1st June 2024 > > Staking BTC & the Presidential veto.

tl;dr

BTC staking is far more exciting than you might think. The Presidential veto has been wielded to the detriment of Joe Biden’s re-election campaign.

Market Snap

Market Wrap

Another day of net inflows to the ETFs whilst Glassnode reports that whales are re-accumulating. So, who are the sellers?

With three months of low volatility price action mostly with a 6-handle, boredom is probably setting in for the more speculative investors. Between November last year and February this year the price of BTC doubled. The ensuing euphoria that enveloped the new holders has long since dissipated. It seems likely we are seeing a period of redistribution from weaker hands into much stronger ones. If so, a very firm base is being built.

Curious Cryptos’ Commentary – Staking BTC

This is not such a weird idea as it might first sound.

Crypto start-up Babylon has just raised $70mm to build on the progress it made on a funding round of $18mm last year, to realise its vision of staking BTC on PoS networks such as Ethereum, Solana, and Cardano.

The basic concept sounds simple – BTC is pledged in the same way as PoS coins to help power the network and earn yield.

In contrast, I am reliably informed that the technical problems in implementing this idea are profound. However, founder of Babylon, Professor David Tse of Stanford University, believes he can crack this conundrum.

If he is successful, two key benefits will be realised.

The obvious one is that owners of BTC can start reliably earning a yield of around 3% per annum. If you scoff at that amount when compared to so-called risk-free treasuries at 5% per annum, well I am happy to take 3% of your BTC stash off you each year at no cost to me.

More intriguingly, this brings the highly secure, and decentralised Bitcoin network to PoS networks for which concerns have been raised specifically about the extent of decentralisation.

The SEC is obsessed with the degree of decentralisation or otherwise of PoS networks. Before ETH transitioned from PoW to PoS, the official line from the SEC was that ETH was not a security. Prior to joining the SEC, Gensler gave a lecture when he was at MIT specifically stating the ETH was a commodity. Post transition, the SEC’s view may have changed, but the extent of the obfuscation from Gensler means that we don’t really know what his view now is. Perhaps he doesn’t either, but if that is the case, this is just one more example amongst many of his abrogation of his duties and responsibilities to the investing public.

The prize on offer is that making BTC the backbone of PoS networks might mean that none of them are securities, and the SEC no longer has jurisdiction.

Oh happy days.

We wish David good speed in his endeavours.

Curious Cryptos’ Commentary – SAB 121

And this is why David’s work is so important and why the SEC should not have jurisdiction over cryptos.

SAB 121 is the heartbeat of Operation Choke Point 3.0, an attempt to stifle a legitimate industry because some people disapprove of financial freedom and liberty for the individual at the expense of TradFi domination of the world.

To recap, SAB 121 is an accounting bulletin issued by the SEC that ensures that banks cannot provide crypto custodial services to their clients by allocating a 100% capital charge against those assets. This punitive and deliberately damaging treatment of cryptos is in complete contrast to all other custodial assets.

Both houses acting in a bi-partisan way have recently approved the repeal of SAB 121.

Joe Biden has vetoed that repeal.

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Ignoring the politicking, Senator Cynthia Lummis calls it right:

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The whole affair is very upsetting. It had seemed that the partisan split in the US in favour or against cryptos had irrevocably fractured to everyone’s benefit. Now the two most senior Democrats are in open disagreement with one another over fundamental principles of freedom and liberty. That is not a good look.

We must expect Trump to opportunistically further his embrace of cryptos, for his recent conversion is merely for political gain. With 50mm or more American adults investing in cryptos with a financial stake in crypto success, that’s a lot of potential extra votes in play.