What you need to know today in crypto and beyond 

June 16, 2021

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–Daniel Kuhn

Today's must-reads

Top Shelf

VACUUM CLEANER? The adoption of bitcoin as legal tender in El Salvador could collapse the country’s economy, said Steven Hanke, a professor of applied economics at Johns Hopkins University. This is because bitcoin holders everywhere in the world could suck up the dollars in El Salvador “like a vacuum cleaner,” he told Kitco News Tuesday. He also referred to the parliament’s decision as “stupid.”

CRYPTO TASK FORCE: Democratic House members are forming a group to tackle concerns about cryptocurrency, U.S. Rep. Maxine Waters (D-Calif.) said in a hearing with the FinTech Task Force on Tuesday. The group will work with regulators and experts to get a better understanding of the industry.

BEAR CASE: A digital euro could reduce bank deposits by 8%, or 873 billion euros ($1.06 billion), analysts at Morgan Stanley have found. The report was based on a scenario where citizens older than 15 transferred 3,000 euros ($3,600) into a European Central Bank (ECB) wallet. Smaller European countries like Greece, Latvia, Lithuania and Estonia would be hit the hardest because converting 3,000 euros is equivalent to 22%-51% of household deposits and 17%-30% of total deposits in those countries.

–Helene Braun

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“We’ve seen many investors in this space that take some time to get around it, to look at Bitcoin pretty seriously, and once they do, they end up going a bit deeper than that as well.”

–Bitwise CEO Hunter Horsley, on CoinDesk’s “First Mover.”

A message from CoinDesk

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What others are writing...

Off-Chain Signals

• MicroStrategy CEO Michael Saylor sees potential for a range of cryptocurrencies, not just bitcoin (CNBC)
• Ethereum gas fees are at six-month lows attributable to lower transaction volume and growing use of layer 2s (The Block)
• China is kicking out more than half the world’s bitcoin miners – and a whole lot of them could be headed to Texas (CNBC)
• Bitcoin skeptic David Gerard gives a detailed look at El Salvador’s bitcoin plan, says it looks like de-dollarization by stealth (Foreign Policy)
• While NYU’s Max Raskin looks at how Salvadorans could benefit from “sound money” (WSJ Opinion)

–H.B. & D.K.

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Putting the news in perspective

The Takeaway

A Web 3.0 Ally?

Yesterday, the Biden administration named Lina Kahn, a 32-year-old Columbia Law professor, as the new head of the Federal Trade Commission. Khan, who will be the youngest FTC head ever, is known as a fierce critic of big tech monopolies like Amazon. While there’s often a knee-jerk resistance to regulation and regulators among blockchain advocates, Khan’s concerns make her a potential ally on big issues like privacy. Her antimonopoly work could also create substantial market opportunities for new kinds of tech businesses – including those building decentralized systems and “Web 3.0.”

Enforcing U.S. antitrust law is a major part of the FTC’s mandate, and Khan is probably best known for helping redefine just what a “monopoly” is. She has been crucial, in part during seven years at the Open Markets Institute, in developing and promoting the idea that a company can be a monopoly even if its practices drive prices down – even, in fact, if its product is free to consumers. This largely hinges on how the firms gather and use data: Khan has been among the loudest critics of the way Amazon uses data gathered through its storefront, such as leveraging sales data to compete with third-party sellers who are, no less than shoppers, its customers.
 
Khan may also have a higher chance of advancing her own legislative and regulatory agenda than some other members of the Biden administration. At the most divisive moment in American politics since the 1960s, Big Tech has managed the neat trick of bringing everyone from the progressive Left to the Trumponationalist Right together in shared hatred and fear. Khan’s own confirmation was bipartisan, with the Senate voting in favor of her 69-28. That bipartisanship will be tested by looming legislation that would seriously reshape the tech industry, which is coming fast and furious in both houses of Congress. A huge bipartisan Senate package includes a data portability provision of particular interest to Web 3.0 projects, because it could erode Facebook’s ability to lock customers into its walled-garden version of the internet.
 
Such measures are steps toward unwinding the surveillance economy that has allowed companies like Google and Facebook to leverage network effects to build the new kind of data monopoly that Khan helped diagnose. In broad strokes, that unwinding would, to whatever modest degree, help people retake some control of their personal data and privacy. Just as important, the antitrust elements of Khan’s agenda could create more space for small startups pursuing novel ideas – almost certainly including more experimentation with privacy-preserving data structures and business models.
 
But now that she’s in charge of the FTC, antitrust shouldn’t be Khan’s only priority: The FTC also sometimes plays an important role in fighting deceptive investment schemes. In particular, I’ve been writing quite a bit lately about a new wave of celebrity crypto endorsements, some of which may have been undisclosed paid promotions. It’s the FTC’s job to stop such touting activity, but recent actions have been slow and reactive, creating an atmosphere of permissiveness. More aggressive enforcement of those rules could help keep more money in legitimate projects, advancing the timeline for real alternatives to the tech monopolies.

–David Z. Morris

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