What's next for banks?

Plus the NFT breakup heard ’round the world

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Today: The future of crypto banking, Meta ditches NFTs, and a BTS look at BTC’s price. Let’s go.

—Angelina

What's Next for Crypto Banking?

Crypto’s “unbank yourself” motto ticks all the boxes of a great slogan: catchy, memorable, and to the point. It has one small problem, though—crypto needs banks.

Why? All dollar-denominated transactions go through the U.S. banking system. It’s virtually impossible for crypto companies (U.S.-based or not) to accept or pay out fiat dollars without a banking partner.

…which brings us to crypto’s current banking problem. Now that Silvergate and Signature Bank—the digital asset sector’s two favorite banks—have shut down, many crypto companies find themselves strapped for liquidity. And with U.S. regulators actively discouraging TradFi from touching crypto, banking partners willing to service crypto firms are getting harder to find.

So, what now for crypto banking? Two potential scenarios:

  1. Crypto banking moves offshore. Given the regulatory scrutiny, U.S. banks are growing increasingly wary of taking on crypto clients—but overseas banks might have more appetite for risk. Major banks like HSBC, Santander, and Deutsche Bank are still interested in servicing the industry, according to CoinDesk.

  2. Crypto-native banks. Kraken, the first U.S. crypto company to receive a bank charter recognized under federal and state law, announced it will launch its own bank “very soon.” And Coinbase CEO Brian Armstrong tweeted that his exchange is toying with similar ideas.

Moving forward: For a sector as volatile as crypto, fractional reserve banking simply isn’t a great fit—the dangers of bank runs and bad debt are just too real. Instead, crypto needs full-reserve, non-lending banks that can withstand mass outflows of deposits at any given time.

Instagram Ditches NFTs

Meta is sunsetting its NFT feature on Instagram and Facebook less than a year after launch.

Some context: Meta rolled out support for select creators to share and sell NFTs last summer. The news made a huge splash in the NFT space at the time, but the feature was never widely released.

Why the pivot? Meta didn’t say, but we have some ideas:

  1. Zuck’s "year of efficiency” management theme. In addition to widespread layoffs, ditching NFTs could be a cost-cutting measure as Meta scrambles to finance its costly metaverse endeavors.

  2. A bad deal for creators. Originally, Meta vowed to take no cut of NFT sales on Instagram. But it eventually landed on a 30% cut to account for Apple’s App Store fees.

  3. Mainstream apathy. Outside of our cozy crypto bubble, most people simply don’t care (or know) about NFTs.

Big picture: With the debut of Ordinals and Blur’s new marketplace, NFTs have been regaining some of their 2021-era momentum. And despite Meta’s decision to drop out of NFTs, legacy brands like Starbucks and Nike are still embracing them.

A Different Kind of Rally

On Monday, the price of Bitcoin soared past $28K—jumping nearly 19% in just a week.

Bitcoiners are reveling in a “told ya so” moment. The string of recent bank failures (see today’s top story) validates Bitcoin’s use case as a decentralized alternative to the banking system.

Zoom out: This is one of the first times BTC is rallying in a risk-off environment, breaking free from its usual tandem with other risk assets. Maybe this points to the start of a Bitcoin narrative shift. But strip away the hopium and you’re left with a pretty boring explanation: the bank failures dramatically decreased the chances of more aggressive interest rate strategies.

In other news:

  • The long-awaited ARB token will airdrop this week, officially marking Arbitrum’s transition into a DAO.

  • Ethereum’s major Shanghai upgrade finally has a target date.

  • Salesforce enters web3 with an NFT loyalty program on Polygon.

  • The popular NFT project Doodles doesn’t want to be an NFT project anymore.

  • Coinbase is considering setting up a crypto-trading platform overseas.

Crypto Job Board

And that's what you need on your radar today in crypto. Will we see BTC at $30K this month? Shoot me a reply with your price predictions. Catch you back here next Tuesday!