Is Trump’s Crypto Support ‘Contagious’? 🦠
European officials ‘fret’ about regulation
In this week’s edition of The Context, we talk about European Central Bank concerns over crypto, why the price of OM went south despite measures to reduce supply, and the SEC’s newest chair.
[Protection from President’s Pro-crypto Policies?]
A European Central Bank policy paper warned that crypto regulations need to be rewritten to account for President Trump.
What Media Said 🧑💻:
“The ECB thinks the U.S. president's lavish support for the American crypto sector risks causing financial ‘contagion’ that could blow up the European economy,” wrote Ben Munster & Giovanna Faggionato (Politico). It thinks the Markets in Crypto Asset Regulation (MiCA), which went into effect this year, must be strengthened. But European Commission lawmakers believe MiCA mitigates the risk of dollar-backed stablecoins weakening the economy.
This is part of a continental debate. Trump sees the new sector as a way to “strengthen the dollar's reach and promote asset inflows into the U.S., specifically via stablecoins,” noted Adam James (The Block). That affects Europe, and fears of “contagion” may not be overblown. Just think back to “last cycle's fallout from collapsed crypto exchange FTX, failed CeFi crypto-lending platform BlockFi and collapsed DeFi project Terra Luna.”
While both the U.S. and Europe have made headway on crypto regulations, one is taking chances and the other is cautious, wrote Camila Grigera Naón (BeInCrypto). Whereas the U.S. is welcoming innovation, MiCA integrates crypto into the traditional financial system and focuses on “ensuring financial stability and consumer protection.”
PR Perspective 🔎:
Trump’s tariffs, threats to fire Federal Reserve Chairman Jerome Powell, and pursuit of his own stablecoin have everyone unclear on what their economic future holds.
[Burn, Baby, Burn 🔥]
After the value of Mantra’s OM token dropped 90% last week, some analysts criticized the team for its tight control of supply. Now, the layer-one blockchain is tightening supply with an initiative to burn 300M OM tokens, starting with 150M from CEO John Patrick Mullin.
What Media Said 🧑💻:
This is just one of several “strategies to restore investor trust,” said Ibrahim Ajibade (FXStreet),along with a tokenomics dashboard and a token buyback. Mullin’s move to burn his tokens is “intended to signal leadership accountability” even as the CEO blames the collapse on “reckless leverage and poor liquidity management on [centralized exchanges].”
One of the “biggest market gainers in 2024,” OM is having trouble getting back to its winning ways. The price dropped “despite the burn announcement, indicative of a steep hit in investor confidence,” wrote Shaurya Malwa (CoinDesk).
PR Perspective 🔎:
“Build in public” is a credo for many creators. Now it’s time for Mantra to rebuild in public. Unfortunately, while you can lose trust in an instant, it takes much longer to earn it back.
[SEC Shifting Stance on Securities]
Trump nominee Paul Atkins officially became chairman of the U.S. Securities and Exchange Commission.
What Media Said 🧑💻:
As the SEC waited for a full-time replacement for crypto “antagonist” Gary Gensler, Republican commissioners Mark Uyeda and Hester Peirce greased the wheels for the industry, said Jesse Hamilton (CoinDesk), “forming a crypto task force, shedding a long list of industry enforcement actions and gathering industry representatives at a series of crypto roundtables.”
With Atkins now at the helm, insiders are “predicting swift action on a standardized ‘token test’ to clarify whether digital assets qualify as securities and whether or not they should be regulated as such,” explained Omar Faridi (Crowdfund Insider). That should lean in crypto’s favor. Atkins has advised crypto startups, invested in blockchain firms, and co-chaired the Token Alliance.
PR Perspective 🔎:
People forget, but some people were cautiously optimistic that Gary Gensler would be good for the industry. He had taught courses on blockchain, and people were heartened that he was interested in the technology. That…didn’t translate to welcoming policy. Atkins is not Gensler, of course, and his boss has a vested interest in crypto. Still, expectations for him are very high. Anything below that will garner criticism.
[Tweet of The Week]
Credit: @AlexOnchain
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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, Andrew Wickerson, Nathalie Larrea, Meghna Dembla, Samvidha Sharma, Trisha Goswami and Shajar Qureshi. 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 PR Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and brands through impactful storytelling. Find out more about us here.