TON takes off on Telegram tie-up By Reuters

Written by Elizabeth Howcroft

(Reuters) – The value of a coin called TON has jumped in recent months, as investors bet that its integration with messaging service Telegram could bring the cryptocurrency to the app's estimated 900 million users.

Telegram endorsed TON in September last year, saying that the blockchain and associated token would be the “official infrastructure of Web3.” Earlier this month, TON said tokens could also be issued on its blockchain, allowing Telegram users to send each other stablecoins within the app.

The TON token rose, reaching $7.63 on April 11, compared to about $2.21 a year earlier, according to CoinGecko data.

With $18.3 billion in circulation, it is the tenth largest cryptocurrency, after memecoin.

The prospect of a “super app” or “everything app,” uniting payments and shopping with social media or messaging services, has long been a holy grail for investors, who look to China's WeChat app for inspiration. In the world of cryptocurrencies, it is sometimes called “SocialFi,” which is short for social finance.

Such ideas led to Elon Musk's acquisition of Twitter in 2022, which has now become X. Binance, which helped fund the acquisition, said it would explore how cryptocurrencies could be used on the platform. Meanwhile, British company Revolut approached it from the other direction, starting with a financial app and then adding social functions on top.

Thomas Busch, CEO of digital asset hedge fund Indigo, said that while TON's appeal is part of broader interest in super-apps, it has also been helped by the overall recovery in altcoins.

“TON has outperformed many of its peers as many people have bought the project with the return of interest in alt tokens and thanks to the support of Telegram,” he said, adding that Indigo has traded the TON token.

TON, short for “The Open Network,” has a cryptocurrency wallet product within Telegram with over 6 million monthly users.

Scale failure

Efforts to bring cryptocurrency payments to social media have so far not been widely successful. Facebook (NASDAQ:), now known as Meta, terminated its Libra cryptocurrency project after fierce opposition from regulators globally, who were concerned it could harm financial stability and weaken control over monetary policy.

“The recent foray into cryptocurrency payments by Telegram presents a new use case for the app, but its acceptance and adoption is still in its early stages,” said PitchBook senior analyst Robert Lu, who said there has been an increase in venture capital interest. SocialFi.

“The main challenge is changing the perceptions of users in non-Asian markets, where messaging apps are mostly seen as just for communication and not as multi-functional platforms.”

Such integrations present “regulatory, technical and security challenges,” said Ram Gopal, a professor at Warwick Business School.

“Regulators may be concerned about how these platforms comply with current financial regulations,” he said.

“Ensuring that users are protected from scams, fraud and potential losses due to cryptocurrency volatility will be a serious concern for regulators,” he added.

ton history

Telegram Messenger created the TON blockchain in 2018 and raised $1.7 billion by selling the associated cryptocurrency. But the project came under accusations from the US Securities and Exchange Commission, which said the token sale violated federal securities laws.

As part of a 2020 settlement with the SEC, Telegram agreed to stop developing TON. She neither admitted nor denied the SEC's allegations.

After that, a group of unrelated developers continued working on the project, picking up where Telegram left off, according to a history on TON's website.

TON says it is decentralized, based on an open source database, with no single controlling authority. There is a non-profit foundation behind it, registered in Zug, Switzerland.

A TON spokesperson said that Telegram and TON are clearly separate entities.

The foundation's website says the TON Foundation's president is Steve Yuen. Andrew Rogozov, the former CEO of Russian social media site VK, is a founding member of the organization, according to his LinkedIn profile. He appeared on stage with Telegram co-founder Pavel Durov and Tether CEO Paolo Ardoino at a conference in Dubai where the partnership to issue the stablecoin on the TON blockchain was announced.

(This April 30 story has been corrected to fix the spelling of Indigo's CEO in paragraph 7)