Yesterday in Crypto - Issue #33

Read time: ~7 minutes

A US court has granted Grayscale Investments a huge victory over the SEC. The magnitude of this decision cannot be overstated.

🚀 The Big Win

Grayscale Investments, a major player in the crypto world, recently won an appeal against the U.S. Securities and Exchange Commission (SEC). The court ruled that the SEC must review Grayscale's application to convert its Bitcoin trust into an Exchange-Traded Fund (ETF).

🤔 What's an ETF?

For those unfamiliar with the concept, an Exchange-Traded Fund (ETF) is an investment vehicle that is traded on stock markets, much like individual company shares. A Bitcoin ETF simplifies the process for average investors to gain financial exposure to Bitcoin without the need to directly own the digital asset.

What sets the applications from companies like Grayscale apart is that they are seeking approval for spot ETFs. In this context, "spot" means that the ETFs would be backed by actual Bitcoin holdings, rather than derivatives or other financial instruments. This development could lead to a supply shock, as ETF providers would need to accumulate significant amounts of Bitcoin to back the ETF shares, thereby affecting the cryptocurrency's availability and price.

🎉 Community Reactions

The crypto community is thrilled, but there's a mix of optimism and caution. While some see this as a game-changer, others are aware that the SEC still has options for its next steps. The court's decision is seen as a significant but limited win.

🤷‍♀️ What's Next?

The SEC could either accept the court's decision or find other ways to challenge it. Either way, the ruling is a step forward for the crypto industry, as it puts pressure on regulatory bodies to provide clearer guidelines.

📈 Why It Matters

This decision could pave the way for more Bitcoin ETFs, making it easier for regular folks to invest in crypto. There are a number of BTC ETF applications from other companies like ARK, Fidelity, WisdomTree. They will most likely be approved, assuming the grayscale one gets through.

Elon Musk's social media platform, X, previously known as Twitter, is yet again making significant strides towards becoming an all-in-one super app. Miss our previous coverage of this? Read it HERE.

🔑 License Secured

X has been granted a Currency Transmission License in Rhode Island, allowing it to offer cryptocurrency wallet services. This comes after the platform secured similar licenses in several other U.S. states, including Arizona, Georgia, Maryland, Michigan, New Hampshire, and Missouri.

📈 Why It Matters

X aims to leverage its massive user base to introduce new revenue streams. The platform plans to enable users to link their bank accounts to their social media profiles, integrate debit cards, and facilitate money transfers. This move could play a crucial role in introducing cryptocurrencies to a broader audience, expanding the crypto market significantly.

🐕 Dogecoin, BTC, and USDC

It's highly likely that popular cryptocurrencies like Dogecoin (DOGE), Bitcoin (BTC) and USDC will be integrated into X's crypto wallet strategy. We all know that Elon loves Doge - he is even known as “The Dogefather” by the DogeCoin community. BTC makes perfect sense - it is the most widely adopted and most secure cryptocurrency. Most likely, X will integrate with The Bitcoin Lighting Network to reduce fees and increase speeds. Lastly, USDC makes sense - even Circle founder Jeremy Allaire thinks so and has reached out to Elon on X to make this happen.

🕒 What's Next

While X aims to offer these services across all 50 U.S. states, they are still awaiting additional approvals, and there's no specified timeline for completion.

🤔 What is Liquid Staking?

Imagine you have money in a savings account that earns interest, but you can't touch it for a certain period. Liquid staking is like a flexible savings account for cryptocurrency, where you can still use your money while earning interest.

Normally, in the world of crypto, you'd have to "lock" your funds to help keep a network secure and, in return, you'd earn some rewards. This is called “staking” and is used in proof-of-stake blockchains like Ethereum, Avalanche, and The Cosmos Hub, to name a few. Liquid staking allows you to earn those rewards without losing access to your money.

🖥️ How Does It Work?

Here's a simple breakdown:

1. Putting Money In: You place your cryptocurrency into a special online account that is managed by smart contracts (code that automatically executes certain actions when specific conditions are met).

2. Getting a Receipt: You get a digital "receipt" that shows you've put money in.

3. Taking Money Out: Whenever you want, you can use that "receipt" to get your original money back.

📈 Why is it Good?

• Easy Access: You can get your original money back anytime you want.

• Use it While You Save: You can use your "receipt" (which represents your original money) for other online activities. This can include borrowing against your receipt for liquidity.

• Earn More: You get rewards for keeping your money in the account, and you can also use your "receipt" to earn additional rewards elsewhere.

🔍 What Should You Watch Out For?

• Online Risks: Since this is all online, there's a risk that someone could hack into the account where your money is stored.

• Value Changes: The value of your crypto can go up or down, just like stocks.

• Rules and Penalties: If the place where you put your money doesn't follow certain rules, you might earn less in rewards.

🛠 In Simple Terms

Liquid staking is like having a flexible savings account for your digital money. You can earn rewards and still use your money for other things. It's a new and exciting way to make your digital money work for you.

That’s all for today. We’ll see you tomorrow for a break down of the largest liquid staking provider: Lido - LDO.

“Online identity and reputation will be decentralized. We will own the data that belongs to us.” 

— William Mougayar, Author and Entrepreneur