaver says the SEC’s “if it quacks like a duck” test for securities is just fine when it comes to crypto, while lawyer Preston Byrne was more acerbic: “Don’t take legal advice from VCs,” Byrne said of Wilson’s blog post, adding “In my experience, fighting Uncle Sam is not a good idea, even if a large chunk of your cap table says it is. What’s best for entrepreneurs may not be what’s best for preferred shareholders.”

For now, it’s too soon to say how the crypto rebellion of 2019 will turn out. History teaches us that some revolutionaries go on to become great national leaders—while many more are simply hanged. For the industry’s sake, let’s hope Kik and Circle know what they’re doing.

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Three parting notes: 1) Thumbs up to Nathaniel Whittemore for his excellent Twitter round-up of Sunday crypto long-reads. 2) Thumbs down to the AP Style Guide, whose “don’t say crypto for cryptocurrency” advice we will ignore. Crypto, crypto, crypto. 3) We can’t wait to see some of you in Montauk for Brainstorm Finance in just over two weeks time. (We’ll have a livestream for those who can’t make it).

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Jeff John Roberts
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jeff.roberts@fortune.com

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DECENTRALIZED NEWS

To the Moon… Tron founder wins bid for annual lunch with Warren “Bitcoin is rat poison” Buffett. Facebook is talking to the CFTC, whose chair called its crypto plans “very clever.” Walmart joins pharma-blockchain service MediLedger. Corporate credit card startup Brex is now valued above $2 billion. 14 banks launch the “utility settlement coin” for cross-border payments. Analyst shop calls Bitcoin “king of the asset class hill” for 2019.

…Rekt. Nearly all enterprise blockchain systems will need to be replaced by 2021. Consumer purchases account for only 1.3% of all Bitcoin transactions. Signs of a Bitcoin price pullback amid “bull exhaustion.”  Russia’s central bank says “nyet” to big bank’s crypto plans. Longtime peer-to-peer service LocalBitcoins ends in-person cash trades. Binance DEX to geo-block U.S. and 28 other countries.

BALANCING THE LEDGER

Where is the biggest opportunity for financial disruption? It’s not credit cards but cash—which still accounts for 30% of all U.S. transactions and 85% of global ones. Balancing the Ledger welcomed Mastercard’s Shamina Singh, who is helping to digitize a range of cash-based services. Her work has helped everyone from women entrepreneurs in New York City to Indian merchants learning to use QR codes.

MEMES AND MUMBLES

“An ancient evil awakens.” That’s how crypto chronicler Neeraj described the return of the loathsome James Altucher, the self-described Bitcoin “genius” whose ads seared our eyebrows everywhere we went on the Internet during the boom of 2017. Crypto Bobby was first to spot the unwelcome sight:

There’s no word as yet on a crowd-funding campaign to raise money for silver bullets and a wooden stake.

FOMO NO MO’

As Coinbase turns. The largest U.S. crypto exchange has experienced conspicuous turnover of late, including the recent departures of hot shot CTO Balaji Srinivasan and, last Friday, of COO and President Asiff Hirji. The latter’s departure is not a surprise as many, both inside the company and out, saw him as a telecom outsider who lacked true conviction for crypto. The Block’s Frank Chaparro interviewed Hirji’s replacement, Emilie Choi, and has an interesting take: That she and Armstrong will have a “Sheryl Sandberg/Mark Zuckerberg-like relationship.” It’s too soon to say if that’s for real (or a narrative trotted out by Coinbase PR) but if it is, it could be just the thing for Armstrong, who has been searching for a true counter-weight in the company since the departure of his co-founder Fred Ehrsam. From Chaparro:

An insider says it will allow CEO Brian Armstrong to take a more hands on approach to leading the business. The person, who described the chemistry between Armstrong and Choi as being great, added that Choi’s appointment will allow Coinbase’s CEO to take on a lot of the product experience and development work that was once delegated to Balaji and Asiff. You can think of Armstrong being the creative brain between Coinbase and Choi as the executor-in-chief.

We hope you enjoyed this edition of The Ledger. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.