TON takes off with the alliance with Telegram By Reuters

By Elizabeth Howcroft

(Reuters) – A coin called TON has risen in value in recent months, and investors are betting that its integration with messaging service Telegram could bring the cryptocurrency to the app's estimated 900 million users.

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

The TON token has skyrocketed, reaching a high of $7.63 on April 11, compared to around $2.21 a year earlier, according to data from CoinGecko.

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

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

These ideas fueled Elon Musk's 2022 acquisition of Twitter, now X. Binance, which helped finance the purchase, said it would explore how cryptocurrencies could be used on the platform. Meanwhile, Britain's Revolut has approached it from the other direction, starting with a financial app and then adding social features.

While TON's appeal is part of a broader interest in super apps, it has also been helped by a general revival in altcoins, said Thomas Puech, chief executive of digital asset hedge fund Indigo.

“TON outperformed many of its peers as many people are buying the project as interest in alternatives returned and thanks to support from Telegram,” he said, adding that Indigo had marketed the TON token.

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

POUND FAILURE

Efforts to bring crypto payments to social media have so far not been successful on a large scale. Facebook (NASDAQ:), now Meta, ended its “Libra” cryptocurrency project after fierce opposition from regulators globally, who were concerned it could harm financial stability and erode control over monetary policy.

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

“The main challenge is to change user perceptions in non-Asian markets, where messaging apps are predominantly seen as purely for communication and not as multifunctional platforms.”

These 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 existing financial regulations,” he said.

“Ensuring that users are protected from scams, fraud, and potential losses due to cryptocurrency volatility would be a critical 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 was hit by allegations from the U.S. 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. He neither admitted nor denied the SEC's allegations.

A group of unrelated developers then 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 code base, with no single controlling authority. Behind this is a non-profit foundation, registered in Zug, Switzerland.

A TON spokesperson said Telegram and TON were clearly separate entities.

The president of the TON Foundation is Steve Yun, according to the organization's website. Andrew Rogozov, former CEO of Russian social media site VK, is a founding member of the foundation, 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 was corrected to correct spelling of Indigo CEO in paragraph 7)