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Jake Chervinsky Profile picture
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28 Oct, 7 tweets, 4 min read
FATF published its updated crypto AML guidance today. It's marginally better than the March draft.

As often happens, industry explained why the draft made no sense, & FATF's reaction was just to make it more vague. No answers here. The saga continues.

🧵 of threads & writeups:
From @coincenter's @valkenburgh, explaining the good, bad, & ugly of the updated guidance & why it's "far too vague and verbose to actually create reasonably clear and narrow limits for surveillance obligations."
From @fund_defi's @millercwl, who you're probably not following yet but definitely should be, if you care at all about DeFi. Miller nails how the guidance could (but won't necessarily) impact DeFi protocols.
From @trmlabs, a fast-rising blockchain forensics company with principles we can get behind (speaking from personal experience), giving Chainalysis tough competition for top dog in that sector, with a solid & unbiased overview / tl;dr of the guidance:
From @nycryptolawyer, one of the leading DeFi lawyers in the US, who makes the important point that regulatory pressure like this will only push us to decentralize more & faster.
From @boironattorney, dYdX GC & on the short list for best DeFi lawyer in the world (I'm not exaggerating), with a rather grim & pessimistic view that I don't totally share, but is definitely a reasonable worst case scenario interpretation.
Plus a follow-up thread from Marc diving deeper. I co-sign this 💯 with the minor exception that I'm more optimistic about our ability to reshape the global financial system. The AML regime is only ~ 50 years old. Its survival is not a forgone conclusion.

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More from @jchervinsky

Jake Chervinsky Profile picture
1 Oct
1/ Some personal news: after 2.5 amazing years, yesterday was my last day at @compoundfinance ❤️

It's been a genuine honor helping @rleshner, @justHGH, & the Compound Labs team build the future of finance 🤖

I'm taking October off, then starting a new challenge (stay tuned) 🧵
2/ I joined Compound in May 2019 in the depths of crypto winter. BTC was around $6k & ETH was around $200.

The Compound v2 protocol was one month old. TVL was about $10m. Only a handful of DeFi projects existed & they weren't even called DeFi yet.

What an incredible journey 🤯
3/ I worked on some big projects over the years, like decentralizing the Compound protocol & launching Compound Treasury.

It's been fascinating to see the community take charge of decentralized governance, & it's been fulfilling to create a novel financial product on DeFi rails.
Read 6 tweets
Jake Chervinsky Profile picture
29 Sep
1/ I'm very excited to be working with @graadient & the Grwth Lbs team as a strategic advisor as they build out & decentralize @groprotocol 🎉

Gro is a next-gen yield protocol that fills a huge gap in DeFi market structure: autonomous risk management 👇
thedefiant.io/gro-protocol-l…
2/ Gro uses risk tranching to create two stablecoin pools, PWRD & Vault, with different risk & reward profiles.

By design, PWRD offers lower yield while Vault offers higher yield at a cost: Vault bears the risk of loss for the whole protocol. In other words, Vault protects PWRD.
3/ Gro addresses one of the most common critiques I hear about DeFi: the lack of crypto-native, professional-grade risk management tools & products.

This is one of the aspects of DeFi that excites me most: its unique ability to mitigate risks in a programmatic & transparent way.
Read 6 tweets
Jake Chervinsky Profile picture
8 Aug
1/ A few thoughts on my Senator @MarkWarner:

Although I've had some strong words for him this week, I don't think he's against crypto on principle.

I think he was just trying to help move the infrastructure bill forward & didn't know this issue was so important & controversial.
2/ I've always thought he would eventually come around to supporting crypto, & even now, I'm still as hopeful about that as ever.

As senators go, he understands technology far better than most: he himself was a successful entrepreneur & tech investor before taking public office.
3/ In the past, he's shown great curiosity about what we're building & he's made positive comments showing an open mind about crypto innovation.

For example, here he is in 2018, saying "I think we may be on top of something that is transformational...."
Read 6 tweets
Jake Chervinsky Profile picture
6 Aug
1/ A quick explainer on what happened with the infrastructure bill last night:

We were on track to pass the Wyden-Lummis-Toomey amendment to fix the worst issues with the bill, & then Senators @RobPortman & @MarkWarner came from nowhere to blow it up.

Now the vote's tomorrow 👇
2/ As a refresher, the current infra bill draft has a provision expanding the Tax Code definition of "broker" to include:

"any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person."
3/ This definition is wildly overbroad. It captures nearly everyone in crypto, forcing them all to surveil users in order to comply with tax reporting obligations.

We spent all week asking Congress to remove it, change it, or add exceptions for miners, developers, & many others.
Read 21 tweets
Jake Chervinsky Profile picture
30 Jul
1/ 🚨 Here's the deal with the US infrastructure bill:

A new provision has been added that expands the Tax Code's definition of "broker" to capture nearly everyone in crypto, including non-custodial actors like miners, forcing them all to KYC users.

This is not a drill 👇
2/ The bill expands the definition of a "broker" to include "any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets."

Earlier drafts said "even if non-custodial" & explicitly included DEX & P2P markets.
3/ This definition is so broad, it could apply to nearly every economic actor in the US crypto industry, if read literally.

That includes PoW miners & PoS validators, since "providing a service to effectuate transfers of digital assets for consideration" seems to fit both.
Read 21 tweets
Jake Chervinsky Profile picture
27 May
1/ I'm thrilled to announce that I'm joining the @variantfund team as a strategic advisor!

@jessewldn & @spencernoon are two of the most insightful, hardworking, & effective investors in crypto. I'm beyond excited to help them & their founders build out the Ownership Economy. 🔥
2/ I've been a huge fan of Jesse's work for a long time, especially since he wrote the definitive playbook on "progressive decentralization" in January 2020.

This piece has become a cornerstone of protocol development strategy across the entire industry:
a16z.com/2020/01/09/pro…
3/ When he started Variant, I was deeply impressed with his Ownership Economy thesis—the idea that the *users* of a network should be the *owners* of that network, instead of being productized & exploited by rent-seeking companies (the typical Web2 model).
variant.fund/the-ownership-…
Read 5 tweets

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