| | | Good afternoon. On the heels of Ripple’s landmark win against the SEC (see our thoughts below), it seems as if crypto – dare we say it – is about to rally? No, in all seriousness, what’s stopping it? It’s been a full year since Terra//SBF//etc. The Celsius’s//3AC’s of the world are officially kaput. Spot bitcoin ETFs are launching in Europe and are finally getting serious considerations in the US (with heavy institutional backing). Exchange volumes are soaring back. And crypto is quickly decoupling from the S&P 500. | Since we’ve started writing CoinSnacks in 2017, every now and then the ongoing narratives paint a fascinating outlook – a moment in time where there seems to be nothing on the short-term horizon that could really stifle market momentum. After this week’s news, we feel as if that sentiment has returned. | How are you feeling about the crypto market? | | Today’s Big Stories:
📜 Landmark crypto ruling sends tokens soaring
📰 Coinbase’s busy week | Today's newsletter is 711 words, a 4.5-minute read. |
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📌 MUST READS |
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A lawsuit nearly four years in the making has finally come to a close and the impacts are already rippling throughout the crypto markets. |
On Thursday of last week, Ripple Labs defeated a significant part of the SECs landmark case over its sale of more than $1.4 billion worth of the popular XRP cryptocurrency. |
Ripple Labs had spent hundreds of millions of dollars arguing that more than half of its token sales did not violate investor protection laws, and that XRP is simply a token developed to facilitate cross-border payments. In short, Ripple Labs argued that XRP is not a security. And, surprise surprise, U.S. District Judge Analisa Torres agrees. |
A Small Caveat
To clear up any confusion, let’s quickly discuss what the part about “more than half of its token sales” means. |
It turns out that although the judge agreed that sales on exchanges (i.e. retail trading) do not violate the Howey test (a legal test used in the United States to determine whether a transaction qualifies as an investment contract), other sales did violate securities laws. But, these violations were primarily around institutional sales. |
You see, the judge put XRP sales into three distinct buckets: |
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But to cut to the chase… |
Here Is All That You Need To Know
Overall, the ruling concludes that the way XRP was sold in certain circumstances is illegal, but that XRP itself is not a security. |
Perhaps to put it even more simply, the XRP token is NOT a security, but certain transactions of the token can be. |
As a result, the crypto market rallied with the price of XRP rising more than 70% and Coinbase (COIN) shares rising 25% after the decision was issued. |
Honestly, the entire market moved higher after the news. |
If XRP is deemed not a security, others (like SOL) could be deemed not a security as well. Beyond the brighter regulatory clarity (and a step toward better token classification), the ruling gave a short-term green light around sales via exchanges. |
It’s why exchanges like Coinbase, Kraken, and Gemini, quickly re-listed XRP after the ruling was determined. |
As we wrote 10 months ago when it looked like the lawsuit was coming to a close: |
“This is a case not just for [Ripple] but for all of crypto.” |
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🔎 DEEP DIVES |
| | Coinbase News Lost In The Hoopla |
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While all eyes were on Ripple last week (and for good reason), there was plenty of other news surrounding Coinbase that got lost underneath the headlines. |
Coinbase Pauses Staking In Four States
Coinbase has announced that users in California, New Jersey, South Carolina and Wisconsin are no longer allowed to stake new digital tokens on its exchange (anything staked prior to the announcement would remain though). |
The move follows the SECs lawsuit from last month, alleging that the Coinbase’s Earn staking program is an unregistered security. |
The removal mainly comes as a result of the “show-cause order” that was issued by 10 states warning Coinbase that its staking product does not comply with securities rules. |
While this is negative news for these four states, it is positive news for the other six where Coinbase worked with policymakers to protect the staking product. |
Coinbase continues to stand by their staking product especially as it accounts now for more than 10% of the company’s revenue. |
Coinbase Releases Decentralized Messaging Feature
What do you get if you combine encrypted messaging such as from the likes of Telegram and Signal, with payment apps such as from Venmo or Cash App? |
Answer: Coinbase’s new decentralized messaging feature. |
This week, Coinbase launched messaging on their Coinbase Wallet feature, allowing anyone to send secure messages to and from wallet addresses on the platform. The feature, which was established in partnership with web3 communications firm XMTP, is a brand new way for people to engage with crypto beyond trading. |
What’s more, the feature also allows users to send USDC to other users without incurring any gas fees. |
“So what?” You might be saying… |
Well, this development adds to a string of recent releases from Coinbase allowing users to interact with crypto in novel ways. |
Furthermore, by offering encrypted messaging and on-chain identity verification, it can help alleviate some of the scams that so many potential users are worried about in crypto. |
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TWEET OF THE WEEK |
 | glassnode @glassnode |  |
| The #Bitcoin Realized Cap currently sits just shy of $400B, indicating that a steady stream of capital is entering the asset throughout 2023. As the realized cap climbs, it signals that coins are changing hands at higher prices on net, suggesting a modest uptick in new demand… twitter.com/i/web/status/1… |  | | | Jul 18, 2023 | | |  | | | 609 Likes 139 Retweets 30 Replies |
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