#260—The SEC signals appeal

Also, how Threads threatens the Fediverse

Jul 24, 2023

Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out our last report here.

This week:

The SEC signals appeal
Everything SEC v. Ripple
How Threads threatens the Fediverse
This week in digital money
Ecosystem updates
Stuff happens

1. The SEC signals appeal

This was expected. Here’s the WSJ:

The Securities and Exchange Commission said Friday that a federal judge erred when she ruled against the agency in a landmark crypto case last week, and signaled that it will appeal the decision.
…
The SEC wrote Friday that the judge hearing Kwon's case shouldn't look to the Ripple case as precedent. Torres's decision "adds baseless requirements" to the test for when an asset is a security, the SEC said. The agency intends to seek "further review," which would likely mean an appeal.
Torres's decision appears to conflict with a basic principle of federal investor protection law: that retail investors should get more protection than sophisticated ones. Torres found that only Ripple's sales to institutional investors required SEC regulation; its sales to individual investors via exchanges didn't.
The SEC's lawyers wrote that the reasoning "is impossible to reconcile with all of these fundamental securities laws principles."

Ripple CEO Brad Garlinghouse responded via tweet (or are they X’s now?):

An important topic has come up about protecting retail. The SEC created this mess by proclaiming it was the cop on the crypto beat when it had no legal jurisdiction Where’s that gotten us? Consumers left holding the bag in bankruptcy court while the SEC holds press conferences.
It’s absurd to blame a Judge for faithfully applying the law. We all know legislation – not more regulation by enforcement – is the only way forward to provide clear rules and protect retail. Glad to see more members of Congress like @RepRitchie, @PatrickMcHenry champion this.

2. Everything SEC v. Ripple

Elsewhere:

3. How Threads threatens the Fediverse

In its Threads announcement, Meta promised to make its new Twitter competitor compatible with interoperable open protocols:

Soon, we are planning to make Threads compatible with ActivityPub, the open social networking protocol established by the World Wide Web Consortium (W3C), the body responsible for the open standards that power the modern web. This would make Threads interoperable with other apps that also support the ActivityPub protocol, such as Mastodon and WordPress – allowing new types of connections that are simply not possible on most social apps today. Other platforms including Tumblr have shared plans to support the ActivityPub protocol in the future.
We’re committed to giving you more control over your audience on Threads – our plan is to work with ActivityPub to provide you the option to stop using Threads and transfer your content to another service. Our vision is that people using compatible apps will be able to follow and interact with people on Threads without having a Threads account, and vice versa, ushering in a new era of diverse and interconnected networks. If you have a public profile on Threads, this means your posts would be accessible from other apps, allowing you to reach new people with no added effort. If you have a private profile, you’d be able to approve users on Threads who want to follow you and interact with your content, similar to your experience on Instagram.

For the Fediverse, this could be their black swan moment.

Here’s Wired:

Meta’s embrace of ActivityPub, used by apps including the Twitter-like Mastodon, was bound to be a little awkward. The constellation of small apps and personal servers that currently use the protocol, known as the Fediverse, is marked by an ethos of sharing and openness, not profit-seeking or user bases denominated in the billions.
ActivityPub is designed to allow users of different apps to not only interact and view each others’ content, but also move their digital identity from one service to another. Mastodon, the largest app in the Fediverse, is open source and run by a nonprofit, and smaller Fediverse apps like PeerTube and Lemmy are often held up as a repudiation of the closed nature of services such as YouTube or Reddit. Corporations like Meta are typically held up as the enemy. No surprise that, despite appeals from ActivityPub leaders for civility when Meta arrived on the listserv, some couldn’t hold their tongue.
Weeks-old Threads already dwarfs the Fediverse, which has been around for more than a decade and recently peaked at about 4 million active monthly users. Some Fediverse fans see that imbalance as a win: Suddenly, the network could become many times more relevant. Others consider that view naive and expect Meta’s size to push the small world of apps built on ActivityPub in undesirable directions. Some have circulated a pact to preemptively block content from Threads’ servers from appearing on their own.
“The Fediverse community has been jolted into motion—due to fear and loathing of Meta, and also excitement,” says Dmitri Zagidulin, a developer who leads the World Wide Web Consortium (W3C) group responsible for discussing the future of ActivityPub. The prospect of Meta joining the decentralized movement has people trying to spiff up their projects and prepare for the spotlight. “There are furious meetings. Grants being applied for. Pull requests. Pushes for better security, better user experience. Better everything,” he says.

But the relationship status? It’s complicated:

How Meta decides to implement ActivityPub in Threads will help determine the outcome of what could be the Fediverse’s big bang. “It’s not plug-and-play,” says Ernst. The company will have to choose how closely to allow Threads users to integrate with other Fediverse servers. That includes deciding how easily users can migrate their accounts and networks to other services, and whether to provide support such as tools that redirect followers to a user’s new home. Meta’s leaders will also have to decide what kinds of Threads content will be broadcast out into the Fediverse—including, potentially, the role of ads—and how users outside of Threads will be able to see or interact with it on their own platforms. Meta did not respond to a request for comment.
…
Meta executives told staffers last week that ActivityPub integration “is a long way off,” according to The Verge. There’s a history of large platforms being quick to announce their interest in the protocol but slower to implement any integration, Zagidulin says, pointing to Tumblr’s as-yet-unrealized announcement last year of ActivityPub integration. Meta itself has a fickle history with open protocols. A decade ago, the company briefly embraced XMPP, an interoperable messaging protocol, along with competitors like Microsoft. But the effort was quickly abandoned.

The reality is that Threads will likely have more pressing priorities in the short term. Despite being the fastest growing platform of all time, engagement has already fallen off a cliff, according to the WSJ:

For a second week in a row, the number of daily active users declined on Threads, falling to 13 million, down about 70% from a July 7 peak, according to estimates from market intelligence firm Sensor Tower.
The average time users spend on the iOS and Android apps has also decreased to four minutes from 19 minutes. The average time spent for Android users in the U.S. dropped to five minutes from a peak of 21 minutes on launch day, according to SimilarWeb, a digital data and analytics company.
Twitter’s daily active users remain steady at about 200 million, and average time spent is at 30 minutes a day, according to Sensor Tower estimates.

Elsewhere:

4. This week in digital money

5. Ecosystem updates

Check out Astra’s new site!

The all-in-one platform for lightning-fast payments
Designed for product teams that want to embed payments, Astra’s API helps you process transfers between bank accounts and cards — faster than ever before.

Yaka Stuff