The Breakdown - QE is good for Bitcoin / Binance US opens next week / France to block Libra / BTC on Premier League Jerseys

Episode Date: September 12, 2019

More qualitative easing out of Europe means more "look at them they're doing it we should be doing it!" from Trump means more "Bitcoin solves this" memes. Binance is geoblocking users but next week opens up Binance.US - a regulated exchange with 6 assets to start. In an interesting one-two punch, France has announced their intention to block Libra from operating while also making crypto-to-crypto trading tax exempt. Finally, we look at investment from a major record label in a digital asset platform alternative to Ethereum and one company is putting the bitcoin logo on Premier League Jerseys.  Watch: https://www.youtube.com/nathanielwhittemorecrypto

Welcome back to another crypto Daily 3 at 3. All right, guys, what is going on? Welcome back. So today we are going to talk about first. A little update from yesterday, Trump's tweets about the Fed, getting their kind of next expression today as the European Central Bank announces new quantitative easing. Second, we're going to talk about Binance U.S. opening up next week. Third, we're going to talk about France blocking Libra, but also saying that crypto to crypto

currency transactions where trades will not be taxed. And four, we're actually going to do a little bonus section on two little mass adoption stories. So let's actually dive in first to just this follow up to yesterday. So yesterday we talked about how Trump was putting pressure on the Fed to lower interest rates even further, talking about even pushing them into the negative territory. And then today, we had an announcement from the European Central Bank that's going to cut its rates further. So Pomp says the ECB just announced they are cutting interest rates and

introducing a large stimulus package, i.e. quantitative easing. There is obviously a bitcoiner inside the organization. You had TUR who said QE infinity, basically, with a Bloomberg post here that says ECB cuts key rates and restarts bond-buying stimulus program to help slowing economy. Trump himself reacted as is his want. He says, European Central Bank acting quickly. Cut rates at 10 basis points. They are trying and succeeding in depreciating the euro against the very strong dollar, hurting U.S. exports, and the Fed sits and sits and sits.

They get paid to borrow money while we are paying interest. So basically, this is, you know, again, part and parcel of the currency war that we discussed yesterday in which basically the Trump is arguing that the euro is doing a better job of depreciating its currency, which makes it more expensive for everywhere else to buy things, the stronger the dollar is, which hurts our economy theoretically. But the problem and the reason that Bitcoiners get so fired up about this is that there's kind of no end in sight and that we're on kind of a 10-year experiment in quantitative easing that really doesn't have an end. And that was at first a break from tradition and now has just become the norm. And no one knows where it ends. And there's currently,

obviously, the ascendance of modern monetary theory, which thinks that this can go on for a very long time. And on the other side is kind of the austerity of Bitcoin, which cuts out the ability to debase currency. So this is all just a quick update in, this is the ongoing story, I think, of Bitcoin and what it means is a macro asset. This is where the narrative battleground is for Bitcoin and what it means. And so nothing hugely new, just more evidence today of just how Bitcoin might be involved than necessary and impacted. by the world at large. But with that, let's move on to number two for the day.

So number two, Binance America. So Binance U.S. was announced a few months ago, and it was interesting because basically, on the one hand, you had Binance announced that it would be geo-blocking U.S. users starting now, starting in September. This announcement was made in maybe July. It could be wrong about that,

but somewhere over the summer. And then very quickly thereafter, Binance announced that it would be opening Binance U.S. which would be a fully regulated, compliant exchange for U.S. users. And when that announcement happened, a few weeks after that announcement, they also announced or shared some of the assets that they were basically considering for listing on Binance U.S. A lot of it looked like some of the later assets that have joined Coinbase more recently. And just yesterday, Catherine Coley, who's the CEO of Binance US said opening our doors to new users in one week, and they followed it up with this

blog post, which explained exactly what would be happening. So starting next Wednesday, September 18th, you can go to Binance US to sign up for your account, verify your information, and deposit any of the initial selection of digital assets. So this looks like Coinbase classic, basically, what Coinbase was until it started listing other assets a little while ago. So you can deposit Bitcoin, Ethereum, XRP, Bitcoin Cash, Lightcoin, and Tether. And, and, and, and, and, and, And, you know, they reiterated that they're considering more things, but they wouldn't be live at launch. And so my question was, I tweeted out yesterday, Binance opens a week from today. Does this excite us?

Does it mean competition for Coinbase? Is it a big old nothing burger? And interestingly, so Catherine, by the way, it was a great sport and said, new daily mantra, never be a nothing burger. But a lot of folks, their questions were either specific. So Nisa says, well, they have insurance-backed custody. So this is obviously kind of like, what is their service look like? Is it comparable to other exchanges? We had a number of folks who are saying that basically, I thought this was a common sentiment from EcoCryptos.

He says, they need more assets to trade. In its current form, there's no compelling reason to move from Coinbase Pro or, say, a BitTrex. And I asked, is there anything besides additional assets that would have you consider moving? And he said, I think they cut their trading fees to near zero and you'll get people on the platform. Otherwise, it doesn't make sense moving from Coinbase, which is insured. I don't think margin trading will be enabled on this particular platform. So again, there isn't much incentive. So basically, right now, I would sum up the attitude that I'm seeing from my relatively small selection of followers as it's just another competitor to Coinbase.

It doesn't necessarily offer anything new. And so to the extent that you are unhappy with Coinbase or you are Binance loyal or you like the brand of Binance, maybe it's interesting. But at the beginning, that's really the, it's competing with what already exists. And it isn't clear what new it offers. I think that it's going to be too early to judge Binance U.S. as a success or not next week. I think there'll be a lot of temptation to look at immediate signups and, you know, volumes and all that sort of stuff and declare it one way or another.

that doesn't really make sense to me. I think this is part of its regulated side strategy. And Binance is a company that does kind of everything all at once. And I think that this is just part and parcel of that. So for me, it's going to be a big wait and see. I think that it's another option in the market. I'm a fan of competition. So I'm glad they're opening and I will be interested to watch.

But as of yet, I'm not sure exactly where their points of differentiation are going to be. So that's what I'm going to be looking out for. Let's move on to number three. So speaking of Binance, CZ commented this morning on interesting kind of two messages coming from France around crypto. So CZ says France is a bit harsh on Libra, but have to give them kudos for not taxing crypto to crypto transactions. More homes for crypto exchanges to flourish. And so what he was referring to is two things. First, so there was a OECD conference, I guess, about cryptocurrencies this week.

And the independent reported that Bruno Lemaire, who's basically the French economic minister, said, I want to be absolutely clear. In these conditions, we cannot authorize the development of Libra on European soil. And so I've had some questions about exactly what that means. But all of the kind of news outlets are following and reporting this news, saying that it will block Libra. Exactly what that means, I think is yet to be determined. But it's a ratcheting up, if nothing else, of the rhetoric coming from France against Libra. And so Lemaire has been classically against Libra since it was announced. He previous to that was very vocally opposed to privacy coins.

He thinks they're a big threat to money laundering. So he's not necessarily a big crypto proponent. Now, at the same time, there was another story that broke that basically they would be allowing crypto-to-crypto tax exemption. So this is following Portugal's. Portugal's example where when you move from crypto to fiat, that's taxable, but crypto to crypto is not, and it's explicitly exempt. And so that actually makes it kind of a positive environment. So a lot of interesting things going on. I think one thing that I wanted to flag that I thought was

notable, digging in a little bit more to some of the stories. So this was from CNBC. And they said, in his remarks Thursday, Le Maire said he had spoken with ECB president Mario Draghi and Christine Lagarde, who will be the next chief of the central bank about creating a public digital currency. So this is really interesting to me because it shows, I guess it's another example, kind of like what we talked about before, with the Bank of England Governor Mark Carney calling for a synthetic hegemonic currency. So Mark Carney, Bank of England governor, previously kind of vocally supportive of Libra, at least compared to other central banks,

at a Kansas City Fed event at Jackson Hole, Wyoming a couple weeks ago, proposed effectively that central banks come together, they band together to create their own version of a Libra. And that kind of seems to be echoed in this statement from Lamar, who said he had spoken with ECB president about a public digital currency. So again, I think for me, the clear thing here is that Libra has it aggressively changed the disposition of governments. It's made cryptocurrency, digital currency, be an issue. And now you're seeing the reaction starting to come in.

You're starting to see people who are proposing to block or ban Libra. You're seeing people who are countering with their own conception of what a digital currency should be and what the role of central banks are. And I think we're just getting started. So I guess the last question on this front is, what happens vis-a-vis Bitcoin? A lot of folks made the point that, that this is what it will look like when they come for Bitcoin too. Right now, Bitcoin continues to fly under the radar to some extent. It doesn't threaten monetary sovereignty because it looks more like a digital store of gold than it does like an actual full-fledged money. But what happens when some government does want to take Bitcoin down?

So that was a lot of the commentary. I like Nick Carter's quote here, though. The trick is to just go ahead and do it without asking permission first. So, you know, again, really interesting stuff happening. To me, this is the biggest story in the world in some ways as it relates to cryptocurrency is what Libra has provoked and the dragon that it is awoken and how everything shakes out. Will it be a corporate coin like Libra? Will it be a government coin like the forthcoming Chinese digital UN?

Will it be a permissionless non-sovereign money like Bitcoin? I think we all know kind of what our bets are on. if you're watching this, I imagine that you're in a pretty similar place, whichever your permissioned coin of choices. However, that to me is, that's the battle, right? So anyways, on that note, let's do one more little bonus section. So a bonus on mass adoption. I think it's always interesting to keep an eye on where Bitcoin or where crypto assets are infiltrating the mainstream in some way. So one bit of news on that front, the company behind CryptoKitties, which is called Dapper Labs,

which spun out of Axiom Zen, which is kind of like a blockchain incubation studio, has just raised another $11 million. So this is from Michael Del Castillo at Forbes, and he's basically writing about how CryptoKitties, or the company behind CryptoKitties, has raised this money from really notable venture investors plus the Warner Music Group to create effectively an alternative blockchain to Ethereum that is really specifically designed for entertainment-based digital collectives.

was digital assets. And so there was some interesting responses in the crypto world. Ariana Simpson, who is an investor in this round, wrote this whole thread about why they're interested in flow and what it might mean. Roham, who's the CEO and founder, or I think he's the CEO, but he's definitely the founder of Cryptokitties and Dapper Labs, says that, you know, we don't think of flow as an Ethereum replacement. We're building projects that are more likely to be additive than competitive. What's interesting, to me about this is I wonder, so I think that the digital asset for entertainment use case is something that we're going to see a lot more explanation of. It could be in the long run that no one cares,

but it seems really unlikely to me that there isn't some digital asset that becomes kind of part of the entertainment landscape or part of the marketing tool for albums or part of the, you know, whatever. It's just like as the world gets more digital, I think ownership of things digitally is a natural phenomenon to come with it. Now, to what extent that needs to be decentralized, censorship resistant, truly owned on the blockchain, et cetera, I think is the more pertinent question in some ways. And what's interesting to me about something like Flow as an Ethereum alternative, let's say, instead of replacement, is they have potentially, if the blockchain doesn't also have to be in the service of censorship-resistant

use cases like money and privacy and things like that, then it potentially can make different tradeoffs in terms of speed and throughput and all the different things that are, you know, challenges for public permissionless blockchains. So that's kind of what I'm watching. I think it's interesting, but I think the thing that's notable here is that no matter what you think, you know, a couple years after the ICU boom, you have, you know, a corporate VC like Warner Music getting into a round that's explicitly about digital collectibles. I think that's notable and I think it's worth watching. But lastly, I think one more kind of mass adoption thing. So the Watford Football Club in the English Premier League has announced that the Bitcoin logo will be on their

shirt sleeves. They're sponsored by the sports betting company, Sportsbet.io. So you can see here the logo with the Sportsbet.io logo on the front and then the Bitcoin logo on the back. And they basically said that it was because the Bitcoin community has been so important to them right from the beginning. And it's a way to kind of provide more exposure for Bitcoin. I think this is really interesting and notable for a couple of reasons. So someone said, you know, is it the best for Bitcoin to be associated with a betting brand? And for me, I think on the one hand, you can make an argument that Bitcoin has been from a narrative perspective, challenged through association with more illicit use cases. However, I think that there's a difference between judging the ethics

or morals of a use case and looking at just how mainstream it is. And so some people may not like sports betting. Some jurisdictions may not like sports betting, but this is a company that's achieved a scale where they can sponsor an English Premier League team. And I think that that mainstreaming effect may be more powerful than the potential downside of further association with something like betting, right? This isn't the Silk Road. This isn't drugs. This is a gambling site.

And there's a whole lot of people who feel like either A, you're allowed to do whatever you want with your money or B, even more generally, they just like sports betting because it's fun, right? And that's just it for them. So I think that the publicity there is really cool. But I think that the bigger point that was kind of I had a moment of, I had a moment of remembering this morning is that this is such a unique phenomenon in the history of the world to have a you know what navarre is called the most valuable startup of the last 10 years that has no company and you know we don't know who the founder was they haven't cashed out like these things are all they

break so many lines of tradition or so many ways of how things have been done historically and now you have you know a company spending some of the most expensive sponsorship and add real estate dollars in the world, you know, on a major global soccer team, you know, in a major global soccer league, that's, basically, you've got a company who's spending their advertising dollars promoting a thing that's maybe a part of what they do or related to them, but isn't their company, right? It's just this underlying protocol. That's pretty phenomenal, and that's really unique. And I think it's notable.

So anyways, guys, I just wanted to make a note of that. I think it's cool enough to at least bear mention here. that's it for today. I think tomorrow we'll try to maybe do some wrap-ups of Invest Asia, or CoinDesks Invest Asia event. Maybe we'll peek over at Tel Aviv blockchain week and see if there's been anything interesting. But for now, I'm out. Peace, guys. Talk to you soon.