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Top stories today:
1. Markets price in 76% odds of Fed keeping rates at 5.00% - 5.25% on Wed
2. Andreessen Horowitz’s 1st non-U.S. office will be in London, crypto-focused
3. Trump criminal case update: Barr says he is “toast”, voters don't care
4. Full video of Coinbase CEO shows his sensible position on crypto regulation

0. Data and calendar

1. Markets price in 76% odds of the Fed keeping rates at 5.00% - 5.25% on Wed

Markets are confident that CPI will gradually return to 2%

Markets and economists expect rates to remain above 5% by year-end and then fall to 3%

Economists also expect the Fed to continue to reduce its balance sheet, to $6.9T in 2024

Looking back, we've seen a sharp rise in base rates around the world

In the U.S., it was the steepest rate hike over the past 40 years

2. Andreessen Horowitz’s 1st non-U.S. office will be in London, crypto-focused

• Led by relocating partner Sriram Krishnan.

• Crypto accelerator program: a16z's next one will also be in London.

• Goal is crypto regulatory clarity: “Our assessment is the UK is ahead of the curve and instituting [crypto] policies that will eventually becoming a global standard,” said Chris Dixon, who leads a16z crypto. - Axios, a16z

Andreessen’s Chris Dixon met with PM Sunak

• Rishi Sunak: “We must embrace new innovations like Web3, powered by blockchain technology, which will enable start-ups to flourish here and grow the economy.”

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4. Trump criminal case update: Barr says he is “toast”, voters don't care

It is unlikely that this indictment will change the GOP race, according to a new CBS poll

As expected, GOP voters want candidates focused on the economy, not social issues

Trump's GOP nomination odds fell slightly to 58% on Betfair

The Washington Post made a nice interactive chart showing how the confidential boxes were allegedly moved

• Evidence from lawyers’ notes: Of note, a significant part of the evidence for this case came from notes of M. Evan Corcoran, Trump's lawyer.

  • Attorney-client privilege was broken through the use of the crime-fraud exception, which the judge granted. - NYT

5. Full video of Coinbase CEO shows his sensible position on crypto regulation

Our view: there needs to be a clear line defining when tokens go from being securities to commodities

The SEC currently provides no guidelines on how they judge crypto assets to be securities or not. They must have clear rules, otherwise, many cases are unclear. To concretize this, let's take the example of Ethereum, the #2 most valuable cryptocurrency:

• 2014: Ethereum founders sell 50M ETH for $17M. Were those sold ETH securities? Possibly.

• 2015: The Ethereum network is launched and ETH is widely tradeable. Is ETH still a security? Unclear.

• 2023: The Ethereum Foundation has only 0.3% of the total ETH supply. Is ETH a security? Very likely not.

Our view: more disclosures from crypto issuers and proof-of-reserves from exchanges would be great

If the SEC has the goal of protecting investors, it should:

1. Require crypto issuers to provide public disclosures (S-1s, quarterly reports, etc.) until the crypto is sufficiently decentralized, and importantly, numerically define what sufficiently decentralized means.

   1. The issuers + founders having less than 10% of the total token supply and of miner control could be the definition.

2. Require crypto exchanges to publish quarterly proof-of-reserve audits in accordance with the Public Company Accounting Oversight Board (PCAOB) guidelines, just as public companies have to do.

   1. Also require them to disclose their security protocol to keep the customers’ crypto away from hackers, employees, and any other stockholder.

6. 50% of North Korea's ballistic missile program is funded by crypto hacks: U.S. official

• If this is true or not, it's hard to say, but the source is Anne Neuberger, President Biden’s deputy national security adviser for cyber and emerging technology.

  • It could be another anti-crypto argument from the Biden administration, whose SEC Chair is in a fierce crusade against the crypto industry. - WSJ

$1.65B in crypto was stolen in 2022 by North Korean hackers, ~6% of GDP!

7. How to make a QR code with Stable Diffusion

• Beautiful QR codes are a new trend to watch out for. - SDA

  • Even though they don't always work perfectly. - DataGenetics

8. Infographic: how the Patriot defense system works

9. Other headlines

Tech

• OpenAI CEO calls on China to help shape global AI regulations.

  • “Optimistic” on global AI coordination, he said in Japan.

• MusicGen: Meta open sources its text-to-audio AI model.

• Apple could launch cheaper Vision Pro as early as late 2025.

• Reddit: some subreddits go dark in protest against API change.

  • CEO: “we'll continue to be profit-driven until profits arrive.”

• Twitter refusing to pay Google Cloud bills.

• Xbox head says he doesn't “feel an imperative” to launch new console.

Biotech

• Alzheimer's: FDA committee votes 6-0 in favor of new drug Leqembi.

• GLP-1s for cessation: Lilly looking into smoking, drinking.

• Illumina CEO resigns after pressure from Icahn.

Business

• George Soros hands control to his 37-year-old son, Democrat.

• UBS completes Credit Suisse takeover, profits unclear.

• SpaceX hires 14-year-old college grad.

• San Francisco hotels are going out of business.

Crypto

• Robinhood to delist Solana, Polygon, Cardano.

• Bitcoin dominance hits 50%; market cat $503B.

• Nigeria: Binance ordered to halt operations by regulator.

World

• American arrested in Russia on drug charges.

• Silvio Berlusconi dies at 86.

• Scotland: former PM arrested as part of investigation into party funding.

• Iran: “no such thing as negotiations” with U.S. over nuclear deal.

10. Interesting tweets, memes, and images

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