In this week’s edition of The Context, Friend.tech gets unfollowed while Grayscale gets good news. Here are the top stories and how they were covered, along with YAP Global’s take:
[Grayscale Beats SEC in Court 👏]
A U.S. appeals court ruled that the Securities and Exchange Commission applied faulty reasoning when it denied Grayscale’s petition to convert its Bitcoin trust into an exchange-traded fund. An ETF would allow retail investors to get financial exposure to Bitcoin like they would with stocks—without actually having to buy or custody actual cryptocurrency.
What Journalists Said🧑💻:
This is huge, wrote Sabrina Willmer, Allyson Versprille, and Yueqi Yang (Bloomberg). It brings “the crypto industry to the precipice of tapping billions of dollars from everyday investors.” At the same time, it’s “a stinging rebuke of Chair Gary Gensler’s bid to clamp down on the industry.” 🗜️
The fight for a spot Bitcoin ETF isn’t over yet, argued Sarah Wynn (The Block). The SEC, which has never approved a spot crypto ETF, is reviewing the decision and can appeal. It could also find a different basis to deny Grayscale’s proposal.
Why It Matters⁉️:
The SEC owes BlackRock, Fidelity, and others a response this week for their own crypto ETF proposals. If the agency capitulates on crypto-centric Grayscale, it’s hard to see it denying TradFi behemoth BlackRock. 🪨
[SEC Targets NFTs for First Time 🎯]
The SEC sued podcasting company Impact Theory for using NFTs to raise $30 million in 2021. The agency says the company explicitly framed token purchases as an “investment into the business” and was therefore selling unregistered securities.
What Journalists Said🧑💻:
The SEC’s purview is widening to NFTs, it seems, wrote Leo Schwartz (Fortune), though “it is unclear whether the enforcement action will be an opening salvo against the broader NFT industry.” Despite reportedly looking into Yuga Labs 🧪, “the SEC has yet to file any lawsuits against major players in the space.”
The SEC is divided on this as well, said Katherine Ross (Blockworks). Two of the five commissioners opposed the enforcement action, and argued that NFTs’ “variety of use cases” could mean the agency needs “fresh SEC categories to determine how securities laws apply.”
Why It Matters⁉️:
Hear that? That’s the sound of NFT projects holding their collective breath. While Impact Theory’s marketing approach is something of an outlier, the enforcement action may provide some hints about how the SEC will handle other NFT sales in the future. 🔮
[Friend.tech Activity Drops 💦]
Daily transactions on decentralised social app Friend.tech fell by 95% from its peak just a week earlier. 📉
What Journalists Said🧑💻:
Reduced activity = less money. “The app's daily revenues have dropped by over 95%, from a peak of $840,000 on August 21 to just $80,500 [on August 27],” wrote Nivesh Rustgi (Decrypt), citing DefiLlama data. 🦙
This feels familiar, wrote Jacquelyn Melinek (TechCrunch): “Just seven days ago, I wondered if Friend.tech’s early growth would be sustainable, and we can see that the answer is clearly no.” It’s now facing the same “declining user engagement” as previous social media fads Bluesky and Threads. 🪡
PR Perspective 📢:
From the outset, Friend.tech had a communication plan similar to that of Fyre Festival: celebrity backing, exclusivity, and lots of hype. Unfortunately, the social media app went the same way as the infamous festival and failed to follow through on promises/substance leaving users out in the cold. ❄️
[Tweet of the week]
[DeFi Definitions]
A segment exploring one particular aspect of DeFi.
This week: “ERC” by Imogen Searra.
An Ethereum Request for Comment (ERC) is a formal proposal or standardisation document that outlines a specific improvement or extension for the Ethereum blockchain. ERCs allow the Ethereum community to discuss, design, and implement new features, functionalities, or protocols within the Ethereum ecosystem. These proposals are intended to be open and transparent, encouraging collaboration and feedback from developers, researchers, and the wider community.
ERCs can cover a wide range of topics such as token standards (ERC-20, ERC-721, ERC-1155), improvement proposals like the change in consensus mechanisms, gas optimisation, or enhanced security measures, protocol upgrades, like the Shanghai Upgrade that saw Ethereum’s consensus mechanism move from Proof of Work (PoW) to Proof of Stake (PoS). It also includes infrastructure like the standards for APIs, libraries, and tools like development tools that help create Ethereum-based applications.
ERCs are typically drafted in a standardised format and include details such as the proposal's title, author(s), rationale, motivation, specification, and so on. Once an ERC is proposed, it goes through a process of community discussion, refinement, and review before it can be formally adopted and implemented as a standard. This ensures that the changes align with Ethereum's design, principles and security.
ERCs allow the community to collaborate and evolve the network while also improving the platform through decentralised decision-making.
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
The team: Founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Ewan Brewster, Damian Alvarez, Andrew Wickerson, Tiffany Mac Sherry, Becky Corbel and Delon Chan. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and Web3 brands through impactful storytelling. Find out more about us here.