Quick take:
- X just received a license that could pave the way for crypto transactions on the platform.
- Yahoo Finance is expanding its ecosystem with the purchase of the social investment insights platform, CommonStock.
- Social investing could be about to go mainstream and experts believe this is good for crypto and close relatives.
Can social media fuel the next growth phase of the crypto industry? Early signs suggest it could. X (formerly Twitter) is arguably the biggest platform for the crypto community. The Elon Musk-owned company has recently received a license to facilitate digital payments. Although the new payments service will start by supporting fiat currencies, Musk has instructed his team to develop a platform that supports crypto.
Soon, X could support crypto payments and transfers, effectively making crypto trading part of its product offerings. Musk has already stated he wants to make X, “The Everything App”, becoming both a financial and news hub. He also has plans for the creator economy with video, content and art, among others.
This is not X’s first attempt to integrate crypto transactions. Before Musk completed the acquisition, the company previously collaborated with leading NFT marketplaces to enable a new feature called Tweet Tiles that allowed users to buy NFTs directly on Twitter. However, in this case, users still needed to connect their crypto wallets to make the purchase.
What X is trying to do could make the process even smoother by facilitating transactions using its own system.
Alex Salnikov, the co-founder and chief strategy officer of Rarible, thinks that embedding crypto functionality in one of the biggest crypto communities and social media platforms could onboard more collectors into the NFT space.
“The integration of crypto services into X not only strengthens the overall industry but also has significant implications for NFT trading. By embedding crypto functionality into one of the biggest social platforms, we are helping to mainstream both crypto and blockchain-based assets like NFTs,” said Salnikov.
“It’s an important stepping stone to broader adoption of NFTs, and we at Rarible are excited to see what this will mean for artists and collectors alike,” he added.
On the other hand, James Wo, Founder and CEO of DFG, a digital investment firm with over $1 billion in assets under management thinks it is too early to preclude that X’s new license will allow it to support crypto payments and transfers.
“As far as we know, X’s upcoming payments feature will initially only support fiat currencies, but Musk has instructed X’s developers to build out the platform’s payment system in order to add cryptocurrency functionality in the future. It’s unclear what financial products X will offer once it launches the payments function,” said Wo.
However, should X receive more clearances to implement crypto payments, it would be great news for the industry.
“We’d love to see cryptocurrency trading implemented in X in the future, but this will require further regulatory clearance. After all, X’s implementation of crypto payments is a good sign for the crypto industry,” he added.
Seth Ginns, Head of Liquid Investments and Managing Partner at CoinFund, which recently raised $158 million seed for its fourth fund also agrees that given the X’s strong crypto community, implementing “a payments or trading layer could see fast adoption and reinvigorate retail interest and engagement.”
Clearly, there is an acceptance that X is strong with the crypto community, and with Musk at the tip of the spear coupled with his ties to crypto — Tesla owned more than $300 million before news emerged last week that it had sold out and Musk is also renowned for having been a big promoter of Dogecoin — a license to offer crypto payments could be the missing piece to take the industry to the next frontier.
“With X’s recent attainment of a crypto license, we’re witnessing a paradigm shift in the digital financial landscape,” says Srikumar Misra, Founder & CEO of Aarnâ Finance.
“X’s introduction of crypto services, ranging from trading to payments, could pave the way for broader acceptance and incorporation of digital assets across varied use cases,” added Misra.
However, Misra also believes Musk’s ambition to make X the one-stop app could have condescending effects. “User segment complexities inherent in finance and asset management may prove that a platform trying to be everything for everyone might not necessarily excel for specific user niches.”
Collin Woodward, the President of StealthTest, a secure, cloud-based private testing infrastructure solution that enables users to deploy and own their own private test networks also thinks there could be some drawbacks with Musk’s big ambition, signalling a potential return of spam bots.
“Now with money transmitter licenses from several states, Elon is likely looking to shift X’s business model to focus on ‘financialising’ content on the platform through incentive payments and tips made using cryptocurrency.”
“While this might open the doors for further mainstream adoption of crypto and Web3, it might also potentially introduce a lot more bots, scams, and spammers, and innovative new methods to exploit the financialization of content and impressions,” said Woodward.
The news of X’s financial services licence comes hot on the heels of Yahoo’s acquisition of CommonStock, a socialised platform that enables investors to link their brokerage accounts thus allowing them to showcase the actual performances of their portfolios and trades without displaying the actual dollar amounts.
By integrating CommonStock, Yahoo will be able to offer a similar experience to the one offered by the leading social trading platform eToro.
“The CommonStock team has built a trusted community, sharing high-quality insights and knowledge that help everyday investors create wealth. Together, Yahoo and CommonStock will further empower investors of all skills and levels through a one-stop shop for smart financial decisions,” said Tapan Bhat, President of Yahoo Finance.
However, unlike eToro, even integrating CommonStock won’t allow Yahoo to offer copy-trading services because it does not provide brokerage services.
Although X’s crypto services could affect social trading platforms like eToro, some experts think the impact could be positive.
“X’s entry into crypto could challenge existing platforms like eToro to expand beyond just crypto trading to include NFTs. The lines between social networks and financial platforms are blurring, and adaptation will be key for long-term competitive success,” said Salnikov.
CoinFund’s Ginns added, “X’s move likely expands the addressable market with new use cases and a broader reach, so the pie gets bigger.”
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