Gm. This is Milk Road, the “Godfather 2” of crypto newsletters. Each issue is just as great, if not better, than the one before it.

Here’s what we’ve got for you today:

• February Recap: Winners & Losers

• All cryptos minus Bitcoin are securities – SEC

FEBRUARY RECAP: WINNERS & LOSERS

Well, ladies and gents, that’s another month in the books. February is the shortest month of the year, but this is crypto, where time goes 0.5x as fast and there’s 2x as much crazy sh*t…

So just in case you missed something, we’re coming at ya with the biggest winners & losers in February.

Let’s start with the winners. We got 5 of ’em:

1/ Bitcoin NFTs

There was only one thing more popular than Miley Cyrus’ new song this month: Bitcoin NFTs.

And it’s all thanks to Ordinals — a new protocol that lets people inscribe data (i.e., images, videos) on the Bitcoin blockchain. In simple terms, it’s bringing NFTs to Bitcoin.

It only launched a month ago but it hit the ground running. There are close to 200,000 Ordinals NFTs in existence now — with most of them created this past month.

Stacks also had a big month riding the Bitcoin NFT wave. It’s a Layer 2 network built on top of Bitcoin that lets developers create and deploy smart contracts (AKA the thing that powers stuff like NFTs, DeFi apps, etc.).

Its native token (STX) is up 210% on the month. It’s “success by association”.

2/ Dookey Dash

Yuga Labs, the creators of Bored Apes, launched its new game this month — Dookey Dash.

It’s a skill-based, “endless runner game”. It’s kinda like Temple Run and Flappy Bird, except players get rewards. The better the score, the better the rewards.

And Dookey Dash ended up being a huge success.

• Sewer Pass NFT saw $40M in sales volume this month. People needed this NFT to play the game. It was the 5th most popular collection in February, according to CryptoSlam.  

• 25,000+ people played the game. According to Yuga Labs, the Bored Ape ecosystem grew by 40% thanks to the game.

• Pro gamers played & streamed the game. There were a handful of pro Fortnite players that got in on the action & streamed the game to their fans on Twitch & YouTube.

Overall, a big win for Yuga Labs.

P.S. – And a big shoutout to Mongraal. He’s the pro Fortnite player that ended up with the #1 score on Dookey Dash. And he just sold the NFT associated with it for $1.6M. That’s more than 2x the amount of money he’s made in all his Fortnite tournaments ($706k).

3/ Coinbase

Although it’s been a rough time for most crypto exchanges, Coinbase had a strong month. In February, it…

• Won a class-action suit. The complaint claimed Coinbase engaged in the “unregistered sale and offering of securities” and failed to register as a New York state broker-dealer but the judge dismissed the case after he found Coinbase’s marketing efforts did not constitute solicitation. A rare legal win for crypto (Regulators: 127893, Crypto: 1)

• Announced a new Layer 2 blockchain called Base. It offers developers an easy, low-cost way to build decentralized apps (dApps).

• Beat earnings expectations. The crypto exchange beat expectations for Q4 revenue ($629M v $590M). It wasn’t the best report, but Coinbase didn’t completely fail either. It’s like getting a C- when you thought you got an F.

But the biggest thing Coinbase did this month was: stay out of trouble.

Kraken had its staking services shut down by the SEC. Binance is being investigated & probed by every regulator, besides Nate Dogg and Warren G.

It’s been a warzone between crypto exchanges & regulators, but Coinbase is in the safezone. For now.

4/ Conflux

Conflux Network is slowly becoming a popular Layer 1 blockchain. And its native token (CFX) was up over 220% in Feb.

Why? It’s the only regulatory-compliant blockchain in China. Plus Conflux recently announced some big partnerships:

• Partnered with Little Red Book, a social media platform with 200M+ users, to provide NFT services

• Partnered with China Telecom, a telecom provider with 390M+ users, to build blockchain-based SIM cards

We’ll see if Conflux can keep the momentum going, but it shouldn’t be too hard since it’s the only chain to have the Chinese stamp of approval in the country.

5/ Blur

NFT marketplaces have all been trying to take the #1 spot from OpenSea. All have failed, until now…

Blur became the first marketplace to overtake OS in trading volume this month. And it isn’t even close. … Blur now makes up ~84% of all weekly trading volume for Ethereum NFTs.

It also dropped a new crypto token (BLUR) that has become one of the top traded tokens this month. BLUR is up 75% since it launched.

OpenSea might have had the upper hand at one point, but the tables have quickly turned.

And now, onto the Losers. There were a handful to pick from…

• Kraken had to pay $30M in fines and shut down its staking services

• Binance is being investigated by all types of regulators

• Paul Pierce became the latest celebrity to get fined $1M+ for promoting a cryptocurrency

• Paxos is possibly facing charges and was ordered to stop minting its BUSD stablecoin

But there’s a common trend amongst them: the SEC. The biggest losers of the month all got rekt by Gary Gensler & other regulators in some way, shape, or form.

Turns out Gandhi was right all along…

First they ignore you. Then they laugh at you. Then they fight you. Then you win.

We’re definitely in stage 3. So brace yourselves ladies & gents, this is only the beginning of the regulation fight. And we won’t be surprised if it creates more losers in the future.

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Inflation, mergers, rate hikes, SPACs, crypto, and more. These are some of the most relevant topics in finance, and you owe it to yourself to know what’s going on every morning.

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GENSLER’S AT IT AGAIN

It’s official: the SEC views every crypto project except Bitcoin as a security. Cue the hysteria.

Everyone’s favorite chairman, Gary Gensler, told NY Mag that cryptos “are securities because there’s a group in the middle and the public is anticipating profits based on that group.”

That’s how the Feds in part define a security: if investors’ returns depend on what other people do.

This is the first time the agency/Gensler flat-out called cryptos securities, though they’ve been alluding to as much for a while now. People are mad because 1) they think the SEC has it OUT for the space and is unjustly trying to kill it dead and 2) if crypto projects are forced to register their products with the SEC, that’d cost them more money and could hurt mass adoption.

But Gensler’s comments may be just that: comments. They might not have too much legal weight. Here’s a good thread on why.

Friendly reminder that Gensler’s opinions on what is or isn’t a security are not legally dispositive.

In this country, judges – not SEC chairs – ultimately determine what the law means and how it applies.

Doesn’t mean his thoughts are irrelevant. They’re just not dispositive.

— Logan Bolinger (@TheWhyOfFI)
Feb 26, 2023

On the bright side, this is a win for Bitcoin: Gensler’s comments are a reminder that the OG and the Crypto Space are two very different things, and the government knows it.

MILKY MEME

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That’s a wrap for today. Stay thirsty & see ya next time! If you want more, be sure to follow our Twitter (@MilkRoadDaily)

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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.