Empire Newsletter: Crypto’s day in Congress

Yesterday saw Congress’ upper chamber side with the House on a measure aimed at overturning SAB 121

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US President Joe Biden | Paul Froggatt/Shutterstock modified by Blockworks

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What’s in a vote?

Meet the US Senate’s new Democratic crypto caucus — sort of.

Yesterday saw Congress’ upper chamber side with the House on a measure aimed at scuttling crypto accounting guidance created by the Securities and Exchange Commission. As Blockworks’ Casey Wagner reported Wednesday, the vote resulted from a behind-the-scenes lobbying campaign involving Republicans and industry advocates.

In the end, a dozen Democrats crossed the aisle for the 60-38 vote. When the House voted last week to undo Staff Accounting Bulletin 121, 21 Democrats joined Republicans. 

What to make of this group, and the relatively swift speed at which this effort took shape? 

Some of the group have been public about their crypto positions for some time. Sen. Kirsten Gillibrand of New York, of course, co-authored legislation with Sen. Cynthia Lummis of Wyoming. Others, including Sens. Cory Booker of New Jersey and Kyrsten Sinema of Arizona, have expressed support for the US crypto industry in the past. 

On the other hand, some yes-voting members have taken positions less popular with the industry; Sens. Bob Casey of Pennsylvania, Mark Kelly of Arizona and John Hickenlooper of Colorado have all scored “very anti-crypto scores” from Stand With Crypto’s political rankings.  

Read more: Stand With Crypto PAC launches as industry interest in campaign funding ramps up 

One has to wonder how much the Biden White House’s veto threat factored into the Democrats’ decision to “vote their conscience” — that is, not align behind a particular yea-or-nay group strategy. 

Remember, several of the votes in question were cast by senators up for reelection this fall: Gillibrand, Casey and Tester. For these members, at least, the vote provides a way to create some daylight between them and an unpopular incumbent. 

The glass-half-empty interpretation: Biden’s stated plan to veto the bill made it a somewhat “safer” bill to vote on, given the preordained outcome. 

Of course, it’s always possible that Biden will reverse course and side with a decidedly bipartisan movement in Congress, but given that it’s an election year, such a move would be a surprising one.

I think there’s more going on here than political machinations, however. Despite the memes to the contrary, there’s always been Democrat support for crypto issues, albeit not at the fervor expressed by Republicans. 

It’s possible, quibbles aside, that the popularity of crypto has broken through and created a moment when Congress actually, against the odds, saw fit to move forward with crypto legislation. Sure, it took the form of an opposition measure, and yeah, it amounts to a won’t survive-a-veto messaging bill when Congress is essentially done working for the year. But they did it by a wider-than-expected margin, and that means something.

The upcoming election is about much more than crypto. But this week’s vote may mean that the next session of Congress could see real movement on crypto issues. 

And who knows — there’s still a few more months to go. Maybe Lummis’ and Gillibrand’s bill will get the attention and debate it has long deserved.

— Michael McSweeney 

Data Center

  • The US bitcoin ETF segment saw positive inflows, including GBTC, notching a total flow of $257 million per Farside data.
  • BTC and ETH are up to $66,300 and $3,000, respectively
  • Roughly $55 million of shorts were liquidated in the past 24 hours, per Coinglass data.
  • Pepe and WIF are down around 3% to start Thursday, as memestocks and memecoins continue to lose momentum, according to CoinGecko.
  • GameStop closed down 30% on Thursday and is looking weak ahead of the opening bell Friday. 

The cutest of pumps

There are some things crypto just does better.

Want to transfer value almost instantly to the other side of the globe, for a fraction of the cost of boring-ass fintech unicorns like Wise and Revolut? Use Tether on a network like Tron or Polygon: frictionless, fast and easy.

How about raising funds for a new venture? Like a goat farm. All good — you can easily source liquidity and donations from around the world on social media and buy tons of goats, no questions asked.

It turns out crypto also does wanton pointless pumping much better than the stock market.

The normie crowd has come back around to meme stocks, about three years after the original /r/wallstreetbets craze. GameStop has pumped up to about 550% and dumped by nearly half over the past few weeks, all because that Roaring Kitty guy tweeted some silly cryptic on Twitter.

What goes up mostly comes down and stays down when it comes to meme stocks

Other popular memestocks from the COVID era of free helicopter money (stimulus packages) haven’t yet had the same treatment, for better or worse.

Whether AMC, Virgin Galactic and Kodak Eastman get their second moment is anyone’s guess. Still, GameStop’s recent 550% is cute compared to what happens around these parts. So is its peak-2021 pump of more than 5,400% (54x).

In the past five years — the same period as memecoin mania #1 and #2 — DOGE, FLOKI, WIF, BONK and SHIB have all, at their most, multiplied in price hundreds of times. SHIB however takes the cake, exploding by 80,000x (8 million percent).

Bitcoin, ether and Coinbase stock for scale (wink, wink)

Sure, there are some caveats: Many memecoins start trading from near zero, so any real market movement sends prices practically off the chart. Hard to compare that with already-listed stocks within the same timeframe. And stock market circuit breakers do tend to put a damper on things.

But don’t let that get in the way of a good time. 

DOGE, for instance, was launched in 2013 and it still went parabolic in 2021, far more than GameStop, Nikola or Hertz ever did.

In fact, if SHIB was included in the chart below, it would turn the entire meme stocks sector into a tiny, little, insignificant bubble. 

Sounds about right.

— David Canellis

The Works

  • Hong Kong’s bitcoin and ether ETFs saw outflows earlier this week, shaking confidence in their debut.
  • Following yesterday’s exploit, Pump.fun said the attacker was a “former employee.” 
  • The Senate passed the resolution to overturn SAB 121, though President Biden has said he plans to veto it.
  • A Dolce & Gabbana customer is suing the fashion firm after it delivered NFT outfits late, Bloomberg wrote.
  • Biden’s order to stop a Chinese-tied mining operation came days after CleanSpark bought the sites, CoinDesk reports.

The Morning Riff

Former Alameda CEO Sam Trabucco has been notably absent from the aftermath of FTX’s downfall, though his name tends to pop up when discussing the collapse itself. 

Caroline Ellison, his co-CEO prior to his departure, took the stand at Sam Bankman-Fried’s trial though Trabucco didn’t appear once. He also hasn’t been publicly accused of any wrongdoing.

But yesterday, Trabucco broke his silence in a letter to the court ahead of ex-FTX executive Ryan Salame’s sentencing hearing. 

Trabucco’s letter is over three pages long and is….interesting, to say the least. Not only do we learn a lot about Salame’s home life (he hung 80 photographs of his new partner in his home after dating for a month) but we also get some insight into Trabucco’s time at Alameda

Simply put: Trabucco seemed unhappy with the hours and work at Alameda, calling Salame his “lifeline” through the “hardest period of my life.”

Obviously, we can’t know what happened behind closed doors and there are still many questions that remain unanswered about Trabucco’s role and the millions of dollars he walked away with. 

But he’s made one thing clear: He’s a loyal friend.

— Katherine Ross


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