#370: What Are The Prospects For Apple’s New Vision Pro?, & More

At its Worldwide Developers conference last week, Apple unveiled the Vision Pro mixed reality headset. Its first major product release in some time, Apple has packed the Vision Pro with top-of-the-line hardware and a new operating system for spatial computing. While it met with positive reviews,¹ Vision Pro’s steep $3,499 price tag tempered the excitement.

According to the specs, Apple has made significant strides in some areas of the headset experience, particularly the user interface. Users will not need external controllers to navigate the digital frontier, as the new device² uses outward- and inward-facing cameras to recognize eye and hand signals.

While its long-term impact could be meaningful, we do not believe the Vision Pro will win over consumers anytime soon because it does little to alleviate the headset’s primary pain point: a cumbersome object strapped around the face and head. Can a product priced at $3,499 succeed in a market struggling to find a killer app?

We wonder whether Apple meant the device for developers instead of consumers. Unfortunately, the mixed/virtual-reality space continues to suffer from the chicken-and-egg problem: developers seek consumer demand, while consumers wait for developers to build a killer app. Until then, Apple and Meta will have to support the market.

Last week, the U.S. Securities and Exchange Commission (SEC) charged Coinbase³ with operating an unregistered securities exchange, broker, and clearing agent, a move telegraphed by its Wells Notice⁴ in March. The new case follows the SEC’s recent actions against other prominent players that list similar assets—Kraken,⁵ Bittrex,⁶  and Binance,⁷ for example.

In our view, the Coinbase charges are the inevitable outcome of SEC Chair Gary Gensler’s view—shared shortly after his appointment—that most cryptoassets listed on exchanges are unregistered securities. Coinbase has budgeted for the legal costs and expects its operations to continue unaffected, though the potential for coordinated state-level action⁸ introduces an additional layer of complexity. The protracted Ripple case⁹ suggests that the Coinbase case could take years to resolve.

Importantly, the SEC’s allegations against Coinbase differ significantly from those made first last week against Binance. While Binance does, in the SEC’s eyes, also operate an unregistered exchange, broker, and clearing agent in the US, the SEC also charged it with more FTX-like activity: deception, commingling of assets across entities, and trading against customers. The SEC brought no similar charges against Coinbase.

The progress of crypto legislation will be critical as legal battles play out and other countries take share from the US in what we believe is one of the most important innovations in history. Ultimately, we believe the US will seek to catch up with the rapidly developing standards¹⁰ evolving in Europe, Singapore, Australia, and Hong Kong.

House Financial Services Committee Chairman Patrick McHenry (R-NC) and House Agriculture Committee Chairman Glenn Thompson (R-PA) have introduced draft legislation¹¹ that would define the jurisdictions of the SEC and Commodity Futures Trading Commission (CFTC) based on a cryptoasset’s level of decentralization. Assets issued and sold for fundraising purposes, for example, would be considered securities at launch. Then, upon achieving various milestones—such as no party with unilateral control over the network, or no party with more than 20% ownership of the supply—the assets would transition to commodity status. We are excited about the potential for this legislation to garner bipartisan support and provide the regulatory clarity for which the US crypto industry has been clamoring.

ARK’s longstanding conviction in decentralized public blockchain technology is as high as ever. In our view, public blockchains are catalyzing revolutions¹² in money, financial services, and digital property rights on the internet. All three transformations should lower the cost of and settlement times for financial transactions, reduce counterparty risk, and foster financial freedom.

Last week, General Motors CEO Mary Barra joined Elon Musk¹³ on Twitter Spaces to announce that GM will follow in Ford’s footsteps and adopt Tesla’s North American Charging Standard (NACS). In our view, GM’s decision could unleash enough momentum to encourage any company selling electric vehicles (EVs) in the US to adopt NACS.

By opening its charging network to other EV providers, Tesla is likely to accelerate the adoption of EVs and increase the capital efficiency of the EV industry. In core geographies, the deployment costs associated with Tesla’s superchargers and residential alternating current (AC ) are much lower than those of competitors, as shown below. In our view, industry resources are likely to gravitate to the lowest cost, highest performance charging stations, as opposed to more costly fractured networks. Increasingly, Tesla is likely to be involved in the electrons Americans consume—whether at home or on the road—as the world transitions to electric power.

Source: Tesla. 2023. “Master Plant 3: Sustainable Energy For All Of Earth.” Tesla 2023 Investor Day Keynote. https://digitalassets.tesla.com/tesla-contents/image/upload/IR/Investor-Day-2023-Keynote. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security or cryptocurrency. Past performance is not indicative of future results.

[1] Eadicicco, L. 2023. “Why Apple Vision Pro’s $3,499 Price Makes More Sense Than You Think.” CNET. https://www.cnet.com/tech/computing/why-apple-vision-pros-3500-price-makes-more-sense-than-you-think/.
[2] Apple. 2023. “Introducing Vision Pro.” https://www.apple.com/apple-vision-pro/.
[3] U.S. Securities and Exchange Commission. 2023a. “SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing Agency.” https://www.sec.gov/news/press-release/2023-102.
[4] Coinbase Global, Inc. 2023a. “Form 8-K.”  U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1679788/000167978823000051/coin-20230322.htm.
[5] U.S. Securities and Exchange Commission. 2023b. “Kraken to Discontinue Unregistered Offer and Sale of Crypto Asset Staking-As-A-Service Program and Pay $30 Million to Settle SEC Charges.” https://www.sec.gov/news/press-release/2023-25.
[6] U.S. Securities and Exchange Commission. 2023c. “SEC Charges Crypto Asset Trading Platform Bittrex and its Former CEO for Operating an Unregistered Exchange, Broker, and Clearing Agency.” https://www.sec.gov/news/press-release/2023-78.
[7] U.S. Securities and Exchange Commission. 2023d. “SEC Files 13 Charges Against Binance Entities and Founder Changpeng Zhao.” https://www.sec.gov/news/press-release/2023-101.
[8] Sun, Z. 2023. “Breaking: Coinbase targeted by state security regulators concurrent to SEC lawsuit.” Cointelegraph. https://cointelegraph.com/news/coinbase-targeted-by-state-security-regulators-concurrent-to-sec-lawsuit.
[9] U.S. Securities and Exchange Commission. 2020. “SEC Charges Ripple and Two Executives with Conducting $1.3 Billion Unregistered Securities Offering.” https://www.sec.gov/news/press-release/2020-338.
[10] Coinbase Global, Inc. 2023b. “We need clear rules for crypto to protect American leadership and consumers.” https://www.coinbase.com/blog/we-need-clear-rules-for-crypto-to-protect-american-leadership-and-consumers.
[11] U.S. financial Services Committee. 2023. “McHenry, Thompson, Hill, Johnson Release Digital Asset Market Structure Proposal.” https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=408838.
[12] Elmandjra, Y. et al. 2023. “Public Blockchains.” Big Ideas 2023. ARK Investment Management LLC. https://ark-invest.com/big-ideas-2023/crypto-overview/.
[13] Barra, M. 2023. “Everybody in: @mtbarra & @elonmusk discuss the future of EV charging.” Twitter. https://twitter.com/mtbarra/status/1666898039800225808?cxt=HHwWoICzsfC7gaIuAAAA.