The Hoot #19

Scatt's Seeds for Thought:

🌱 Coinbase Sues the S.E.C. 👨🏻‍⚖️

🌱 Binance Pulls Out of Voyager Deal 😶‍🌫️

🌱 Starbucks, Bitcoin & $10m 📊

🌱 EU 🇪🇺 1 - 0 USA 🇺🇸

Meme of The Week

Year-to-date Market Performance:

• S&P 500: 8.59%

• Dow: 2.87%

• Nasdaq Comp.: 16.82%

• Bitcoin: 77.57%

• Ethereum: 58.27%

• Scatt Capital’s Fortune Strategy: 35.04% (Since Inception: 30.70%)

• 7-Day Change in Crypto Market Cap: +$57 billion

• New Home Sales for March surprised with a figure of 683k vs. an estimated 634k

• GDP for Q1 was 1.1% (q/q ann.) against an estimate of 1.9%, and 2.6% in prior quarter. This represents the slowest growth since Q2 in 2022...

• Pending Home Sales came in -5.2% m/m vs. an estimated 0.8%. This is the worst drop since September, 2022.

• PCE Index for March showed that inflation increased 4.2% y/y. This was slightly higher than expectations of 4.1% (with a prior figure of 5.1%). This is one of the Fed's favorite inflation gauges, so it's key to monitor this.

• Data for the Week Ahead: FOMC Decision; Consumer Credit (March); U.S. Trade Deficit (March); U.S. Unemployment Report (April)

Coinbase Sues the S.E.C. 👨🏻‍⚖️

Shots have been fired, ladies & gentlemen. Coinbase has officially sued the Securities & Exchange Commission (the financial watchdog in the US). Here is a quick recap of the story:

• Coinbase filed a petition with the SEC in June, 2022 to see if current securities laws could be applied to crypto.

• The S.E.C. didn't respond to the petition, but instead sent them a Wells notice (a notification of imminent legal action).

• So in retaliation, Coinbase is following up with a lawsuit demanding a response to their petition, as well as a list of other unanswered questions.

This is all SUPER important though. Coinbase has an established business with 110 million users, and a strong legal team. They've attempted to comply with U.S. regulation, but haven't succeeded so far. It places the spotlight on the SEC and its chairman, Gary Gensler, who have basically been making things up as they go along.

It's also key to note that Coinbase just received a license to open a derivatives exchange in Bermuda... potentially adding to the long list of crypto-related companies leaving the U.S. 🇺🇸

Binance Pulls out of Voyager Deal 😶‍🌫️

Voyager was a big, U.S. based crypto lender. And they weren't small either, at one point boasting roughly $1.3 billion of crypto on its platform, holding more than $350m in cash on behalf of customers. So here's the story:

• Voyager extended Three Arrows Capital (a former crypto hedge fund) a significant loan position.

• Crypto winter came around with prices dropping across the board (thanks, FTX)... and Three Arrows defaulted on that loan, forcing Voyager to file for bankruptcy.

• Binance.US (Binance US's arm) said they'd buy Voyager's assets for $1bn... right up until a few days ago.

Binance just pulled out of the deal citing the "uncertain & hostile regulatory environment in the US". The clock is ticking for the old folks running the show here...

Starbucks, Bitcoin & $10m 📊

A 'whale' (someone that holds A LOT of crypto) transferred 400 bitcoin ($10m+) in 1 INSTANT TRANSACTION... for just $5.22 - the approximate price of an oat milk cappuccino from Starbucks ☕️ A lot of people track these whale wallets (remember all the balance and transfer information is public) to gauge what the 'big players' are doing with their crypto. They also have the ability to significantly influence prices because they own so much.

Baring in mind the crypto was obviously sent on the bitcoin network, which is slower, and fewer people use it (making it cheaper relative to the ETH network which can get a little more expensive). Nevertheless, compare this to traditional banks today: Bank of America & Chase both charge $30 fees per transfer (with a max $100k daily limit), AND the worst part is that it takes DAYS to arrive. Transferring more than $10m for the price of a Starbucks Coffee doesn't sound so bad, now does it?

By the way... that credit card you use to pay for your clothes, groceries & the rest of your life? Those payments take up to 60 DAYS to settle. Bitcoin's AVERAGE transaction time is about 10 minutes. The ability to transfer enormous amounts of money for a fraction of the cost? An absolute revolution.

Europe 🇪🇺 1 - 0 USA 🇺🇸

The European Parliament has just edged the U.S. in the Crypto Games. Last week they rolled out the WORLD'S FIRST CRYPTO LEGISLATION. So, what does it say?

We won't bore you with the details, so here's they're basically saying: We like crypto and you can do that here, but it needs to be managed better. From holding providers accountable for holding crypto assets, to asking them to disclose information on their energy usage on mining, there are all sorts of regulations and rules they've implemented.

But even if some of them cause an headache or 2, you know what's cool? It's still a set of rules. The rest of the world still doesn't have a playbook. And whether you like it not, some form of regulation is necessary for the space to really innovate and grow.

Sorry U.S. folks, our friends across the pond have one-upped us on this. Let's hope it won't stay like that for too long.

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See you next week 🦉

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.