Allow me to introduce myself: I'm Colton Dillion, cofounder of Hedgehog alongside Taylor and my brother Jason. My main job title is CTO, but I'm also Chief Compliance Officer, CFO, and our Registered Investment Adviser Representative (or registered rep). That's a lot of jargon but to put it simply, I'm responsible for all the infrastructure at Hedgehog: technical, regulatory, and financial.
As the company's registered rep, I'm stepping in for Taylor so the newsletter can evolve as Hedgehog-the-product evolves. Don't worry, we're not going full promotional — there will still be crypto news to discuss (because there is always crypto news to discuss), but since we're giving financial advice, it's helpful to have the right registrations to talk about the nitty-gritty. That said, we'll start discussing the finance side of things more in depth, not just in terms of price-watching, but also regarding time-tested strategies for building wealth.
Headlines come and go; economic fundamentals are forever. The real action is where they intersect. Like when the streams cross in Ghostbusters ⚔️
First let me be a little promotional. As Taylor has mentioned a few times in the past 90 (!) newsletters, Hedgehog is working on a big product upgrade. You're already familiar with Version 1.0, which is a portfolio manager that primarily tracks your assets and offers manual trading tools. Version 2.0, coming soon, is a portfolio manager that automates 90% of the work for you, according to the investment settings that you select. It's like driving a car in the year 2100: choose the destination, and we'll take you there.
Our hero feature is called Stacks, and it evolved from the 1.0 feature with the same name. The mobile app will launch with six improved and streamlined Stacks:
- Total Crypto: More than 85% of the entire crypto market cap
- Satoshi: Bitcoin, where it all started
- DeFi: Peer-to-peer financial services on the blockchain
- ETH Network: Assets built with Ethereum
- Layer One: Core networks powering the crypto ecosystem
- Yield Farming: Tokens that pool staked funds to generate rewards
We've partnered with Gemini for secure custody, and you will individually own the underlying assets in each Stack. (In other words, no commingling of customer funds and you can withdraw any currency in the stack at your leisure.) You'll be able to automatically rebalance your Stacks on the schedule of your choice. Our goal is to make it easy to "buy the market" the way you can using index funds and ETFs, but with an approach designed specifically for crypto. In that vein, support for self-custody is next on the roadmap after we launch the mobile app.
More on Hedgehog 2.0 soon, but in the meantime we promised you crypto news…
The hammer descends
There are three big stories developing right now:
- "Binance, CEO Zhao Sued by CFTC Over 'Willful Evasion' of U.S. Laws, Unregistered Crypto Derivatives Products"
This one is not particularly surprising. Binance has been in the hot seat for a while, and scrutiny intensified in the wake of the FTX debacle.
- "SEC Warns Coinbase It's Pursuing Enforcement Action Over Securities Violations"
Also not a big surprise, but nonetheless frustrating. Coinbase CEO Brian Armstrong pointed out on Twitter, "Two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking." Chief legal officer Paul Grewal responded in depth on Coinbase's blog.
Finance columnist Matt Levine summed things up: "The position of Coinbase — and of the crypto industry more broadly — is 'look, SEC, if you want to have a flourishing system of legally compliant, safe, trustworthy crypto assets, you will need to work with us a little bit to write new rules,' and the position of the SEC is 'no, we don't want that, we want all of you to go away forever.'" Probably neither side will get what it wants.
Last but not least:
- "The RESTRICT Act creates blanket authority, with few checks, to ban just about anything linked to a 'foreign adversary'" — advocacy group Coin Center explains the relevance to crypto
This is the same as the "ban TikTok" bill you've been hearing about, by the way. To give you a sense of the scope, people are calling it a redux of the Patriot Act.
These three stories are significant news, but not new news, if you catch my drift. Regulators' general hostility toward crypto (sometimes justified, sometimes not) and internet freedom in general, that's par for the course at this point. Still, number goes up and number goes down. Fresh transactions are stitched onto their respective blockchains every minute.
The political power struggles will continue for decades, just like in the early days of Wall Street, when newly minted tycoons filled their coffers by laying train tracks across America. We may not talk via telegraph anymore, but today's financial industry is an extension of the same story.
Yep, we're still spreading the love with Hedgehog swag.
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