My opinions on Crypto.com’s MCO/CRO swap program
Earlier in the week, Crypto.com announced a new swap program where their customers can swap their MCOs to CROs at a predetermined rate. This has resulted in a large community outcry and backlash. As someone who is long term bullish on cryptocurrency, I have some opinions on their decision to introduce this swap.
Details of the swap
As of 3rd August 2020, holders of MCO tokens have the option of swapping their existing coins into CROs at the predetermined rate of 1 MCO = 27.6439 CRO. If they do it before 2nd September, they’ll receive an additional 20% CROs in the form of a 6-month stake in the Crypto.com exchange.
All MCOs have to be swapped into CROs by 2nd November 2020. After said date, MCOs will lose all their utilities and will ultimately lose ALL its value.
MCO Visa Card
The MCO card staking benefits have also been updated. For users who have staked their MCO coins prior to the announcement of this swap, they’ll continue to receive the same benefits. Users who want to upgrade their cards will now have to stake in CROs instead.
As of current prices, it is actually cheaper to get the cards now with CROs as compared to using MCOs before the swap. You’ll pay US$160 (CRO @US$0.16) for a Ruby Card now compared to US$220 (MCO @US$4.50) previously.
It makes sense for the company
With the introduction of CRO, the focus of the company is split into 2. The MCO was used mainly for the MCO Visa card related perks and CRO for utility. Over the past couple of months, CRO has been heavily promoted by the company through their social media accounts. Marketing campaigns such as the 20% Crypto.com exchange stake has greatly boosted the popularity of the coin. MCO on the other hand, was not given much of an attention throughout the same period of time.
By consolidating the 2 coins into 1, the company can better focus its efforts on promoting just 1 coin. This might also be good for the coin holders as they no longer have to make a “bet” on which coin is likely to take off.
Price engineering has taken place without concern for early adopters
This swap has been announced at the very peak of the price difference between MCO and CRO. As a result of their constant promotion, the price of CRO has increased greatly over the past couple of months whereas the price of MCO has stayed relatively constant. This has helped lower the swap rate of the coins for the company.
I could not help but wonder if this was what the company was attempting to do the past few months. By lowering the swap rate of the coins, the company do not have to give out as many CRO tokens and therefore keeping most of its value to itself.
Showed me that the value of CRO/MCO is ultimately tied to the company
Following the point in the above section, this incident has shown me that the price of the coins are very tightly coupled to the decisions of the company. This results in the company having a lot of powers over the holders of the coins. They can easily devalue the tokens by flooding the market with CRO since most of the tokens are locked up with them if they decide to raise funds one day.
What I’ll be doing
For one, I’ll be moving most of my holdings of CRO into Ethereum and Bitcoins. As someone who looks forward to a day where our money is not controlled by any central entity, this move by Crypto.com has left me with a sour taste in my mouth.
Based on their data, as of August 2020, more than 80% of the supply of CROs are locked up by the company. This idea does not bode well with me as this means that the company has huge power over the value of the coin. Should the company decides to fund raise, they can easily unlock this coins and increase their supply, thereby lowering the value of each coin on the market.
As a result of this move, I’ll also be starting to move my holdings of cryptocurrencies into a cold storage such as Ledger. By holding my coins in the Crypto.com app, I’m risking the chance that my coins might be lost should the company liquidates. There are many more benefits for storing your cryptocurrencies in a cold storage and I’ll be discussing more about this in a future post.
In the long term, I’m still very bullish on cryptocurrencies and believe them to be the future of finance. I will continue to beef up my holdings of large-cap coins such as Ethereum and Bitcoin where their legitimacy is more decentralised. Crypto.com will continue to be the place where I routinely purchase Bitcoins from and I will continue to use their MCO card for the benefits.
If you like my article and would want to support my blog, you can choose to sign up with Crypto.com using my referral code here! We’d both get US$50 worth of CRO coins when you stake some coins with them.