Just in case you have that one friend who insists that the whole Operation Choke Point 2.0 narrative was hoax — that controversy where crypto companies and entrepreneurs were kicked out of banking services, en masse, for slinging internet money: show them this timeline.

• It very much shows that again and again the Biden agencies told banks that operations would be difficult and tedious if they tried to bank these companies, or, worse, provide services that enabled new lines of business.

Read the full story: Public documents clearly show the official crypto debanking campaign

11 years ago today, bitcoin price was $376
The 11th largest coin by market cap was namecoin
The 111th largest coin was NXTventure

Malvern surrenders

Until Vanguard, the mutual fund giant, investing used to be throwing darts at the newspaper or going to some financial advisor, dumping a bunch of money on them, letting them go to town and paying them whether you made money or not.

John Bogle came along in 1975 and said: “Screw that. Just buy everything.”

“Everything?” said the world.

“Everything,” Bogle said.

Very rebellious. Very everything you believe about making money is wrong.

Sound familiar?

But when bitcoin ETFs hit the scene, the investing giant was all like: “You can’t sit with us!“

But.

Eighteen months ago, Salim Ramji, became Vanguard’s new CEO. He had come over from BlackRock, where he had overseen the creation of its crypto ETFs. BlackRock has been printing ever since its bitcoin product, IBIT, hit the market. Once he was at the helm, it was just a matter of time until Vanguard allowed trading of these ETFs.

And that time is now. Cue fireworks and dancing girls and trumpets. Huzzah.

On the news, bitcoin popped. So, it is up because Vanguard bent the knee and will permit its customers to buy bitcoin ETFs. I know you all want to believe this is good news. Bags v fat. Much happy. Vanglad.

But are you going to sell? No, you aren’t going to sell. You’re not going to take profits! This is all just theory. A mood. You’re just happier looking at your Coinbase account or your CoinStats app. Not as happy as you were when it was a six-figure number, mind you. But you like that 9. You hate that 8.

But what’s really happened this past week? On Sunday, Bitcoin was worth $1.8 trillion. Then it lost $200 billion in a day. A day. It lost a whole McDonald’s corporation in market cap in a day. A Novo Nordisk. A freaking Shell Petroleum, OK? In a day.

McDonald’s has been selling billions and billions of burgers for almost 100 years to get to the point it’s at, but bitcoin lost equivalent value in one day and we’re happy that one company coming round was enough to lift its mood back up $200 billion again? This is good news?

Look, when I was in middle school, if one of the cute girls said something about my shoes I was on cloud 9 all day, but we’d like to believe that the Honey Badger of the internet had thicker skin than adolescent me.

This is good news in the same way your friend who always has cocaine showing up at the party is good news. Like... Is it?

It wasn’t just Vanguard this week either. Bank of America got religion as well. It’s now recommending an allocation of bitcoin in its model portfolios.

I think they should call the program “1% for Piece of Mind.” That sweet, sweet branding also riffs on something out of the Ben & Jerry-verse. Bitcoinifying that brand would cause aneurysms in Vermont. Or at least some popped blood vessels.

We have fun.

Argumentum ad verecundiam

An economist at the New York Fed published an essay this week where he pointed to 80% growth in stablecoin transactions between real humans, attributing the growth there to these networks’ openness.

With stables, no one needs to get permission from a financial gatekeeper. Free software. Internet. LFG.

“Stablecoins are already accessible worldwide and enable transactions without restrictions on value or counterparties,” the New York Fed’s Michael Lee writes.

Yes. The rumors are true. The more friction something creates, the less likely people are to use it. And if something comes along with less friction, some people will use that less frictiony thing. Lock-in effects don’t work if some people never got in.

Ever since 9/11, you’ve had to give a blood sample and three letters of recommendation to order chalupas online. Someday that was gonna break down.

It’s like how sometimes I put the bag of cookies into a box that has a lock on it. Yes, I have the key to the lock, but if I have to get out the key to open the box then that makes me a little less likely to go get into the cookies, you know? Right, right, I could just not buy cookies, but don’t be crazy. I’m buying cookies.

The U.S. government isn’t going to quit asking for a retinal exam before every credit card swipe and I’m not going to quit buying cookies. This is the world.

So sometimes new things have to appear beneath the sun. Sometimes, a new kind of settlement system has to spin up that has nothing to do with the existing system. Sometimes, I need to write this column in a house that doesn’t have cookies.

There is no middle ground.

It is cool that the Fed is hinting that it might kinda get that easier-to-use money will get used more. The truth is, there have been folks at the Fed who got it for a long time. But they couldn’t like... officially get it, you know? Talking Bitcoin was an after-5 thing. (hat tip to Crypto is Macro Now for flagging this blog post).

But other countries are also making news. In Russia, an official in Putin’s orbit would like to get trade balance credit for the bitcoin it mines and related economic activity.

Russia has begun to experiment with using cryptocurrency to route around sanctions. We have no idea how much, but we know it’s happening.

The U.S. got mad at Russia and said: “We’re taking our ball and going home.” But Russia’s all like: “You know it’s not the only ball, right?”

Weirdly, the U.S. actually does not know that. It’s much too lucrative to the U.S. for it to admit that there is another ball, so it will not.

And while we’re on the topic of big moves from old countries, the UK now recognizes cryptocurrency as property. Bitcoiners seem to be happy about this, but I’d be cautious.

With the UK these days, you never know what they might decide to put you on a list and round you up for. Yes, it is property now, but it mightn’t end up being problematic property? The elder island has a way of getting very weird about the things it finds on the internet.

But not every big, old country is softening toward magic space money.

The biggest and maybe the oldest, China, is putting its foot down on stablecoins. The US likes them so China does not.

You think Vanguard slinging corn is bullish, I think China getting mad about stablecoins is. We are not the same.

First they ignore you. Then they mock you. Then they fight you. Then the PBOC tanks the Hong Kong stock market.

Trust the process. This one’s good for your CryptoPunks — trust me.

250 years

“Before the United States was a nation, it was an investment.

“The first permanent English settlements in this hemisphere were financed through joint-stock enterprises that allowed people to pool together capital and share in the risk and reward of an uncertain venture.”

— Paul Atkins, Chair of the SEC, at the NYSE on Tuesday, talking getting the regulatory cruft out of the way of capital formation.

Gold and bitcoin

Meanwhile, the clown prince of Macro (and plushie toys), Arthur Hayes, caused meltdowns on the timeline this week when he pointed out that Tether has enough gold and bitcoin on its balance sheet that a serious downturn in value for those prices could theoretically make Tether insolvent.

Reading Hayes is like reading late era Nietzsche or watching Dave Letterman reruns. The joy is as much the mood as the text itself.

Hayes’ point was that it looked like Tether, the 800-lb gorilla of the industry, was making a bet on lower interest rates.

Wouldn’t you want to know what kind of bets the biggest player in your market is making?

Paolo Ardoino, CEO of Tether, always talks about how much he loves Bitcoin, and it’s easy to come up with an argument that he’s not being ideological, just practical.

The interest rates on U.S. Treasuries are going to ebb and flow. When those interest rates are high, Tether prints the easiest profits on earth. But when they come back down to Earth, he’s got a giant stack of Bitcoin as a hedge, which tends to rise when money is loose.

Tether was born under ZIRP. It knows how to dance this dance. What I don’t understand about Tether is, though, what if the opposite happened? What if we actually did see another year in which bitcoin 3Xed, and its balance sheet was massively over-collateralized? Would it take some BTC off the books?

Don’t be mad at Hayes. Be mad at Zee Prime Capital’s

Matti

for saying that crypto companies should try making profits. Someday. For a treat.

Drumbeat

• Truly madly deeply no one cares that these two went to Harvard.

• Teach me how to feel right about private mempools on Ethereum.

• Leverage is the kiss of death always, for everything, including apparently the hegemony of Catholicism.

• Ethereum repriced blobs.

Phoning it in

In October, Solana discontinued support for its worst highly profitable idea, the Saga phone. I thought this was the end of the very dumb era of crypto mobiles, but I had missed the fact that it had already announced a different phone with other branding: Seeker. And this dumb idea is going to have a dumb token.

There have been several crypto phones now.

Again and again, people have come along and made crappy Androids with a couple weird features and called it a crypto phone. The first big one was from — I am not making this up — the same guy who invented the Yo! App.

Solana’s goofy phone had a moment in the spotlight because a bunch of airdrops got directed to the wallet addresses of the first raft of phones — particularly in the form of BONK, a dog coin. So it turned out to be profitable to have a Saga, even if you never used it for anything but sending the tokens to an exchange.

It ended up making the company behind Solana so much money that it made a second phone. Pretty sure it also sold out. Guys, you know these rinse-and-repeat gravy train runs out, right?

To make just one more squeeze thought, this time Solana has made a new token just for the latest mobile: SKR. SKR is for [[waves hand here]]. Sirin’s Finney also had an ecosystem.

My Solana skepticism is inflamed. Pass the Arthriten.

Remember, friends: Dumb random windfalls happen all the time in crypto, but every iteration on dumb random windfalls gets less and less lucrative.

No, no, Solheads object! This next phone is different! It has a native dumb random windfall. That’s innovation!

Degens that chase every new dumb random windfall never find their own dumb random windfall! Just for them! This is the promise of web3! You must pioneer into new bad ideas, rather than showing up late to old ones. 🧘‍♂️