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Cryptocurrency

How Crypto Start-ups Faced 'Debanking' and Political Storm

2024-12-10

Concerns over crypto companies being intentionally excluded from the global banking system have emerged as a significant issue at a crucial time for the industry. Early last year, Ryne Saxe began receiving demands from banks associated with his San Francisco-based startup, Eco. These banks presented a long list of new compliance and reporting obligations that Eco needed to adhere to. The predicament was that Eco was a cryptocurrency firm operating within an industry under intense regulatory scrutiny. The banks claimed to be under pressure from government agencies to follow new guidelines regarding crypto clients. Subsequently, Bill.com, Eco's payroll provider, closed the company's account, citing a new policy, as stated by Mr. Saxe. After enduring eight months of such pressure, Mr. Saxe shut down Eco's app and revised his business plan to no longer depend on bank partnerships. Eventually, his Bill.com account was reinstated. He described the experience as "like hell," stating that they were continuously being "debanked."For several years, crypto startups like Eco have encountered difficulties in obtaining and maintaining bank accounts in the United States, leading entrepreneurs to express their grievances. In their angry social media posts, they have accused the government of orchestrating a campaign to suppress the crypto industry, labeling the crackdown as unconstitutional and un-American. They have even taken legal action against banking regulators and brought up the issue with members of Congress.Those concerns have reached a critical stage. Last month, Marc Andreessen, a prominent venture capitalist, appeared on Joe Rogan's podcast, which has an audience of over 10 million listeners. He accused Democrats of "terrorizing" crypto startups by pressuring banks not to collaborate with them. His complaints were further amplified by Elon Musk, as well as crypto executives like Brian Armstrong, the Coinbase CEO, and Tyler Winklevoss, who asserted that the government and the banking sector were engaging in "evil behavior."Brian Armstrong, the chief executive of Coinbase, has been highly vocal about the issue of debanking. He has been actively advocating for changes in the regulatory environment to ensure the survival and growth of the crypto industry. He has pointed out that the current restrictions on crypto companies' access to banking services are hindering innovation and limiting the potential of the sector.Another aspect to consider is the impact of this debanking phenomenon on the overall economy. Crypto has gained significant traction in recent years, and its exclusion from the traditional banking system could have far-reaching consequences. It may lead to a lack of liquidity in the crypto market, making it more difficult for startups and investors to operate. Additionally, it could potentially drive more crypto-related activities underground, making it harder to regulate and monitor.In conclusion, the issue of crypto companies being cut off from the global banking system is a complex and multifaceted problem that requires careful consideration and action. Both the government and the banking sector need to work together to find a balanced solution that既能 ensure regulatory compliance and consumer protection but also allows the crypto industry to thrive.

Retail investors are increasingly showing a strong interest in memecoins. A recent analysis of cryptocurrency subreddit growth trends, as revealed by Reddit data, has identified PEPE PEPE/USD as the current leader in capturing retail attention. This trend highlights the significant influence of retail investor psychology in the current market cycle.

Understanding Retail Investor Psychology

Retail investors are driven by various factors. Financial nihilism plays a role, as they view crypto as a means to achieve quick wealth. The allure of high-risk, high-reward opportunities also attracts them. Additionally, platforms like Robinhood provide easy access, making it more accessible for retail investors to enter the cryptocurrency market. As one author stated, “They view crypto as a way to ‘get rich quick.’”

Subreddit Member Growth as an Indicator

The analysis focused on subreddit member growth as a key indicator of retail interest. PEPE and BONK BONK/USD emerged as top performers, with PEPE showing remarkable growth after its Nov. 13 Robinhood listing. “PEPE’s Subreddit growth went parabolic after its Nov. 13 listing on Robinhood, outperforming the Subreddit growth of all other memecoins,” the author observed. This growth indicates the significant attention and participation of retail investors in PEPE.Retail investors are also influenced by unit bias. They are drawn to tokens with low prices per unit and often boast about owning large quantities rather than focusing on the dollar value of their positions. This behavior showcases their unique approach to investing in the cryptocurrency market.

The Most Active Memecoin Subreddit

PEPE’s subreddit has become the most active among this cycle’s memecoins. This is fueled by ambitious price targets, such as the trending Subreddit narrative of ‘PEPE to $1’—a 46,000x gain. Although this target may seem unattainable, it mirrors the narratives that propelled DOGE and SHIB to great heights. This shows the power of market sentiment and the impact it can have on the popularity and growth of memecoins.

Potential for Further Growth

If these Reddit trends continue, subreddit data could serve as a valuable indicator of retail interest in cryptocurrencies. Currently, PEPE appears to be the clear favorite among retail investors, and it has the potential for further growth as the Ethereum ecosystem gains momentum. This indicates the significant role that memecoins can play in the cryptocurrency market and the influence of retail investors in shaping its future.However, it’s important to note that not all memecoins are performing equally well. Dogwifhat WIF/USD lags behind Pepe and Bonk despite its listing on Robinhood on Nov. 25. Similarly, Shiba Inu SHIB/USD has seen slower subreddit growth compared to its historical performance. This shows that while memecoins are attracting attention, there are differences in their performance and popularity.In conclusion, the rise of memecoins among retail investors is a significant trend in the cryptocurrency market. Subreddit data provides valuable insights into retail interest and can serve as an indicator of future market movements. As the Ethereum ecosystem continues to grow, the potential for further growth of memecoins remains. However, investors should approach memecoins with caution and consider the risks involved.

Investors in major tech companies like Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) are currently engaged in a critical evaluation process regarding potential investments in Bitcoin (BTC/USD). This comes in the wake of MicroStrategy Inc. (MSTR)'s remarkable success with its bitcoin strategy.

Tech Giants' Bitcoin Dilemma - A Strategic Shift?

Microsoft's Bitcoin Proposal

Microsoft shareholders are set to make a crucial decision on December 10. A proposal is on the table to consider Bitcoin as a balance sheet asset. Supported by the National Center for Public Policy Research, this proposal advocates holding at least 1% of assets in bitcoin, emphasizing its potential as an effective inflation hedge. However, the company's board has advised against it, highlighting the significance of maintaining stability in corporate treasury holdings. They believe their existing processes are adequate for safeguarding long-term shareholder value.Despite this, MicroStrategy's CEO, Michael Saylor, has presented to Microsoft's board, arguing for potential market value growth through bitcoin investment. But the betting site Polymarket indicates only a 13% chance of shareholder approval for Microsoft's Bitcoin evaluation.

Amazon's Bitcoin Allocation

There is also a proposal for Amazon to allocate 5% of its assets to Bitcoin. This highlights Bitcoin's astonishing 1,246% price increase over the past five years, which has outperformed corporate bonds. Business Insider reported on Tuesday about this significant proposal. It shows that other tech giants are taking notice and considering similar investment strategies.

MicroStrategy's Aggressive Strategy

MicroStrategy recently made a substantial acquisition of 21,550 bitcoins for approximately $2.1 billion, bringing its total holdings to over 423,000 BTC. This purchase was financed through the issuance and sale of company shares, generating net proceeds of about $2.13 billion. This move clearly demonstrates MicroStrategy's aggressive stance in the bitcoin market and has had a significant impact on other tech giants, prompting them to consider similar investments.In conclusion, the decisions and actions of these tech giants regarding Bitcoin investments are closely watched in the financial world. It remains to be seen how these proposals will unfold and what impact they will have on the future of these companies and the cryptocurrency market as a whole.