#299—A very crypto election year

Also, Tether’s tokenization push

Jun 24, 2024

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:

A very crypto election year
Tether’s tokenization push
What people are reading: Wells Fargo’s Bilt Card fiasco
Stuff happens

1. A very crypto election year

Here’s the NYTimes (via Margaret Slemmer) on crypto’s growing electoral influence:

Mr. Selkis, who runs the crypto data firm Messari, was one of a couple hundred attendees at an event celebrating Mr. Trump’s series of nonfungible tokens, the digital collectibles known as NFTs. When he reached the lectern, Mr. Selkis turned to face the former president.
“There’s 50 million crypto holders in the U.S.,” the executive declared. “That’s a lot of voters.”
That message has become a political talking point in the crypto world, as the industry tries to shake off a wave of scandals and establish itself as a powerful force in the 2024 election cycle. Three large crypto firms have banded together to finance a group of affiliated super PACs, investing about $150 million to elect pro-crypto candidates in congressional races.

The digital assets industry views this as a “pivotal moment”:

Many crypto supporters view the 2024 election as a pivotal moment. After a series of crypto firms collapsed two years ago, the Biden administration embarked on an aggressive crackdown, bringing lawsuits and criminal charges against some of the industry’s leading figures. The Securities and Exchange Commission is pursuing cases that could effectively force the crypto industry out of the United States.
“The 2024 elections will be the most consequential in crypto’s history,” said Brad Garlinghouse, the chief executive of Ripple, a crypto company that has sparred with the federal government for years. “You are seeing a technology become a partisan political issue.”
Mr. Garlinghouse, Mr. Selkis and other executives have argued that newly energized “crypto voters” could sway the outcome of the election. They often cite a survey, commissioned by the crypto exchange Coinbase, that suggests that 52 million Americans own digital currencies. (The Federal Reserve estimates that the total is 7 percent of the adult population, or roughly 18 million people.)

But the theme of the day is money—which is flowing on both sides of the aisle:

But voters’ supposed passion for crypto may be less important than the industry’s campaign war chest. Ripple, Coinbase and the venture capital firm Andreessen Horowitz have each donated about $50 million to the crypto PACs, which plan to spend those funds in several competitive Senate races. In March, the largest PAC, Fairshake, spent about $10 million on attack ads against Representative Katie Porter, a Democratic candidate in the California Senate primary who was allied with Senator Elizabeth Warren, a longtime crypto critic. Ms. Porter lost her race.
“A single relatively small industry is literally trying to buy enough politicians to hijack the public agenda,” said Dennis Kelleher, the president of Better Markets, a financial reform advocacy group. “It’s pretty breathtaking.”
The industry’s vast resources have turned a niche set of issues into a talking point in the presidential campaign. Robert F. Kennedy Jr., the independent presidential candidate, made his first official campaign appearance at a Bitcoin event in Miami, and he has attended multiple industry conferences, sometimes holding fund-raising meetings with wealthy executives on the sidelines.
President Biden has long been seen as anti-crypto because his S.E.C. chair, Gary Gensler, has sued so many crypto companies. But some Biden supporters, including the investor Mark Cuban, have pressed his campaign to mend fences.

Relevant:

2. Tether’s tokenization push

Here’s Coindesk:

Tether, the company behind the $110 billion stablecoin (USDT), debuted Monday a new token minting platform called Alloy on the Ethereum network that lets users create tokens collateralized by Tether's tokenized gold (XAUT).
"Alloy by Tether is an open platform that allows to create collateralized synthetic digital assets and will soon be part of the new Tether digital assets tokenization platform, launching later this year, Paolo Ardoino, CEO of Tether," said in an X post. The platform may potentially offer yield-bearing products in the future, said Tether in a press release.
The first asset available on the platform is aUSDT, whose price is pegged to the U.S. dollar. Investors can mint aUSDT by depositing Tether's XAUT as collateral. XAUT has a $570 million market capitalization and is backed by physical gold stored in Switzerland, according to Tether.
The aUSDT token is targeted for users who want to use crypto for payments and remittances without selling their gold-backed tokens, the press release explained. The position needs to be overcollateralized, meaning that the amount of new tokens users can mint is maximized at 75% of the collateral value.

Relevant:

New Documents Show SEC’s Concerns About Crypto Company Aiming for IPO

3. What people are reading: Wells Fargo’s Bilt Card fiasco

Here’s the WSJ:

In 2022, Wells launched a credit card with Bilt Technologies, a fintech startup with big-name backers including Blackstone and Mastercard. The co-branded card came with a rare perk: Users can pay for rent with it without incurring fees from their landlords while also earning rewards points. More than one million accounts were activated in the first 18 months, many by young adults.
But Wells is losing as much as $10 million every month on the program as savvy customers flock to the card, according to current and former employees. Executives made internal projections on key revenue drivers, such as the likelihood that cardholders would carry balances, that turned out to be inaccurate.

Relevant:

The fight over credit card swipe fees hits the road
Via Sam Ostler—What's Holding Back Open Banking?
Via Sam Ostler—What are the tech solutions to Zelle fraud and scam resolution?
Inside FICO and the Credit Bureau Cartel
Via Sam Ostler—US Federal Reserve Board issues cease and desist order against Evolve Bank - FinTech Futures: Fintech news

Yaka Stuff

#299—A very crypto election year

Also, Tether’s tokenization push

1. A very crypto election year

2. Tether’s tokenization push

3. What people are reading: Wells Fargo’s Bilt Card fiasco

4. Stuff happens

Discussion about this post