Crypto n' Stocks Report July 2023: Full Report

BTC YTD Performance
Jan – July 2023

NASDAQ 100 YTD Performance
Jan – July 2023

S&P 500 YTD Performance
Jan – July 2023

The Federal Reserve’s annual stress test saw all 23 participating Wall Street banks pass, resulting in a rise in banking stocks.

Note: The Common Equity Tier 1 Ratio, is a measure of a bank’s financial strength.
It is calculated by dividing the bank’s common equity by its risk-weighted assets. The higher the CET1 ratio, the more financially secure the bank is.  

Benchmark:
CET1 capital ratios well above the required minimum of 4.5% show that a bank is well-capitalized and able to withstand a severe economic downturn.

“This stress test is only one way to measure that [financial] strength. We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses.”

Michael Barr
Federal Reserve Vice Chair for Supervision

“The FED’s capital requirements and stress tests are like a belt and suspenders. You can loosen the belt and rely on suspenders or you can take off the suspenders and rely on the belt but if you do both, your pants will fall.”

Elizabeth Warren
United States Senator

“ETFs are the new mutual funds. They are the most popular way to invest in the stock market, and they are only going to become more popular in the years to come.”

Michael Hartnett
Bank of America Chief Investment Strategist

“AI is a revolutionary technology, and it could help individual investors better tailor their money for their goals. AI has a promising future if it can improve our daily lives. For now, it seems like there are some real use cases when it comes to investing.”

Callie Cox
eToro US Investment Analyst

“People are missing the economics that Buffett and Munger are looking at… The returns on capital in coal, oil and gas are off the charts compared with other sectors. And with ESG, you can buy them cheaper than you otherwise would.”

Cole Smead
CEO of Smead Capital Management

Major banks including JP Morgan, Wells Fargo, and US Bancorp have started to use the Federal Reserve’s FedNow launched on July 20, 2023.

The service that runs 24/7 has so far been adopted by 57 banks and credit unions intending to allow financial institutions to process payments instantly.

“The Federal Reserve built the FedNow Service to help make everyday payments over the coming years faster and more convenient.”

Jerome Powell
Federal Reserve Chair

 “The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash. The FedNow Service is an instant payments service provided by the Federal Reserve.”

Federal Reserve Twitter Account

“The fact that FedNow will support tokenization could mean that real-world assets may become tokenized in this network. If this happens, you will own nothing. The FED will own it instead.”

Guy Turner
Coin Bureau Co-Founder

Worldcoin is a new cryptocurrency startup led by the creator of OpenAI – Sam Altman. The company is using eye scans to create a global identity system and promises a universal basic income. Worldcoin has managed to recruit over 2 million test users by incentivizing them with cash and $WLD tokens.

Critics argue that the system, relying on sensitive biometric information, has just created a shady database rather than delivering on its promise. Some people see Worldcoin as a scam.

Concerns over privacy and exploitation are escalating, particularly in poorer regions like Kenya where Worldcoin has focused its recruiting efforts.

“Don’t catalogue eyeballs. Don’t use biometrics for anti-fraud. In fact, don’t use biometrics for anything. The human body is not a ticket-punch.”

Edward Snowden
National Security Agency Whistleblower

“Most alarming to me is how the WorldCoin team has boasted about how many users they have. 

When in reality they have been exploiting people in developing countries.”

ZachXBT
On-Chain Detective

“Everyone is gonna have an AI assistant and that AI assistant is going to run a whole team of other AIs. That is 100% locked in my mind the world we’ll live in. And in that world, we are gonna need proof-of-humanity.”

Jason Yanowitz
Blockworks Founder

Curve Finance, a decentralized stablecoin exchange, recently experienced an exploit resulting in a loss of $62M. The hack was linked to a bug in the Vyper software version used.

The exploit is a reminder of the risks involved in using DeFi protocols. They are built using smart contracts, which are often complex and difficult to audit, making them vulnerable to attack.

Some of the stolen funds were recovered, thanks to a white hat hacker who used a front-running bot to steal the attacker’s ETH back.

Demand for bond yields skyrockets as interest rates keep rising. Crypto investors have lent over $680 million to the U.S. government through tokenized US Treasury bills, bonds, and money market funds, issued by DAOs and protocols as of July 31, 2023.

These blockchain-based investments in treasuries show how traditional finance is converging with DeFi, reshaping the market landscape.

“Tokenizing a wide variety of assets – from equities and index funds to real estate and carbon credits – offers huge potential in terms of not only enhancing transparency, auditability and efficiency, but also access to people who otherwise might not be able to tap into traditional markets.”

Daniela Barbosa
Executive Director of Hyperledger Foundation

“About 2% of global money supply, via stablecoins and CBDCs could be tokenized over the next five years, which is about $3 trillion”

Seth Bernstein
AllianceBernstein CEO

“T-bills are 5% plus. Who doesn’t want that? It’s one of the greatest assets of all time. It’s an incredibly safe short-term investment. Everybody wants that and it doesn’t really exist on-chain right now.”

Robert Leshner
Compound Former Founder & Superstate CEO

“We believe that blockchain technologies have the potential to reshape the investment management industry by providing greater transparency and lower operational costs for traditional financial products.”

Roger Bayston
Franklin Templeton Digital Assets Head

The SEC identified 13 lightly traded cryptocurrencies on Coinbase as securities, meaning that offering these tokens to customers could fall under the regulator’s jurisdiction.

Brian Armstrong, Coinbase’s CEO, indicated that complying with the SEC’s request would equate to the end of the U.S. crypto industry.

“They came back to us, and they said . . . we believe every asset other than bitcoin is a security.

And, we said, well how are you coming to that conclusion, because that’s not our interpretation of the law…And they said, we’re not going to explain it to you, you need to delist every asset other than bitcoin.” 

Brian Armstrong
Coinbase CEO

Ripple won a key ruling in its ongoing legal battle with the SEC, with Judge Torres declaring that $XRP is not a security in regards to programmatic sales on digital asset exchanges. 

However, the judge ruled XRP is a security when sold to institutional investors, satisfying the Howey Test.

Yes, $XRP Is a Security:

Institutional Sales of XRP are considered to be investment contracts under Howey because they satisfy all four prongs of the Howey Test.

• Investment of money – there was a direct payment from institutions in exchange of XRP.
• Reasonable investors – with Ripple’s communications, ‘reasonable investors’ would have the expectation of profits.
• Efforts of others – institutional buyers clearly understand that XRP’s value is directly tied to the Ripple team’s effort and business model.

“We’re pleased from that decision recognizing the importance of protecting [institutional investors] but disappointed on what they said about [retail investors] – we’re still looking at it and assessing that opinion.”

Gary Gensler
U.S. Securities and Exchange Commission Chair

“This is a clear win both for Ripple and for the industry! The SEC clearly lost as a matter of law… Any attempt by the SEC to paint this as some sort of split victory is pathetic. They lost on everything that matters (as many lawyers have noted, not just Ripple’s).”

Brad Garlinghouse
Ripple Labs CEO

No, $XRP Is Not a Security:

Programmatic Sales of XRP are not considered to be investment contracts because it fails the third prong of the Howey Test – “reasonable expectation for profit”.

• Indirect purchase – users buying XRP from exchanges were not buying it directly from Ripple.
• Blind bid/ask transactions – users buying from exchanges could not know where the money went.
• No purchase contracts – there were no contracts containing lockup provisions, resale restrictions, indemnification clauses, or statements of purpose.
• Speculative motive – people were speculating on XRP which does not prove that it is a security.