Twitter: another step toward possible crypto integration

Yesterday it was revealed that Twitter Payments LLC has obtained three official licenses to operate as a Money Transmitter in three US states, Michigan, Missouri and New Hampshire. 

New Hampshire is a state on the East Coast, the one on which, for example, New York is located, while Michigan is a state in the Midwest, i.e., in that region where Chicago is also located. Missouri, on the other hand, is a southern state. 

Curiously missing from this list is the West Coast, i.e., the region where California is located and where the company is headquartered.

With these licenses, Twitter will be able to handle user money transfers internally through its subsidiary Twitter Payments LLC. 

Twitter goal: to integrate crypto?

Indeed, the company’s goal is precisely to integrate payment features within its app. 

Indeed, the new owner, Elon Musk, has repeatedly stated that he is inspired by WeChat, which is a Chinese messaging app that has not only integrated a microblogging platform similar to Twitter, but has also become one of the leading daily payment tools in China.

Musk’s idea is to create a kind of super-app for Western countries, for now simply called X. 

Thanks to newly obtained licenses, it will be able to integrate internal money transfer services at any time, theoretically speaking. 

Twitter: crypto integration

Truth be told, for now there is no sign that the payment services that will be integrated will include any cryptocurrencies. 

However, Musk has stated so many times in the past that he wanted to integrate Dogecoin into Twitter that it would seem really strange if he had given up on it. 

They will certainly start with fiat currencies though, because the process that way would be much easier especially from a regulatory perspective. 

But once they integrate an internal wallet within the app for fiat currency payments, it is very easy to imagine that they may also want to integrate a cryptocurrency buying and selling service, somewhat like PayPal did in late 2020. 

At that point allowing also crypto payments could be an almost a foregone conclusion, even though PayPal for instance has not yet done so. 

However, a distinction needs to be made between what will presumably happen in the short term, i.e., the likely integration of fiat currency payments on Twitter, and what might happen in the medium/long term. 

The entry of financial institutions

For example, imagining the SEC’s approval of BlackRock’s Bitcoin spot ETF, one could also easily picture that BlackRock itself could relatively quickly begin to offer its clients the ability to take positions directly on the price of BTC. 

BlackRock is an institution in the US, and given that it is the largest asset manager in the world, such a scenario would eventually lead to the definitive clearing of Bitcoin in the eyes of presumably the entire American population. 

At that point, it is hard to imagine that other financial institutions could stay completely out of the crypto world, and their eventual entry en masse would end up justifying the integration of crypto into apps such as Twitter. 

Thus, it may be only a matter of time, although the discussion gets complicated in no small measure when extended to altcoins. 

Bitcoin and altcoins

It is very likely that what has been happening in recent months could lead, within a year or two, to the final clearance of Bitcoin. 

This will probably also bring with it a subsequent final clearance of Ethereum, but this is by no means the case for all altcoins. 

The main issue is the question raised by the SEC about the nature of many altcoins, including Ethereum. 

Indeed, Bitcoin is certainly a commodity, and this is in no way an obstacle to its spread. But many altcoins actually seem to be securities, and this in fact prevents them from really having a wide spread. 

As for Ethereum, the question is still open, although for now the SEC has not yet officially included it in the list of cryptocurrencies it considers securities. 

And with regard to Twitter and Elon Musk, Dogecoin is not considered a security for now either, so in theory there should be no problem integrating Bitcoin and Dogecoin into Twitter’s future wallet. 

However, it seems unlikely that such a popular app would fail to add altcoins that are popular in their own right, such as Shiba Inu. 

The impact on crypto markets

Yesterday’s release of the news about the new licenses obtained by Twitter had no impact on the crypto markets. 

The reason is that for now it only affects fiat currencies, and Twitter has made it more or less explicitly clear that it will only start with fiat currencies. 

However, if at some point a clear intention to integrate cryptocurrencies emerges, then the impact on the markets could be significant. 

As of today this is actually not a foregone conclusion, but it still seems quite likely, especially in the medium to long term.