Elon Musk gives crypto-Twitter a boost
Good morning, and welcome to Protocol Fintech. This Tuesday: Elon Musk makes “crypto Twitter” a little more literal, Chase goes after the rent, and Coinbase executives get “juicy feedback.”
Off the chain
I have gone decades without a checkbook. Around the turn of the millennium, I politely declined my bank’s offer of a paper checkbook, intending to use online billing and other means to avoid what I saw as a rapidly diminishing means of moving money. I may have been optimistic in my early adoption, because the old-fashioned rent check has a way of clinging to life. As of 2016, more than half of tenants used a check or money order to pay their rent.
Now JPMorgan Chase wants to tackle the problem, with a service for tenants and property managers to create digital invoices for rent that can be paid electronically. Chase has a large consumer banking base, and it will likely save a lot of money if it can shed the remaining cases where people need paper checks. And it’s a big multifamily lender, too: With a better look at those rental streams, it could probably improve its underwriting. I just feel sorry for anyone still in the checkbook business.
– Owen Thomas (e-mail | twitter)
Like completely crypto Twitter
Twitter’s future looks unclear under Elon Musk. But can things come into focus for crypto-Twitter?
Musk now owns a social network used by a large and dynamic online community of crypto followers, where he himself has been one of the loudest and most unique voices. The ongoing health of Twitter and its leadership under Musk could have a significant impact on a service where crypto promoters offer tokens, developers coordinate software updates and investors seek information.
Musk has shown that he can move crypto. The self-proclaimed “tweeter-in-chief”, who has more than 112 million followers on Twitter, is known to trigger wild movements in the price of dogecoin at the mere mention of the token.
- On his instructions, Tesla bought $1.5 billion worth of bitcoin and announced it would take the crypto token as payment before selling a large portion of the investment, saying bitcoin payments had been halted due to environmental concerns.
- Despite Musk’s idiosyncratic attitude, crypto fans on Twitter seem excited by the notion of someone they see as one of their own running the place. Dogecoin, for example, is rallying again, its price boosted not by any tweets from Musk, but simply by the idea that one of its leading cheerleaders is in charge.
Crypto even played a role in financing Musk’s Twitter takeover. Crypto powerhouse Binance invested alongside Musk, giving it a say in the reshaping of a major social network.
- CEO Changpeng Zhao said in a statement that Binance’s hope is to “play a role in bringing social media and Web3 together to expand the use and adoption of crypto and blockchain technology.”
- Patrick Hillman, the company’s chief strategy officer, called the investment “a huge R&D opportunity” to use Twitter as a “sandbox” to apply “Web3 solutions” to the problems plaguing a Web 2.0 social network. That includes fighting off the crypto junk bots Musk has complained About.
- Some ideas already being considered include a microtransaction system that would impose prohibitive costs on robots, Hillman said. Another proposal is to use NFTs to establish the users’ identity.
Musk’s first priority must be to fix Twitter. Only then can Twitter think about launching its Web3 experiments, Hillman said.
- Rob Siegel, a management lecturer at the Stanford Graduate School of Business, said Twitter under Musk could mean that “Web3 technology finally gets a commercially interesting application at a scale that is more than financial speculation.”
- But it’s also easy to see scenarios in which Twitter “evolves[s] into more chaos,” Siegel said. “Musk’s promises of a barely moderated free-for-all” could easily attract “racist and anti-Semitic” tweets, said Marc Fagel, a former SEC regional director for San Francisco, as well as “unfounded crypto-evangelism and pitches for NFT and crypto fraud.”
- Musk tried to reassure advertisers that the service would not be a “hellscape.” But he didn’t help his cause when he shared a baseless conspiracy theory about the attack on Paul Pelosi, the husband of Speaker of the House Nancy Pelosi. Musk later deleted the tweet, which “probably means he thought it was a mistake,” Binance’s Hillman said.
While crypto fans obviously want to know how the Musk regime will benefit them, their needs are likely on the back burner. “Managing crypto Twitter may be a low priority,” Siegel said. Indeed, Musk has barely tweeted about crypto since he started amassing his stake in Twitter. “I did it to try to help humanity, which I love,” Musk wrote in a note to advertisers. Crypto Twitter may especially love Musk. But Musk has a lot of people to love.
—Benjamin Pimentel (e-mail | twitter)
A version of this story first appeared on Protocol.com. Read it here.
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On the money
BlockFi has chosen Stripe for its global payments. Stripe has pushed harder into crypto lately with products designed for the sector.
India starts a CBDC pilot. The first test for the digital rupee will be for settlement of transactions in government securities.
Haun Ventures asks CFTC to set rules for DAOs. The petition comes after Haun partners Chris Lehane and Tomicah Tillemann expressed concern about the agency’s “regulation by enforcement” in the Ooki DAO case.
Tether is facing a renewed investigation by the Department of Justice. A team of government attorneys in Manhattan is taking over the investigation, Bloomberg reports.
Revolut’s CEO has renounced his Russian citizenship. Nikolay Storonsky is a staunch opponent of Russia’s invasion of Ukraine and is now only a British citizen, a spokesman said. Storonsky’s father, a Gazprom executive, was recently sanctioned by Ukraine.
Overheard
Crypto ETFs? Not so fast, said Ethereum co-founder Vitalik Buterin. “I don’t think we should enthusiastically pursue large institutional capital at full speed,” he tweeted. “The ecosystem needs time to mature before we get even more attention.”
Gary Gensler tried to be nice on Twitter: “Congratulations on the 14th anniversary of Satoshi Nakamoto’s whitepaper! It has led to innovation and investment in crypto assets. Let’s make sure investors are properly protected as crypto enters its 15th year.” The SEC chair was nevertheless blasted by crypto-Twitter in his responses.
Coin base CEO Brian Armstrong and COO Emily Choi give each other “juicy feedback,” Choi revealed in a new Fortune profile of her boss.
Agreement flow
Three former Tinkoff executives have raised $16 million to start a digital bank initially targeting the Philippines. They may find themselves going up against their former employer: The Russian online bank had also made plans to expand in Asia.
Onward raised $9.7 million in a Series A round. The fintech startup aims to simplify the handling of shared expenses by divorced parents. TTV Capital led the round and Citi Ventures, Correlation Ventures, Gingerbread Capital and Lerer Hippeau participated.
Decentralized Engineering Corporation raised $9 million in a seed round. DEC’s Trip, a protocol on the Solana blockchain, is intended to run decentralized ride-hailing services like Teleport, an Uber alternative that will debut at the Solana Breakpoint conference this month.
Custodia raised another $7 million. The digital asset bank has raised a total of $51 million from backers including Binance.US and Coinbase Ventures.
Argo Blockchain will not go through with a $27 million investment deal. The crypto miner told investors it was selling off some of its mining hardware to raise cash instead.
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