For 2021’s final edition of The Ledger, it’s only right that we reflect on what’s been a historic year for crypto. It was a turning point for digital assets—the year that they broke into the mainstream, expanding their reach into both the financial system and the popular consciousness.
Asset values hit historic highs, with total crypto market cap topping $3 trillion for a time and crypto firms routinely raising money at multibillion-dollar valuations. Financial regulators worldwide began taking digital assets more seriously than ever before, calling for tighter rules and more oversight (if not outright prohibition). And the spectacle of the world’s richest man pumping, and then tanking, a farcical meme-coin on live national TV saw crypto’s cultural influence hit unprecedented levels.
Most significantly—and as Fortune explored in our Crypto At A Turning Point magazine package this past summer—the ways in which people can invest in decentralized digital assets continued to proliferate. Wall Street’s growing acceptance has meant that it’s never been easier to trade crypto, through an ever-widening possibility of investments. The DeFi landscape kept expanding at a prodigious rate, opening up an entirely new financial ecosystem for investors. And NFTs exploded onto the scene; Fortune revealed ourselves as believers, partnering with artist pplpleasr to tokenize our magazine cover (and directing half of the proceeds to a decentralized journalism fund).
Of course, there are plenty of question marks heading into 2022. Crypto values are slumping heading into a new year, with some pondering whether another crypto winter could be on the horizon. It’s almost certain that the regulatory spotlight on the sector only grows more intense moving forward, raising the specter of disruptive government intervention. More money, more problems is a truism that continues to hold true—and as the crypto market lures ever more investment and attention, so will it command more scrutiny and face new challenges.
As we head into an unpredictable new year, one thing feels certain: whichever way things go from here, it will be history in the making—and fascinating to witness and document. The Ledger relishes the task, and will be back with you in 2022. Wherever you are, we wish you and your family a happy, healthy holiday season.
Crypto prices got a bump from the Federal Reserve’s hawkish policy turn this week... Elon Musk says Tesla will begin accepting Dogecoin as payment for some of its products... Melania Trump is launching a Solana-backed NFT... a16z’s Katie Haun is leaving the venture giant to start her own crypto fund... Bitcoin trading firm NYDIG raised $1 billion in funding at a $7 billion valuation... Crypto custodian Anchorage is valued at more than $3 billion after a $350 million funding round... Fed chair Jerome Powell talked up stablecoins as “a useful, efficient, consumer-serving part of the financial system”... Robinhood has acquired crypto trading platform Cove Markets... NBA superstar Kevin Durant is Coinbase’s newest spokesman... A group of investors is looking to leverage crypto and NFTs to purchase an English soccer club... Myanmar’s pro-democracy shadow government has approved Tether as an official currency... Hedge fund managers are warming up to crypto.... Crypto gifts are en vogue this holiday season.
Despite receiving a boost from the Fed, Bitcoin is still languishing below $50,000 and down some 20% over the past month ... A technical glitch sent crypto prices on Coinbase and CryptoMarketCap haywire on Tuesday... Russia’s central bank wants to ban crypto investments... Binance is withdrawing from Singapore... The U.K.’s advertising watchdog has banned a number of crypto ads for “failing to illustrate the risk of the investment”... Kraken CEO Jesse Powell has raised the possibility of another “crypto winter”... The Gwyneth Paltrow-backed crypto miner TeraWulf had a rough debut on Nasdaq... Senate Banking Committee Chair Sherrod Brown thinks stablecoins should be regulated under current banking rules... The IRS will be keeping tabs on your crypto assets this tax season... Instagram has become a battleground for crypto scams... Comic book fans are not happy about late Marvel legend Stan Lee’s new NFTs.
FOMO NO MO
If you’ve followed the cannabis sector, you know that the industry is still massively handicapped on a nationwide level by the ongoing federal prohibition on marijuana as a Schedule I substance. Among the logistical challenges facing legal cannabis operators (i.e., ample regulatory red-tape, state-sequestered business models), perhaps the most daunting is the industry’s lack of access to traditional banking and financial services; it’s forced many retailers to operate all-cash businesses, which come with their own unique hazards. Despite efforts by some lawmakers to change this state of affairs, real reform seems some way off for the time being.
Enter crypto. In a column for Coindesk this week, Greenbridge Corporate Counsel principal Khurshid Khoja, whose law firm represents legal cannabis businesses, writes that cryptocurrencies offer the marijuana industry “immediate alternative to both an exclusionary banking system and operating all-cash businesses.”
Cryptocurrencies offer the only immediate alternative to operating all-cash businesses, and a practical substitute for the banks that can’t yet service legal cannabis businesses (and for those banks that may choose not to, even after SAFE Banking passes).
Cryptocurrencies hold incredible promise, and not only for providing access to financial services through decentralized finance (DeFi). They have the ability to level the playing field between large, well-capitalized multistate operators (MSOs) on the one hand, and small businesses (including woman- and minority-owned enterprises, and social equity licensees) on the other.
The large MSOs can afford access to banking today under the currently effective, highly restrictive and overtly discriminatory FinCEN guidelines, and will pay the exorbitant fees charged by the banks to offset the cost of heightened surveillance needed for AML compliance.
Small businesses cannot access those banking services on relatively comparable terms, or at all. Put differently, while federal law remains unchanged, the biggest banks and their MSO customers have the financial means to get federal regulators to look the other way on their otherwise willful violations of AML laws – but everyone else gets shut out.
That’s how much cryptocurrency has been stolen by scammers this year, according to Chainalysis’s new 2021 Crypto Crime Report. The amount is up 81% from 2020 and particularly driven by the emergence of “rug pulls”—a type of scam in which the developers of a new crypto project (usually a new token) abandon it unexpectedly and abscond with users’ funds.
THE LEDGER'S LATEST
Robinhood to launch crypto gifting feature by Chris Morris
How to give the gift of crypto this holiday season by Felicia Hou
Sotheby’s posted its highest-grossing year ever, boosted by millennials and NFTs by Yvonne Lau
Can a community of basketball fanatics run an NBA team as a DAO? by Aron Solomon
Blockchain.com is seeking an ambitious $20 billion valuation by Jessica Mathews
Now, even COVID-19 has an NFT by Chris Morris
How to shop in the metaverse: The cryptocurrencies you’ll need to buy, and how to get them by Felicia Hou
Cathie Wood thinks Ethereum is ‘even more undervalued’ than Bitcoin by Anne Sraders
Meet the typical American crypto owner: A millennial who voted for Biden and earns over $50,000 by Megan Leonhardt
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
MEMES AND MUMBLES
“How’d it happen? A lapse of concentration I guess.” The cryptosphere has been abuzz this week with the latest high-profile case of “fat finger,” which saw one NFT investor accidentally sell a Bored Ape NFT at 1% of its intended price. The perpetrator was a misplaced decimal point: rather than list the in-demand digital simian for the intended price of 75 Ether, or around $300,000, NFT owner Max accidentally priced the asset at 0.75 Ether—only $3,000 or so. “It was instantly snipped before I could click cancel, and just like that, $250k was gone,” Max told CNET.
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