Jake Chervinsky

IRS has finalized the second half of its broker rule, requiring most DeFi front-ends to KYC users starting in 2027.

This unlawful rule is the dying gasp of the anti-crypto army on its way out of power.

It must be struck down, either by the courts or the incoming administration.

When this rule was proposed, thousands of pages of comment letters were filed explaining why it exceeds IRS's statutory authority and violates the Constitution.

This isn't what Congress meant by "broker," nor what the founders meant in the Bill of Rights.
https://www.federalregister.gov/public-inspection/2024-30496/gross-proceeds-reporting-by-brokers-that-regularly-provide-services-effectuating-digital-asset-sales

1/ Policy x markets:

Trump won and the market immediately priced in its wildest dreams about how quickly and completely crypto would take over America.

Now we're living the reality, which is very positive, but obviously a slow, uncertain grind compared to Q4 2024 wishcasting 🧵

2/ As in technology, in DC, people often overestimate what can be done short-term and underestimate long-term.

All the pieces are falling into place so that crypto can mature into a serious industry where real products are built and fundamentals matter.

This takes a long time.

3/ But today's market doesn't seem to care about crypto becoming a serious industry.

If you want to build something real, things like the SEC's Crypto Task Force matter a lot. If you just want a memecoin pump, they probably don't.

Right now, the market seems to prefer the pump.

4/ I don't see much happening in DC that delivers another jolt of energy to the memecoin trenches.

The literal President of the United States already launched a memecoin.

Please tell me anything that could reasonably happen in the foreseeable future bigger than that. I'll wait.

5/ What will happen in DC are things like:

- stablecoin regulation, opening the floodgates for tradfi to pour dollars and users onchain
- securities clarity, allowing builders to launch tokens that aren't valueless memes
- market structure, giving credibility to trading venues

6/ These are all insanely bullish for crypto long-term, and signs from the early Trump admin + 119th Congress are very encouraging that we're actually going to get a lot of them done in the next two years.

But the market appears immune to the steady flow of good news these days.

7/ Usually the market ignoring good news is a top signal.

I'm not sure that's a good interpretation here, since the news isn't just "look, a partnership!" but rather "look, the US government's genuine acceptance of crypto as a core feature of the financial system and internet!"

8/ But I do think, to the extent that policy ever drives markets (which is highly questionable), DC is rightly focused on fundamentals, not price action.

If the market cares about fundamentals, great. If crypto succeeds as an asset class and technology, that's where we're going.

9/ But right now, while the market focuses on where the hot ball of money will roll next, DC is probably not where traders will get their edge.

It is, however, exactly where companies building products that take over the world will get their edge.

Tune in accordingly!

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