🧠 SEC drops a bomb.

Seedphrase Daily 👋 If crypto winter is cold, we’ll be your Canada goose.

Today's Agenda 📓:

• 🔍 How a crypto influencer made the SEC regulate ETH.

• 🛠 The most innovative utility since ETH.

• 😳 Meme of the Metaverse

First, a little history 📖

For a few years now, the SEC has been filing federal lawsuits against people who haven't registered their initial coin offering (ICO). This past Monday, influencer Ian Balina was added to that list of lawsuits.

We're actually on board with suing scammers and influencers. We need them out of the space so real people and projects can get the credit they deserve.

But this filing was different. One one small detail dropped by the SEC revealed something disturbing.

The line that changed everything. 🔍

Buried in the lawsuit's 69th paragraph, the SEC claimed it had the right not only to sue Balina, because his case concerns transactions made in the United States, but also because the Ethereum network falls under the US government's purview.

This was the original complaint against Balina:

They're using the merge against us...

The SEC is arguing that because 45% of ETH validators are in the US, it is therefore a US security that must fall under US jurisdiction. Since the transition to ETH 2.0, the government has been salivating at the prospect of classifying ETH as a security.

Gary Gensler, the SEC chair, said that any digital currency network that allows users to stake their coins might be deemed as a security using the Howey Test.

In the eyes of the SEC: PoW vs. PoS

• PoW miners have to expend considerable amounts of time and energy to solve hash puzzles. Therefore, they are not passively earning income from mining. They are actively working.

• PoS stakers do no work of their own. Stakers park their coins and expect profits to flow. This is a lot like investing, therefore, it is highly likely ETH will now be deemed a security.

Although the FED has not officially announced regulations, this is a strong indication of what is to come.

How regulation can affect us.👇

Regulations are good for us in the macro. It allows for more industry adoption by setting up parameters for companies to work around.

On the other hand, a lot of things will change. The space is evolving from the wild west to a civilized place ready for governments to implement the technology.

What the world would look like once governments adopt crypto:

This is the first major step to mass adoption.

Regulations will shape how the ETH network functions, good and bad.

👍 Pros to regulations

• Legitimacy ✅: More products that belong to institutions will likely get involved with crypto when there are defined rules for the functionality of the network.

• Involvement 👯‍♂️: This will allow regular people to get involved in the crypto space with fewer problems transitioning. It's much easier for someone to buy a product when they know they have certain rights under the law. Crypto scammers have scared off the normies because they don't know how to protect themself.

Regulation sets the foundation to shape the space and gives more direction on how people use this technology.

👎 Cons to regulations

• New rules 🤝: Now, developers and the ETH network will have to abide by the new regulations. In turn, development and innovation might slow down to adjust to the new rules.

• Centralized? 🧐 : The Merge has made ETH more centralized. Centralization makes it a lot easier to be regulated.

1. ETH staking done on centralized exchange's like Coinbase and Binance will likely be heavily regulated, easily tracked, and closely monitored.

2. The top 100 holders of ETH hold 40% of the tokes, making ETH both centralized and dominated by the wealthiest holders.

• Short-term crash 📉: because regulations are seen as bad news when it comes out, they can hurt prices. But this is usually when big institutions BUY. 👀

Our take. 🧠

ETH isn't as decentralized as we thought, but is that bad?

Depends who you ask.

As systems evolve, things change. With that comes its own set of pros and cons. ETH centralization and regulation seem to go against the pillars of crypto. But take another look and you'll see growth in the number of people initiating into ETH.

Is decentralization more valuable than garnering public interest and trust which comes along after regulation?

⚜️ Golden Nugget: The SEC hasn't made an official announcement yet. This is THE opportunity to buy the rumour and sell the news.

Or short the rumour, buy the news. NFA 😉

I am SICK of people telling me a Bored Ape on alcohol cans isn't "real world" utility.

I physically cannot breathe if I don't have my BAYC Full Send seltzer every morning.

But fine. I'll show you real world utility.

Nova Labs is bringing utility to a whole new level with a partnership with T-Mobile that gives users 5G powered service via crypto.

Telephones. Something people actually use daily. Genius.

👇 How it works. 👇The service will offer significant economic differentiators from traditional services:

• Plans will start at $5 per month, and

• Users can also optionally earn crypto token rewards for sharing data.

Helium's decentralized 5G network currently includes more than 4,500 active user-operated nodes, so Nova doesn't have to invest capital in building infrastructure.

Voice calls will take place entirely on T-Mobile's network, while data transfers will use services provided by node operators in the decentralized network where available.

😉 Benefits of Helium:

• Mining ⛏: Now your phone can be more than just a photo album with 10,000 photos you don't look at. Users can setup and maintain a 5G node, collecting crypto rewards on it.

The better quality setup and coverage they provide for the network, the higher the reward of the token $MOBILE.

Users with the best setup possible who find locations without proper 5G coverage are rewarded with higher mining rewards.

• Cheaper 💵: Tired of those unwarranted charges from AT&T? Phone plans start at only $5. Add up mining, and you could potentially get free phone service for life. Say goodbye to getting robbed by Verizon.

👟 Big Steps for Web3

This is the first significant partnership between a web3 network and a telecom company.

They can basically do the same thing but better.

Helium adds a new layer to telecommunications and could be helpful for people placing nodes in residential areas telecom companies can't touch, giving people the power to earn rewards and sustain themselves within the ecosystem.

🤝 How to get in early.

To get a node and start mining ⛏: The average monthly miner gets $2-$5/month. If you want to make more than that, you better find an area that hardly gets 5g service. Not great, but it's something. Plus, it's a weird flex. You can say you're running a telephone network in your basement.

You got two options:

1. Indoor 🏠: typically easier to install, indoor deployments create a localized area of Helium 5G coverage. These setups are ideal for houses, coffee shops, and other small businesses! They cover roughly 3x the area of WiFi.

2. Outdoor 🏝: typically requiring a more involved setup process, these are optimized to create broader Helium 5G coverage while withstanding the elements, so you can build the Network rain or shine! They can cover several city blocks depending on placement.

Buy Here

To use the network 📲:

Unfortunately, it's full :( But you can sign up for the waitlist via their website!

And the launch will be in early 2023!

Join waitlist here!

If you want to start investing, Buy Crypto Here

FTX is one of the most trusted ones, and signing with our code not only supports these emails, it gives you 5% of all of your transactions.

Doesn't sound like much but adds up in the long run.

Buy Crypto Here!

😹 Meme of the Day

God shaking his head. 🤦‍♂️

Send this to someone that owes you money.

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