Newsletter: Brands in Web3 & Web3 in Brands #10

Welcome to Edition #10 of “Brands in Web3 & Web3 in brands“, your regular dose of the latest news from the blockchain, crypto, and Web3 space, curated to provide unique marketing and brand strategy insights with a pinch of spice. 

This week: MiCA paves the way for expansion of the European digital asset sector; Web3 at a pivotal moment for enterprise takeup and startup funding; Meta’s metaverse gets some legs. 

Banking on Europe

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While the never-ending drama of the SBF trial dominates headlines, I’ve been on the lookout for other stories that have consequence for our sector. Not that anyone would know it from the crypto headlines, but the outlook for the regulated crypto sector in Europe is looking increasingly sunny. 

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Last week, Kraken announced that it will acquire Dutch crypto broker Coin Meester as part of its European expansion plans. In addition to the Dutch acquisition, the company has also already secured VASP registrations in Spain, Ireland, and Italy, and we can expect more to follow. 

This week, the CEO of longest-running crypto exchange Bitstamp told Coindesk that the company was in talks with no fewer than three household-name European banks regarding its white-label exchange-as-a-service offering. While he didn’t name the banks, he did say that he believed they would be in a position to make announcements by early next year. 

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All of this comes against the backdrop of the increasing regulatory divide between the US, which has traditionally held a substantial share of value and innovation in the Web3 space, and the rest of the world – as noted in my last newsletter. What we are seeing is an increasing consolidation of the crypto exchange markets into Europe, Canada, and other crypto-friendly jurisdictions, away from the US. 

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While all this European growth and expansion offers some desperately-needed relief in the current market, there is a challenge ahead for legacy Web3 firms. With banks and other large fintech providers such as PayPal lengthening their inroads into the digital asset space, it will become increasingly difficult for crypto exchanges to stand out from the competition. 

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In the unregulated crypto wild west of the old days, it was enough for crypto exchanges to pay for a sports team sponsorship or onboard a celebrity influencer to get eyeballs on their logo. But in the newly regulated, potentially less global market, brands will need to stand out to be seen. And not just from one another – from household name financial institutions that already have a foot in the door with their established customer base who know what they stand for. 

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In this new world, crypto exchanges will need to have a clear message about what they stand for, and the reality is that today: they don’t. Based on the proprietary branding research recently published by THE RELEVANCE HOUSE, crypto exchanges have plenty of work to do when it comes to establishing consistent narratives about their own offering and values. The 19-page report is available as a free download, but we can also offer an exclusive, extended 50-page version that dives deep into the specific narratives of each brand in scope, identifying strengths and weaknesses. If this is of interest to your company, or anyone in your network, please PM me. 

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So while the good news about European expansion continues to roll in, crypto brands must make sure that they are ready to stand up to the competition when it comes to attracting and onboarding users in these new markets. 

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An industry turning point? 

I’m determined not to talk about the SBF trial, simply because it has so little relevance to anything branding-related, except perhaps as a cautionary tale. But it’s impossible to ignore the impact that this event is having on the sector, which is already in a perma-state of “waiting for something to happen”, thanks to the ongoing market uncertainty. 

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A quote from an industry insider in a recent Bloomberg report sums it up well, that “You can imagine there’s a pre-FTX digital-asset industry and then a post-FTX digital-asset industry. And I think that this will go down potentially in history as a marking point for when the industry became institutionalized, credible and regulated.” This reflects my own views expressed above, that at least in the jurisdictions where crypto is becoming regulated, the landscape of the industry is changing. Rather than a stream of funding towards startups and legacy Web3 firms, the activity is increasingly coming from established enterprises and institutions. 

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Nike, a trailblazer when it comes to integrating Web3 into its products and marketing, has now announced the first physical sneaker which will be launched on October 20th as part of its .SWOOSH Web3 platform. Only .SWOOSH members who have previously opened one of the platform’s Our Force 1 virtual box are eligible to own the product, which is priced at a not-unreasonable $120. 

From digital sneakers to physical, the move represents a full circle for Nike’s pioneering Web3 loyalty initiative. 

PayPal continues its push into digital assets with a patent application for an NFT marketplace, with the details revealing grand ambitions for tokenization that go far beyond jpegs. The text of the application refers to digital media, but then talks of deeds to property, event tickets, legal documents, and other real-world items. If PayPal branches out into NFTs, it could be said that its journey into Web3 is complete. 

And banking giant JPMorgan has executed its first blockchain-based collateral settlement transaction on the blockchain, involving Blackrock and Barclays bank. Blackrock used JPMorgan’s Onyx blockchain (based on Ethereum) and the bank’s Tokenized Collateral Network (TCN) to tokenize shares in a money market funds. Barclays then took custody of the tokenized shares as collateral in an over-the-counter derivatives trade. This comes as McKinsey maintains a forecast that tokenized securities will represent trade volumes of up to $5 trillion by 2030.

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Enterprise adoption is all well and good, but what does this mean for crypto’s legacy, legendary reputation for wild innovation? 

Well, the unfortunate reality is that, at least for now, the VC funding tap has slowed to a drip. For Web3 startups, it will be harder to get a toe into a much smaller pool. But that doesn’t mean it’s impossible. Funding is still there, it will just mean that your product – and most importantly, your brand – have to be more compelling than the competition. 

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Advancing adoption

Like NFTs and Web3, the metaverse has also ridden the highs and lows of the hype rollercoaster, but in terms of the overall VR user experience, Meta has been making some surprising strides. Mark Zuckerberg joined Lex Fridman for an hour-long conversation for the latter’s podcast, which took place entirely in the metaverse using photorealistic avatars. 

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Source: X

Could the addition of avatars with legs prove be the critical catalyst for Meta’s metaverse ambitions? 

Deutsche Telekom has furthered its reach into blockchain with the announcement that it will become an indexer on The Graph network, organizing and serving blockchain data to users. In May this year, the company joined Polygon as a validator, following its onboarding to other networks including Ethereum, Celer, and Chainlink. The presence of reputable national telecommunications providers on these networks means that the networks themselves can benefit from the powerful brand associations. 

And in a surprising twist, the revered scientific journal Nature has proven to be an unlikely endorser of Web3. An editorial for the journal’s biotechnology section explains how DAOs (decentralized autonomous organizations) could be used to convene scientific communities and funding around niche research areas that would otherwise go unexplored. With scientific funding dominated by large institutions and vested interests, this could prove to be one of the more intriguing and potentially truly transformative use cases for Web3 technologies. 

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Out and about in Web3

Short notice, but if you happen to be around in Vaduz this afternoon (October 12th) then come and join us at CCA Token Summit 2023! I’ll be delivering a keynote with some uncomfortable but necessary truths for Web3 founders – find out more on this LinkedIn post. 

Also, a reminder that I will be speaking at the HeroFest event in Bern TOMORROW – October 13^th – for more details, please check out this LinkedIn post. No spoilers about my costume…