Truth Social or Dare? ⁉️
Plus: The other shoe drops on Nike’s NFTs
In this week’s edition of The Context, we talk about UK’s crypto regulations, Nike’s NFT pullback, and Truth Social’s potential crypto token.
[UK Rules! 🇬🇧]
The UK on Tuesday released draft regulations for crypto firms. It will collect public feedback before finalizing them.
What Media Said 🧑💻:
In general, the UK is folding crypto “into the existing framework for regulated financial firms,” explained Aliya Shibli (The Banker). If, for example, a bank wanted to add crypto services, it wouldn’t have to go through a different licensing process.
The UK is also collaborating with the US on crypto rules despite “European concerns about President Donald Trump’s embrace of the sector,” wrote Emily Nicolle & Tom Rees (Bloomberg). They’re looking at ideas like SEC commissioner Peirce’s “cross-border sandbox for digital securities.”
The UK is behind the European Union on regulations, noted Camomile Shumba (CoinDesk); t**he EU’s Markets in Crypto Assets rules went into effect last year. Now it’s following the US, which has “eased crypto regulation” under Trump—or, at least, enforcement.
PR Perspective 🔎:
The same day it released draft regulations, the UK said it was working with the US. That may be a smart move because it frames the regulations as pro-innovation. The general sentiment is that America is becoming more friendly for crypto firms and traders alike, and many established firms have a strong presence stateside. If the UK government can convince them that it’s a similar environment, they’ll win business.
[R-T-F-K-T! What’s That Spell? ✔️]
In 2021, apparel company Nike bought NFT shoe company, RTFKT, which shut down in January. This week, a group of RTFKT NFT owners sued Nike for $5M in damages over the decision, saying they wouldn’t have bought the assets if they realized they were unregistered securities.
What Media Said 🧑💻:
Basically, the deal was that Nike would make money off of “Swoosh-branded digital collectibles” and then a cut of the sales when buyers traded their NFTs, explained Ian Servantes (Footwear News). Some NFTs could even “be redeemed for real-life sneakers.” Then the other shoe dropped.
Are NFTs securities? SEC regulators are currently looking at whether they should be treated as such. But even if RTFKT’s digital shoes aren’t, wrote Vismaya V (Decrypt), the class action claims Nike violated some states’ consumer protection laws by creating a rewards ecosystem then pulling the plug.
PR Perspective 🔎:
Nike is being accused of a soft rug pull in a textbook example of the reputational risks that come with jumping on a trend without a long-term commitment. In acquiring RTFKT, Nike was looking to position itself as innovative and forward-thinking. But in winding it down, it left consumers holding the (shopping) bag without a thoughtful exit strategy or community communication. We’ve seen this before with mainstream brands, and it’s important to remember that web3 consumers have unique expectations because they are also stakeholders.
[Truth Social Capital? #️]
Trump Media, which owns the Truth Social platform, told shareholders it is “exploring the introduction of a utility token.”
What Media Said 🧑💻:
Utility tokens are crypto assets that can be used for more than speculation—in this case, to pay for a Truth+ subscription. If the token moves forward, it’d be the latest product in “the Trump’s family growing crypto empire,” wrote Ben Weiss (Fortune). “There are NFTs, memecoins, a decentralized finance application called World Liberty Financial, a stablecoin, a Bitcoin mining business, and a planned Trump-themed real estate video game.”
President Trump’s crypto endeavors have already raised concerns over conflicts of interest, noted Brayden Lindrea (Cointelegraph). This probably wouldn’t do much to assuage those concerns, but Trump did transfer his majority stake in Trump Media into a trust last year.
PR Perspective 🔎:
Trump is a deeply polarizing political figure, and Truth Social is known for being Republican-leaning. News like this could damage—rather than legitimize—crypto’s reputation for those opposed to Trump’s policies.
[Tweet of The Week]
Credit - @GwartyGwart
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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.