GM HEARTLAND |
The hurrier I go, the behinder I get. —The White Rabbit |
—El Prof, Muhammed & Chad |
MONEY MONEY MONEY
TOKEN | PRICE CHANGE | PRICE |
---|---|---|
Solana ($SOL) | +1.20% | $145.52 |
Helium ($HNT) | -5.95% | $6.79 |
Pyth ($PYTH) | -3.72% | $0.32 |
Save ($SLND) | +20.92% | $0.80 |
(Price changes reflect past 7 days as of 10.11.24)
BUZZWORD OF THE WEEK
de-central-ized intel-li-gence
AI without a central authority (Sam Altman’s raging robophilia, et al).
AI operating across distributed nodes, using blockchain and smart contracts for transparency and security.
Control concentrated among individual users, ensuring data ownership and resistance to censorship.
The next frontier in AI: secure, democratic, and transparent intelligence systems.

DeFi’s Regulatory Bête Noire Hits a Boiling Point
Crypto.com has filed a lawsuit against the U.S. Securities and Exchange Commission (SEC). This comes as the DeFi sector’s collective hate boner against federal regulators — in particular one Gary Gensler, who recently committed the cardinal sin of admitting that, “the leading lights of [the crypto field] are either in jail or awaiting extradition” — reaches a critical mass.
More formally, it follows a Wells notice issued to the exchange by the SEC in August, indicating potential enforcement action on familiar grounds. The SEC claims that certain tokens sold on Crypto.com’s platform are unregistered securities. Similar legal battles are currently being fought by other major players like Coinbase.
In its lawsuit, Crypto.com argues that the SEC has overstepped its jurisdiction by classifying nearly all crypto assets, except Bitcoin and Ether, as securities. The crux of the company’s pushback is basically that the SEC’s approach is arbitrary. Token trades involving all cryptocurrencies are more or less the same as those conducted with BTC and ETH, yet only those two are not considered securities. Which, I’m sure, has nothing to do with the sweet, sweet BlackRock money backing the latter two, or the genuine potential of some of the former to bring more equity to the financial sector. (Cough, Solana.) Moreover, Crypto.com asserts that the SEC did not follow the proper rulemaking process as required by law.
Crypto.com says it intends to leverage the lawsuit to push for more regulatory clarity, emphasizing that enforcement without a clear legal framework damages innovation and competitiveness in the U.S. crypto market. The company has also registered with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and holds over 40 state money transmitter licenses, which it believes should further validate its operations under existing laws, in an admirable, albeit belated attempt to avoid Binance-ing itself.
These steps are fairly familiar for anyone tracking the SEC’s crackdown on — and consequent pushback from — crypto exchanges. What’s really interesting here is how thoroughly the anti-regulatory sentiment has fully permeated crypto culture now too. In the years since the 2021 bull run, now synonymous with regulator-cozy figures like Sam Bankman-Fried, a happy compromise no longer seems to be the goal of federal officials, crypto executives, or enthusiasts. On the top level, “regulatory steps” have become contentious legal steps, while at the bottom, calls for Gensler’s head regularly ring out over X. (Figuratively, I assume, despite the not inconsequential overlap between the crypto sphere and that other anti-federal movement.)
In theory, this would relegate crypto, no longer the inescapable subject of Tom Brady ads and Jimmy Kimmel bits, to a purely countercultural movement. But that has not been the case either. Frankly, there’s too many degens, and more profoundly, too much money in the space, for decision-makers to write it off entirely. So with crypto lobbyists still pouring many millions into politicians pockets, it’s not unlikely we will see Gensler’s head rended to the masses sooner than later, regardless of the results of the 2024 U.S. presidential election. Fairly or unfairly, he has become an effigy for a large, powerful cultural movement, which tends to end exactly one way: 🔥.
Now look, our newsletter is not overly sympathetic to the plight of TradFi figureheads. And we’re not particularly confident in the ability of the gerontocracy to understand, let alone effectively govern an emerging and rapidly evolving technology. But it’s worth noting Gensler’s not wrong, at least not in his most recent comment. The major figures to emerge from the DeFi movement have overwhelmingly been grifters, if not convicted criminals. Which makes the SEC’s “regulation by enforcement” approach, if not ideal, at least understandable.
Neither are we entirely on board with the complaints from Coinbase and Crypto.com, which are basically just web2 financial companies with web3 set dressing, robber barons in degen clothing. They’re concerned the regulation could stifle the industry’s growth and drive businesses away from the U.S. Sounds like a crucial step toward a truly decentralized exchange to us.
Ultimately, violence begets violence, whether in meat space or the metaverse. The broader crypto culture has fostered an environment in which scammers and criminals can thrive, without meaningfully exploring solutions, or even fully reckoning with why.
Maybe in an ideal world regulators would step in to do so. But this isn’t an ideal world. And from a realpolitik perspective, that sort of work will have to happen from the ground floor. In other words, a workable regulatory framework isn’t going to come from a former Goldman Sachs partner turned Finance Bro in Chief, and it’s not going to come from a tech giant using a lawsuit to pave the way for more tailored, crypto-friendly regulations that support innovation while still protecting consumers. It’s going to have to come from a cultural movement, which tend to start from the bottom up.
—Muhammed
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Everything Is a Remix
The founding principle of our newsletter is to make it easier for you to identify and digest the breaking news in emerging industries that could make a meaningful difference in your life. And honestly, making these weekly attempts to do so is the highlight of my working life. But as a self-made journalist with no formal training (I know, shocking, right?) I also find myself consistently running up against a surprising hurdle: the core concept of breaking news.
See, this week, the web3 hubbub was that Stripe added USDC back to third-party merchant website checkouts. The financial services firm made waves way back in 2014 as the first of its kind to accept Bitcoin payments, before abruptly pulling the option in 2018 and proceeding to sit out the entire subsequent rally. To hear the crypto press corpse [sic] tell it, the move marks another Significant Moment For Mass Adoption™.
But to hear me tell it, the move isn’t any different than allowing PayPal alongside Visa and Mastercard at checkout. It’s just the latest marginally faster, marginally cheaper step along the proverbial Civ tech tree. Is there even such a thing as breaking news? Everything is a remix.
What I’m more interested in is how this technology will fundamentally add value to my life in a way that current technologies do not. And writing about that is a lot harder than aping the latest Cointelegraph headline. It’s becoming increasingly clear utility isn’t the main force driving adoption in the DeFi sector (get rich quickness takes the cake there) and more colorful use cases like GameFi or an AR-powered Metaverse don’t seem to be on the table this cycle either. So what is?
There’s lot’s of buzz around ZK, or zero knowledge proofs. ZK is a fancy math problem that serves essentially as passcode to get into a speakeasy, except unique to every individual. The idea of the technology is to allow one user, the prover, to prove they know a piece of information, to another user, the verifier, without the latter learning it.
There’s much discussion around how it can be used to enhance privacy for users and their transactions, but as a data scientist, I scream hooey! The data they’re proposing to withhold from the system is the very thing predictive analytics systems need to function, and since most software companies make their money off of monetizing user data, it’s hard to picture this as a viable route for mass adoption. Sure, ZK is part of the solution for privacy and user data ownership, but so is fully homomorphic encryption (FHE). In other words, there are a lot of complex moving pieces to the puzzle, and its unlikely a single one of them is going to catch on and do all the utilitarian heavy lifting.
So I propose an alternative. This week, I was fortunate enough to get to meet with Kuleen and Dare from the Solana Foundation, thanks to an indirect intro from a new KC-based friend. (It’s a small world after all, especially in the American Heartland.) As with most of my conversations, it quickly turned into a debate on data privacy and ownership. And while I’m not sure I’ve convinced them of the case to be made for intertwining crypto and AI, the idea of utilizing crypto to incentivize common data pools by rewarding users for opting into industry-wide aggregations with their peers seemed to resonate.
In my mind, the most useful formula is to treat the blockchain as a technological backbone rather than a selling point. Build an ecosystem with actual economic utility on the front end, then use crypto on the backend as an incentive mechanism to keep people engaged with your product and reward them through the product onboarding process. It be a win-win, giving software developers who build places for groups of people to congregate more ways to monetize their unique datasets, while community members will have exposure to the upside via the tokens.
Which at the risk of sounding like a meme — or, who am I kidding, that’s always the intent — brings us back to $mother Iggy. She’s aMASSed a community of thousands of stakeholders to invest in her brand. And now, she’s monetizing that community by moving them toward three different economic solutions for which her token has utility, and enabling them to earn more by engaging in the environment.
So yeah, forget ZK maxis or TradFi stablecoin adoption. The current cycle’s real utility comes from Iggy fucking Azalea. It’s been a big, bratty summer for “Fancy” fans.
—El Prof