☕️ Why Republicans Fear This Token 😳 🐘

Republicans are moving fast to ban this new kind of token 🏃‍♂️💨

Our fears are apolitical. Democrats and Republicans alike are equally afraid of monsters under their bed, tight spaces, and intimacy.

But why is there one token that Republicans keep talking about? What is the digital harbinger of doom that haunts Ted Cruz’s nightmares?

Brace yourself, because in today’s newsletter, we’re going to open the tomb of the GOP’s crypto boogeyman.

Espresso Shots

☕️ FED Hikes Interest Rates 📈 

Interest rates will continue to rise with a quarter point rate hike announced on Wednesday. 

This decision was expected but is nonetheless controversial given the instability of regional banks around the country. 

Earlier in March, Fed Chairman Jerome Powell admitted that the FED interest rates may be, “higher than previously anticipated.” But the string of recent bank failures seem to have put a stop to that plan.

“As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to cool inflation,” said Powell. “Instead, we now anticipate that some additional policy firming may be appropriate.”

Despite recent events, the FED maintains: "The U.S. banking system is sound and resilient."

A press release went on to state: "Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation."

This rate hike isn't exactly making us feel warm and fuzzy but one thing is for sure: interest in interest rates is at an all time high.

☕️ SEC Sues Tron ⚖️ 🚨

Tron Founder Justin Sun is being sued by the SEC for selling and airdropping unregistered securities as well as fraud and market manipulation.

“Unregistered securities,” or as we call it in this newsletter, crypto.

But, as nebulous as those securities charges could be, Sun is facing the very serious allegation that his company was “wash trading” to manipulate Tron’s secondary market.

The suit alleges that Sun had his employees “engage in more than 600,000 wash trades of TRX between two crypto asset trading platform accounts he controlled.”

Wash Trades are used to create a false sense of activity on a platform, in doing so, others view the platform as more successful or busy than it might otherwise be. 

In addition to the alleged Wash Trading, Tron also employed a variety of celebrity spokespeople to advertise for them. 

These celebrities included the likes of Lindsay Lohan, Lil Yachty, and Akon. The SEC is also suing the celebrities for promoting Tron without disclosing they were being paid.

It’ll be interesting to see this mess settled in the courts rather than the traditional Tron-method of conflict resolution, laser motorcycle races.

☕️ SEC Warns Coinbase ⛔️ 📉

The SEC isn’t officially suing Coinbase, yet. 

But the SEC did send Coinbase a “Wells Notice,” which is essentially a warning to a company that their agency is planning future enforcement action against them.

One fun feature of the Wells Notice: it doesn't specify what kind of action or what that action may entail.

As you probably expect, this notice was equal parts concerning and annoying to Coinbase’s employees.

“If needed, we welcome a legal process to provide the clarity we have been advocating for,” said Paul Grewal, Coinbase’s chief legal officer. 

Meanwhile, Coinbase CEO Brian Armstrong feels like this: 

While they await further action from the SEC, Coinbase staff are reportedly sending Tron’s Justin Sun a “Get Wells Soon Notice.”

Spilling the Beans

The GOP Takes on CBDCs 💥 🤺

The Republican party is not one to keep their feelings inside.

When they don’t like something, they scream it, loud and proud, again and again.

And now we’re seeing two of the loudest voices in the Republican party crying out against crypto.

But… not for the reasons you would think.

It’s not about volatility, transparency, or the potential for fraud or unsafe business practices.

Presidential hopeful and Florida Governor Ron Desantis and U.S. Senator Ted Cruz have been calling for a ban on CBDCs.

A quick refresher: CBDCs are Central Bank Digital Currencies, in short, digital currencies issued by central authorities: like the US Government.

And it seems strange that CBDCs would become the target of Republican’s ire. These things are very centralized. They literally have the word central in the name. 

So why is the Right so up in arms about this digital currency?

Here's how Cruz puts it: 

“Unlike decentralized digital currencies like Bitcoin, CBDCs are issued and backed by a government entity and transact on a centralized, permissioned blockchain,” 

“Not only would this CBDC model centralize Americans’ financial information, leaving it vulnerable to attack, it could be used as [a] direct surveillance tool into the private transactions of Americans.”

A surveillance tool into the private transactions of Americans? Nobody tell Ted Cruz about Venmo. 

And definitely don’t mention anything about the Chinese and Tik-tok. That would be very bad for his blood pressure.

Meanwhile, Desantis hasn’t just criticized potential CBDCs, he’s taken action in his home state, introducing a law that would prohibit the use of a national central bank digital currency in Florida.

A press release issued by Desantis reads: 

“Today’s announcement will protect Florida consumers and businesses from the reckless adoption of a ‘centralized digital dollar’ which will stifle innovation and promote government-sanctioned surveillance,”

“Florida will not side with economic central planners; we will not adopt policies that threaten personal economic freedom and security.”

Protecting Americans’ freedom and limiting surveillance are two Republican buzzwords that we’re all too familiar with.

Again, just a reminder, this anti-surveillance stance is coming from the party that pushed the Patriot Act through congress. 

But what these anti-CBDC opinions really seem to boil down to is a debate that has been going on for centuries.

This all goes back to that old debate between Thomas Jefferson and Alexander Hamilton. You remember right? It's in the second act of the musical in case you need a refresher. 

Hamilton wanted the government to have a central bank and a central currency. That would mean bank branches in every major city and the creation of the US Dollar.

Jefferson thought that a central bank would create too much power for the federal government and would take power away from states.

For all intents and purposes a digital dollar, or US-created CBDC, is just another extension of the power of the federal banking system Hamilton created all those years ago. 

And it checks out among the Republican ethos that Cruz and Desantis would lean into the be pro-crypto and anti-CBDC agenda.

The Biden Administration has readily embraced an anti-crypto position in recent weeks. 

There's a political gap that the GOP seems more than ready to embrace. If crypto takes power away from the government, the GOP is all for it. 

They're the party of less government, less regulation, and extra individual freedoms with a side of fries.

And despite not being the most beloved messengers… they kinda have a point.

There are genuine risks to the introduction of a digital dollar, even beyond centralization.

It’s significantly easier to mint something that’s intangible. And that convenience may lead to our nation devaluing the dollar even further than our currently unsustainable rate.

But regardless of the risks, CBDC developments are already much larger than some old debate between two founding fathers. 

Several of the world’s superpowers are already contemplating, and embracing CBDC implementation.

Chinese citizens already have access to the digital yuan and Britain has announced its intention to roll out the digital pound in the coming years.

Like joining a World War or abolishing slavery, this may be one of those instances where we may be forced to catch up with the rest of the world, even if one party is against it. 

Meme of the Day

The Fed is doing great 🤦

Crypto 101

Wash Trading: This is an illegal practice in which a single buyer transactions with themselves between two different accounts.

This falsified back and forth action creates misleading market information. This can be used to artificially inflate the value of a given collection, or of an entire trading platform.

Though “wash” trading may sound clean, it’s actually a very dirty trick.

The Last Sip

Given Tron is the most recent target of the SEC, we’ve compiled a list of which 1980s classics might be next:

  • Terminator

  • Bladerunner

  • St. Elmo’s Fire

  • The Breakfast Club

  • Gremlins

Stay Caffeinated,

Coffee & Crypto Team

That's all for today! If this email got you hooked on our unhinged crypto takes, be sure to get a full dose on Twitter @GetCoffeeCrypto.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.