Hello! Ed here!

Are memecoins hijacking the crypto narrative?

This is an important question as the explosion of offerings from Donald Trump, the Hawk Tuah girl, and now Argentina’s president, Javier Milei, face backlash. 

The tendency of such cryptocurrencies to fly out of the gate and crash a short time later as early movers cash out looks an awful lot like classic pump-and-dump schemes. 

This has crypto industry lobbyists worried. 

Hawk Tuah, the raunchy memecoin that soared to $500 million on its December launch and then plunged 90% in 30 minutes, has become a hot topic in the halls of Congress, Liam Kelly reports. 

So, too, has the president’s official TRUMP coin, which followed a similar trajectory. 

This is not welcome news for the industry. 

Key crypto bills are moving through the gears in both the Senate and the House of Representatives. 

Lawmakers are asking about memecoins within the “first five minutes” of conversation on crypto-related legislation.

The last thing the Blockchain Association and other industry leaders want are memecoins monkeywrenching a legislative effort years in the making. 

Ever since Gary Gensler approved a crackdown on stalwarts such as Coinbase and Ripple, crypto has pushed hard for clarity that would establish legal definitions for digital assets. 

This breakthrough would not only mitigate legal risks for crypto firms, it would also spur financial institutions to enter the marketplace with new offerings, and a lot more capital. 

But memecoins are designed to make easy money rather than foster technological innovation and strengthen economic competitiveness. 

As it happens, that is precisely the narrative crypto supporters ranging from Coinbase CEO Brian Armstrong, to influencer Anthony Scaramucci, to Trump himself have been promulgating to defend the asset class.

So what are decisionmakers to think when they see the extraordinary memecoin episode that unfolded in Argentina over the weekend? 

On Friday, Javier Mieli, the South American nation’s pro-crypto president and a favourite of Trump, promoted a memecoin called LIBRA on his official X account, Kyle Baird reported. The memecoin skyrocketed to $4.5 billion.

Within three hours, 10 insiders sold their stakes and raked in a staggering $87 million, according to Bubblemaps, an on-chain analytics firm.

The backlash was fierce.

Milei, who has vowed to repair Argentina’s broken public finances and root out corruption, distanced himself from the scandal by explaining he “was not aware of the details.” 

If memecoin mania accelerates, the gory details in this and similar schemes may overwhelm the carefully drawn narrative industry leaders have been laying out in Washington.

ICYMI

• How the Bitcoin Strategic Reserve, once a long shot, is gaining traction with Trump

  It’s an idea that has long been dismissed as outlandish, outrageous, and pretty much impossible. And yet the notion of a US Bitcoin Strategic Reserve is actually beginning to gain some traction now that Donald Trump is president.

• Crypto debanking was probably real: Fed Chair Jerome Powell

  Crypto companies were likely “debanked,” Federal Reserve Chair Jerome Powell told lawmakers at a hearing last week.

• Who is Brian Quintenz, the a16z crypto boss tapped to lead CFTC?

  Crypto’s excited about Donald Trump’s latest regulatory pick. On Wednesday, the President nominated pro-crypto candidate Brian Quintenz to be the next Commodity Futures Trading Commission’s chair.

Story of the Week

How an Alabama man hacked the SEC for $50,000 in crypto

It could have been an ill-advised prank or an attempt to manipulate crypto markets.

But last year’s hack of the X account belonging to the US Securities and Exchange Commission was something simpler: a minor move in a larger identity theft operation run out of a home in the Alabama town of Athens, population 25,000.

Eric Council, 25, pleaded guilty on Monday to conspiracy to commit identity theft. The identity in question belonged to an SEC employee called “C.L.” in court documents, who had access to the agency’s X account.

Post of the Week

SEC Commissioner Hester Peirce, the head of the agency’s crypto task force, bid adieu to a rule that precluded banks from holding cryptocurrencies in custody for clients. It was a major change from policy in the Biden administration.

Comment of the Week

Crypto legislation and potential new regulations from the SEC have bolstered the digital assets market, but Bitcoin has proved stubborn in recent weeks.

DL News is an independent news organisation that provides original, in-depth reporting on the largely misunderstood world of cryptocurrency and decentralised finance. From original stories to investigations, our journalism is accurate, honest and responsible.

Forwarded by a friend? Subscribe here.