Commentary of the Week – Tidbits and Insights

For better or worse, outlets like Twitter have become the go-to outlet for many tech companies and their CEOs as they can reach a broad audience in a moments notice.  With such a fast moving news cycle and a constant flow of information, it can sometimes be difficult to remain up to date on notable commentary from recent days.  With that in mind, here are a few tidbits recently shared pertinent to the digital asset sector.

Senator Cynthia Lummis Casts Doubt

While Bitcoin has repeatedly been confirmed as a commodity, rather than a security, the status of Ethereum is not as clear cut.  This week Senator Lummis cast further doubt on the worlds second largest digital asset being a commodity due to the networks recent decision to undergo ‘The Merge'.

“It's a security because of the way [it] moved from proof-of-work to proof-of-stake”

The reason for this stems from the fact that typically when a user allows their holdings to be staked, securing the respective network, they are doing so in anticipation of a financial return for their efforts.  This expectation takes the asset from being a commodity to a security – meaning that while Ethereum may be the network of discussion, scores of others may be in the same boat.

Kevin O'Leary Draws the Ire of Many

Earlier this year, while FTX was still riding high, Kevin O'Leary was hired on as a paid spokesperson for the platform, and compensated to the tune of roughly $15M.  Now that the exchange has come crashing down, O'Leary has found himself in the same boat as others with significant amounts of capital now inaccessible.  Rather than jumping on board the blame-train with the rest of the world, O'Leary has now shared commentary sharing his view that judgement on SBF should be withheld for now.

In a recent discussion in which O'Leary touched on the loss of $10M in his funds to FTX, he stated,

“There's only the murder of my money in this case…If you want to say he's guilty [SBF] before he's tried, I just don't understand it…You don't know, because you have no data.  All I'm saying is let's do the forensic audit.”

In all honesty, despite the ire this commentary has drawn, this approach is more pragmatic one than many being taken.  At this point the bottom-line remains that much of the narrative surrounding SBF and FTX is still speculation.  No doubt much of it is true, but for now perpetuating unconfirmed information about the situation is not good for the sector, or anyone in it.

Larry Fink Envisions the Future

Although occurring just over a week ago, commentary made by BlackRock CEO Larry Fink at this years DealBook Summit bears repeating.  While many are still fixated on the current state of the digital asset sector, Fink took a look forward and shared his thoughts on what comes next.

“I believe this technology [DLT] is going to be very important…I believe the next generation for markets, the next generation for securities, will be tokenization of securities.”

Naturally, we at securities.io believe this to be true.  For years we have seen and believe in the future of digital securities, and with recent events expect for this perspective to be an increasingly shared one.

Jesse Powell Expects Accountability

Centralized exchanges are accountable for ensuring the safe-guarding of client assets.  This goes beyond simply not rehypothecating such funds though.  It means full transparency into operations – a core principle of what blockchain is meant to offer.  With this in mind, many exchanges have begun sharing what are referred to as proof-of-reserves.  However, Kraken CEO Jesse Powell, who is scheduled to soon step down from this position, has shared on multiple occasions just how unimpressed he is with these attempts, calling out the media for once again taking CeFi at its word and allowing itself to have the wool pulled over its eyes yet again.

“Dear media clowns,
Do you think you have any duty whatsoever to evaluate the veracity of claims that are being made about audits and Proof of Reserves? Or, are we really going to do this all over again?  Here's the headline: Media duped again.  Couldn't be bothered to investigate.”

The issue at hand is that many of these reports being touted as proof-of-reserves are simply not fully representative of the companys solvency.  For this to be the case, Powell has reiterated that the statements must take a comprehensive and independent look behind the scenes in to both reserves and liabilities.

Michael Saylor Surprises No One

One would be hard-pressed to find a more influential and outspoken advocate for Bitcoin and what it has to offer the world.  With significant skin-in-the-game, Saylor promoting Bitcoin with daily tweets should not surprise anyone.  While not particularly insightful, we will leave you with one of his latest – a short, but succinct, approach to the worlds top digital asset.

“Trust Bitcoin, Not People”