Ten31 Timestamp 801,077
While Congress was holding hearings on UFOs over the past few days, a number of important financial developments hit the wire. In particular, financial gatekeeping seemed to be entering a bull market this week, as we got an avalanche of headlines showing Chase, Mastercard, PayPal, and others all blocking use of bank accounts or payment rails in the latest set of powerful reminders of the importance of permissionless, censorship-resistant money. These instances transcended countries, ideologies, and use cases, highlighting that the transformative value proposition of bitcoin isn’t that it empowers one particular group or political movement, but that it removes the opinions and whims of your banker, card provider, and president from the equation altogether – it is money for enemies. The macro front was very busy this week as well, including another Fed rate hike, the failure of two regional banks, and another surprise tweak to the Bank of Japan’s yield curve control policy.
Portfolio Company Spotlight
IBEX provides lightning infrastructure for merchant payments, consumer wallets, and a variety of other applications. The company offers sleek software that can be easily deployed in minutes to onboard merchants to the lightning network with no new hardware required, and its IBEXHub API offers additional modular functionality. IBEX focuses on Latin America, an underserved part of the global economy with high demand for cheap, simple payments technology, and the company recently announced a new partnership with Grupo Salinas in Mexico that will enable easy lightning payments for over four million people.
Selected Portfolio News
Unchained rolled out an improved onboarding flow for its IRA product:
Ten31 Managing Partner Marty Bent joined a stream on Twitter Spaces with Presidential candidate Robert F. Kennedy, Jr. to dig into the candidate’s pro-bitcoin platform.
Marty also joined Ten31 Co-Founder Grant Gilliam on the What Bitcoin Did podcast to discuss The Bitcoin Cheat Code.
Ten31 Co-Founder Jonathan Kirkwood sat down for an extensive interview with the Forbes Cryptoasset newsletter to discuss the development of the bitcoin ecosystem and Ten31’s strategy. A copy of the newsletter can also be found on Ten31’s website.
Mutiny Wallet Co-Founder Tony Giorgio published a new essay on recent improvements in the UX of lightning network tools and some exciting directions lightning could take from here.
Tony also appeared on the Kevin Rooke show to discuss Mutiny in detail.
Strike’s lightning infrastructure was discussed in a Fidelity Digital Assets report about scaling the bitcoin network.
River CEO Alex Leishman joined the What Bitcoin Did podcast to discuss River’s bitcoin custody infrastructure and the collapse of Prime Trust.
The Federal Reserve resumed its rate hiking cadence (after a “pause” last month), increasing the target Federal Funds Rate to 5.25-5.5%, a 22 year high. Notably, Fed Chairman Jay Powell said the Fed is “no longer forecasting a recession” this year.
In line with that viewpoint, GDP figures for Q2 showed growth of 2.4% Y/Y, above consensus expectations. Meanwhile, core PCE, the Fed’s preferred measure of inflation, rose 4.1% for June, the lowest annual increase since September 2021 and a substantial deceleration from May.
While the Fed declared a near-term recession unlikely, two more small banks succumbed to recent struggles for the industry, as Pacific Western Bank agreed to be sold to Banc of California (whose market cap was ~30% lower than PACW’s ahead of the announcement).
Unlike recent industry consolidations, the deal did not require direct government coordination or backstop (though as with prior deals, JP Morgan will reportedly scoop up close to $2 billion in mortgages from the deal).
A few days later, the FDIC announced that Heartland Tri-State Bank in Kansas, which had $130 million in deposits, would enter receivership.
Overseas, the Bank of Japan delivered another surprise update to its long-running yield curve control policy, raising the hard cap 50bps to 1% after raising it for the first time in years only 7 months ago. As JGB yields surged to a nine year high shortly after the announcement, the BOJ stepped in with another round of unscheduled bond buying.
This week gave us not one, not two, but four examples of the prevalence of counterparty risk within the incumbent fiat financial system.
The business and family bank accounts of Dr. Joseph Mercola, who has been critical of the FDA and prevailing COVID policies, were shut down without warning.
Later in the week, PayPal froze the account of GrapheneOS, an organization building privacy-focused software for mobile phones, and Monzo terminated the bank account of the UK’s True and Fair party (which had previously struggled to find banking partners elsewhere in the UK).
Finally, Mastercard announced it would no longer facilitate debit card payments for purchases related to cannabis, despite marijuana sales having been legalized in 38 states.
Coinbase CEO Brian Armstrong said that the SEC asked the exchange to cease trading for “every asset other than bitcoin” prior to suing the company last month.
Russian President Vladimir Putin signed into law a bill establishing a “digital ruble” CBDC.
Elizabeth Bisbee, head of investigations at Chainalysis Government Solutions, testified during the Roman Sterlingov / Bitcoin Fog trial that she is unaware of any peer-reviewed evidence of the effectiveness of Chainalysis’s software, and that the company does not have data on its rate of false positives or margin of error.
The Human Rights Foundation announced an extensive set of 10 bounties (worth 2 bitcoin each) to address a variety of activists’ and dissidents’ most requested UX improvements for bitcoin and lightning.
The FBI reportedly seized equipment containing unencrypted data on users of a Mastodon server as part of an unrelated raid at the home of one of the server’s admins, a reminder of the potential Nostr has for addressing some of Mastodon’s vulnerabilities.
Per a recent poll that would have read like dystopian fiction less than a decade ago, a majority of Americans now say that the government should restrict “misinformation” online.