Do you remember those crypto-Super Bowl ads? Here’s why they still matter: Morning Brief

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Wednesday, April 6, 2022

If you buy an ad during the Super Bowl, you get millions of eyes. However, some of these eyeballs are likely to belong to federal regulators.

Which brings us to Securities and Exchange Commission Chairman Gary Gensler on Monday (yes, two months later), who is responding to the amount of crypto ads from this year’s game.

“Seeing these ads reminded me that subprime lender AmeriQuest announced in the run-up to the financial crisis in the Super Bowl. It went down in 2007,” Gensler said at a Penn Law event.

That’s not a very flattering comparison from Gensler, Wall Street’s top officer. (Funny fact: Gensler is a Ravens fan who once mediated an agreement on NFL television rights during his Goldman Sachs days.) Gensler later said he was considering a “number of projects” to better regulate the crypto space, such as separation of crypto trading. platforms from market making functions.

In English: Cryptocurrency trading platforms like FTX and Coinbase (remember the Larry David and QR Code Super Bowl ads?) Could not trade the same tokens listed on their platforms. If users can buy bitcoin on one platform, that platform cannot take the other side of the trade itself.

Such a rule (which would take forever to implement) would not lower FTX, which raised funds earlier in the year to a fixed valuation of about $ 32 billion.

Sam Bankman-Fried, CEO of FTX and FTX US, told Yahoo Finance on Tuesday that the SEC takes a “pretty convincing stance”, suggesting that crypto-trading platforms would be fine without simultaneously acting as a trader.

“I do not think I am some kind of radical on this or purist,” Bankman-Fried said.

The scale is already built for people like FTX, who have attracted a large enough user base to afford Super Bowl ads in the first place. Aside from the millions of dollars it cost the company to set up and ship the ad, the company entered into a $ 135 million 19-year deal for the naming rights to the Miami Heats home arena.

This underscores the fact that the regulation of cryptocurrency plays into technology that has already reached the masses. For Gensler, the challenge lies in balancing regulation that protects investors without breaking the infrastructure already built.

Crypto exchanges also recognize this. FTX announced a “strategic investment” in IEX (by Michael Lewis’ “Flash Boys” fame) on Tuesday, which brings the regulatory expertise from IEX’s experience in operating in the more mature world of stock trading.

“There are parts of the stock market, like a regulated market, that we are thinking about for digital assets,” IEX CEO Brad Katsuyama told Yahoo Finance. “And I think there are certain parts of the stock market structure that you do not want to replicate.”

So it seems that the expensive Super Bowl ads are doing what they are supposed to do for these cryptocurrencies: attracting attention and expanding their user base. But when the regulators come and knock, the same companies need to be ready to play ball.

By Brian Cheung, an anchor and reporter covering the Fed, finance and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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