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| The biggest crypto news and ideas of the day Nov. 17, 2021 If you were forwarded this newsletter and would like to receive it, sign up here. Sponsored by Welcome to The Node.
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Today’s must-reads Top Shelf INDIA BAN: India will ban the use of cryptocurrency for making payments, but will allow trading of crypto assets. Authorities will also ban “active solicitation” from crypto firms, including exchanges and platforms, in a crypto regulation bill that’s being finalized. Crypto exchanges WazirX and Bitbins have paused their ads. The ban shouldn’t affect blockchain technology, which has been around for 10 years and can grow without cryptocurrencies, the country’s central bank said.
STABLECOIN FEARS: The search for higher yields amid rising inflation and falling interest rates has led investors to take greater risks, making a broad section of the market, including crypto, vulnerable to corrections, the European Central Bank (ECB) said. The ECB acknowledged that cryptocurrencies have grown in popularity and relevance, and said that the crypto markets are subject to “speculative bouts of volatility.” It also warned against the growing link between stablecoins and the traditional financial market.
INDUSTRY FUNDS: The Oasis Foundation has announced the launch of a $160 million investment fund to develop the long-dormant, privacy-focused layer 1 blockchain. The project’s backers include Dragonfly Capital Partners, Draper Dragon Fund and Electric Capital. Meanwhile, KuCoin Labs has also launched a $100 million fund, the KuCoin Metaverse fund, to invest in GameFi (the latest buzzy crypto sector combining DeFi with gaming), NFTs and decentralized infrastructure projects.
SAY WHAT, AGAIN? Quentin Tarantino is being sued by Miramax for copyright infringement after the famed director announced he would be auctioning off a collection of NFTs from his celebrated movie “Pulp Fiction.” The seven NFTs being sold are from different scenes that were cut from the final film, for which Miramax currently owns the rights, while Tarantino owns the rights to publish the film’s screenplay. The company sent a cease-and-desist letter to Tarantino to stop the sale, but the director has continued to push forward with his plans.
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Overheard on CoinDesk TV... Sound Bites “They have to wait 10 hours to go to the bank and they can only get a certain amount of money … so we’re getting them used to cryptocurrency.”
–Women’s Entrepreneurship Day Organization CEO and founder Wendy Diamond on the state of crypto in Afghanistan, on CoinDesk TV’s “First Mover.”
What others are writing... Off-Chain Signals Acting OCC head Hsu wants consolidated supervision for crypto (Bloomberg) Celebrity NFTs Risk ‘Catastrophic Failure.’ Just Ask John Cena (Bloomberg) Bubblicious: Crypto Euphoria’s Emerging Impact on Housing (Real Estate Consulting) Australian Baseball Club to pay athletes in bitcoin (Cointelegraph) Bitcoin gets more high-profile criticism. Is the bull run over? (Barron’s) No, the real inflation rate isn’t 15 percent (Full Stack Econoomics)
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CoinDesk’s “Most Influential” recognizes individuals who’ve had a big impact on the cryptocurrency and blockchain industry in a calendar year. Chosen by readers and editorial staff, the list features 50 people from across the space, including entrepreneurs, traders, coders, regulators, celebrities and the odd surprise. To have your say on who should make this year’s list, check out the form here. The results will be announced on Dec. 6, 2021.
Putting the news in perspective The Takeaway Remember CMGI Field? More like NGMI Field Hi, David Z. Morris here. News broke Wednesday that Los Angeles’ Staples Center, longtime home to the National Basketball Association dominator L.A. Lakers team, will be renamed “Crypto.com Arena” in a 20-year, $700 million naming rights deal that appears to be the largest in sports history. While plenty of sports fans seem to be mourning the end of an era, others see the name change as a legitimation of the crypto sector as a whole.
I would love for that to prove out, but the history of naming-rights deals for major stadiums shows there’s no guarantee. Plenty of companies, particularly companies leaning on new technologies or speculative investments, have gone belly-up after what seemed like victory-lap naming deals. For a time this was so common that people referred to “the stadium curse.” Big spending on naming rights has sometimes even been cited as a reason for investors to question the judgment of company management because the pay-off in branding and publicity remains somewhat unclear.
The “stadium curse” has hit some companies you know and many you don’t. The farkakteh “energy-trading company” Enron, perhaps the most notorious corporate fraud of the past half-century, went belly up just two years after buying the rights to the Houston Astros baseball team’s stadium (now Minute Maid Park). CMGI, an internet investment and holding company, didn’t last much longer after a 1999 naming deal for the U.S. football New England Patriots’ field, now known as Gillette Stadium.
These cases illustrate the fundamental tension at the heart of naming deals. They’re the corporate equivalent of buying a Lamborghini: functionally almost useless, but a huge signal to the world that you’re winning, exactly because you’ve got so much money to set on fire. Much in the way that day-trading gurus flaunt (rented) Lambos, this makes the success signal of a stadium name particularly attractive for companies that haven’t actually “made it” yet.
It’s particularly tempting to apply this rubric to the Crypto.com deal because the exchange has relatively thin brand recognition. It spends a ton on advertising and does decent volume, ranking fourth worldwide among spot markets, according to CoinGecko data. But in contrast to Sam Bankman-Fried’s FTX, which recently bought naming rights to the venue of another U.S. pro basketball team, the Miami Heat, Crypto.com isn’t deeply involved in crypto innovation. Maybe the rise of a purely retail-focused operation is itself an index of sector-wide growth, but at a high level you could see it being particularly vulnerable to a downturn in crypto markets.
(Incidentally, FTX reportedly paid just $135 million for 19 years of naming rights, and the Heat is nearly as hot as the Lakers these days. It seems either FTX got a great deal or Crypto.com got soaked – or maybe this prices in the likelihood that Miami will be underwater in 20 years.)
Beyond Enron and CMGI, there’s a bit of a “curse” angle to the Staples Center name change itself. The name has become iconic, thanks largely to the legendary championship runs of the Kobe Bryant-led L.A. Lakers circa 2008-2012. In fact, “Staples Center” is probably just as recognizable these days as the actual company Staples, which is still a large retailer but has been shrinking steadily in the era of Amazon.
Bryant’s widow, for instance, seemed unsettled by the name change, and took to Instagram for an oblique complaint.
Vanessa Bryant’s point may be that what players do is always more important than who cuts a big check for naming rights. But Lakers fans are definitely mourning the loss of the “Staples Center” name, which has come to represent a powerful legacy. That demonstrates just how valuable sports naming rights can be: Given a bit of luck, it can lead people to associate your brand with some of the most admired people on Earth.
That might not be enough by itself to supercharge a business. But you know who hasn’t had a stadium in Los Angeles named after it for the past 20 years? Office Depot, which Staples has outperformed and is trying to buy. Maybe a coincidence – but it does turn out that the bulk of “stadium curse” cases were clustered around the dot-com bust, and naming rights have been a bit more of a mixed bag for investors since then.
However optimistic you might be about crypto, the current wave of rapid and speculative growth definitely rhymes with the conditions in the tech industry in the late 1990s when Enron and similar naming deals were inked. Whatever the fate of Crypto.com itself, we’ll likely see some reckonings as currently hot crypto operations turn out to be overleveraged bets a la CMGI or outright frauds a la Enron.
–David Z. Morris
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