Shining a Light on Digital Asset Markets 2021 — Day Two and Final Thoughts

Three takeaways from the latest and greatest in crypto from the Association for Digital Asset Markets (ADAM) and Eventus

Source: freerangestock.com

Regulators led off with insights that didn’t put anyone to sleep, a couple of luminaries brought the goods, and I had a random thought that connects Mary Poppins to cryptoasset protocols. Read on to learn my three takeaways and a couple of extra illuminating thoughts from the second day of SaLoDAM.

1. The day began with three regulators, a move that often necessitates extra doses of caffeine to keep early morning eyes propped open, but these regulators were bright, lively and refreshing. Dawn Stump “gets it” and continues the tradition of CFTC commissioners that balance policy and business while Peter Kerstens, Adviser to the European Commission, provided a few zingers, including the assessment that the U.S. wins hands down when it comes to regulatory complexity and his explanation of the “Brussels Rule”: the U.S. innovates, Asia copies and Europe regulates. The third regulator was “crypto mom”, SEC Commissioner Hester Peirce. Peirce joins a shortlist of regulators who “really get it”, a list that in my estimation includes Brooksley Born, Tim Massad and Chris Giancarlo. Her Token Safe Harbor Proposal is the best kind of regulation: collaborative, innovative and reasonable. Give it a read to understand how the future of crypto regulation might unfold.
2. Kyle Samani from MultiCoin Capital was the first of two crypto luminaries that highlighted the back end of the conference. MultiCoin published their three point investment thesis in 2019 (find it here) and it has held up well so far: the open finance renaissance, Web3 / self-sovereign data, and global, state-free money. He may ultimately prove to not be right but his thesis is a provocative read. Check it out.
3. I admit it: I was pre-disposed to dislike the discussion with Michael Saylor, CEO of MicroStrategy. He became the poster child for corporate adoption of bitcoin beginning in the Spring of 2020 and he remains undaunted in his convictions, even in the face of the +50% retracement in the price of bitcoin over the past several months. In fact, he referred to the recent crackdown on bitcoin mining in China as a $500 billion geopolitical mistake. In his estimation it has been good for bitcoin because it removed for four big FUDs: bitcoin relies on coal for power, bitcoin uses too much energy, China had 50% of the hashrate and, therefore, control of mining, and China could manipulate the price. The price of bitcoin may have fallen in the face of these moves (and other factors) but it is bent, not broken. At least, that’s the Kool-Aid that Saylor is peddling.

Final thoughts:

1. I can be pretty slow on the uptake sometimes and a look at the homepage of ADAM this evening made me realize how much of an internal lovefest SaLoDAM was: I counted close to 20 ADAM members as speakers during the two day event. That’s not necessarily a bad thing, many of the best and brightest crypto related firms are members of ADAM, but I didn’t realize it right away. I just thought I’d mention it for full disclosure’s sake.
2. During the SRO and New Crypto Legislation panel, Lewis Cohen of DLx Law quipped in defense of SROs and regulation when he said that cars can drive faster on roads that have lines on them. That analogy got me to thinking: different jurisdictions have distinct ideas about what the speed limit should be (e.g. 80 mph in Nebraska and 55 in Chicago), having a different speed limit in a school zone compared to the autobahn makes perfect sense, and if I drove the posted speed limit on Lake Shore Drive I’m pretty sure that I’d be putting my life in danger as everyone else sped by +20 miles per hour faster than me. Lines on the pavement might help but they don’t tell the whole story, just as a crypto SRO is only one piece in the market evolution puzzle.
3. I have neither the skills nor the time to build on this thesis but one idea crossed my mind on day one: Disney and VHS. If memory serves, Disney was struggling and drew the attention of vulture investors in the late 70’s / early 80’s and the introduction of VHS tapes helped them break out of their rut. They had a treasure trove of content built up over decades but infrequent theatrical re-releases and showing on TV delivered limited returns and little upside. VHS changed that because every family needed to buy the tapes of Mary Poppins, Lady and the Tramp, etc. for their kids and the release cycle could be dramatically reduced. In short, the protocol helped save the company. To extend (or torture) the analogy: which entities will be saved (or spawned) by new cryptoasset protocols?

That’s it for now. Please let me know if you have any questions or comments and I’ll be back on the blog-o-sphere when the next opportunity or event comes around.

Chuck Mackie is a principal at Fathom Communication. Fathom provides thought leadership strategy and content that delivers both depth and understanding for financial services and technology innovators.