Tom Farley

@TimHite Agree

@ThomasFarley x.com/i/status/20347…

I spent a lot of time (wasted) with the prior Chairman/SEC and heard “only Congress can provide clarity.” This Chairman and SEC proves that was a lie. Thanks for a level of decency and humanity that didnt exist in the prior SEC…

Morgan Stanley has ~$7 trillion (!) in their wealth division. They will be an instant player in btc ETFs.

UPDATE: Morgan Stanley’s Bitcoin ETF ticker will be $MSBT.

Another scoop for @coindesk. On fire! 🔥.

Bullish broke into the Top 3 exchanges globally by spot volume in Feb for the first time.   Spot volume was $76 billion / 5.06% market share.   I want to highlight our Liquidity-as-a-Service (LAAS) partners growing alongside us and helping us get to this point. Huge appreciation for all of these partners.   We are building the future of crypto markets, together. 🐂

@fintechfrank 🔥

Big news from GSR. We have acquired Autonomous and Architech. The timing is interesting. Bear market has been in full swing. Tokens are down and the launch window has shut. That is exactly when you build. Most teams are flying blind when it comes to some of the most thorny questions founders in this sector face. When to launch a token. How to get attention from real capital. Where to list. How to manage a treasury. What podcasts should you actually go on? With Autonomous and a supercharged advisory capability, we can help answer those questions and bring an end to end platform that combines institutional trading, white glove advisory and go to market support. Excited to welcome the team to GSR.

@eric_turner @diran_li You are a pro Eric and you will continue to be a success in your next chapters.

Today, I stepped down as CEO of Messari and handed the reins to Diran. This wasn’t an easy decision, but it’s the right one for the company’s next phase, and he has my full support. It’s also a difficult day for the team as we say goodbye to many people who helped build Messari. I’m incredibly grateful to everyone who has been part of this journey. It’s been the privilege of a lifetime to work with such an extraordinary group of people over the last eight years. I’ll continue supporting the team as an advisor and am rooting for what comes next.

@ASolovichh @brian_armstrong Just quietly building.

@brian_armstrong that's some shady stuff right there, Bullish not owning up to it is suspicious

This is a great follow with balanced takes

Hey Jim, I think I agree. If you follow this path, if a DeFi platform allows trading with no KYC, how would broker, issuer, transfer agent et al prevent the tokens from trading to bad actors? By enforcing it in the code? What if there is a mistake and it happens anyhow? Who “fixes” the bad trades?

I think it depends on where in the stack KYC/AML gets implemented. DeFi shouldn’t, in my opinion, have to be responsible for verifying all users at scale across different asset classes and jurisdictions. It should be the responsibility of the issuers (and the platforms bringing them onchain) to ring fence assets based on their unique restrictions but make those tokens compatible with DeFi in a compliant way (which is what we do @SuperstateInc).

Question for the crypto market structure nerds like me following the Market Structure/Clarity Act and wondering what it means for DeFi:   If DeFi platforms get exempted from U.S. registration (as DeFi lobby is asking for), does that also mean zero KYC/AML (Know Your Customer/Anti-Money Laundering) obligations for them? Because if so, I don't see how regulators will ever allow tokenized securities to trade on DeFi. They won't be comfortable in a world where North Korea can spin up anonymous wallets and buy up 25% of a U.S. defense contractor on a DeFi platform. 
Is DeFi ironically shooting itself in the foot by pushing for full exemption? Some registration obligations around KYC/AML and reporting might actually unlock tokenized equities at scale. Otherwise, tokenized stocks may remain a hobby and never benefit from DeFi's innovation and composability.   People say, “Don’t worry, smart contract whitelists will solve it and this KYC/AML stuff should only be the responsibility of the issuer or a broker-dealer regardless,” but what happens if that system breaks down or is inaccurate? Won't regulators want a nexus to the DeFi platforms themselves to feel comfortable allowing DeFi transactions?   I generally agree that we should look to protect developers for writing code. And I agree that self-custody is absolutely essential to unleashing innovation. But I worry that “protecting developers” will become “shouldn’t have to register a trading platform and also shouldn’t have KYC/AML obligations” and this will backfire… 
Maybe I'm missing something. Every time I ask about the Banking markup on DeFi and how KYC/AML will work, I get a different answer, so I’m putting it to crypto Twitter. Curious what others think (and also curious if more than zero people actually care about this level of market structure enough to read this far in this tweet…).    I’m happy to have the conversation direct also if anyone wants to DM. I want to be on the side of the angels on this one and be advocating for the most innovative and productive solution.

@JBSDC @jyarow Tend to agree something like this is the likely outcome but boy is it uninspiring. It would reduce the innovation curve I’m afraid.

It’s a good question. My sense is the platforms wont be required to KYC/AML but there may be requirements on large participants (entities under direct regulation unlike retail) to only use platforms/interfaces where KYC/AML is possible. This could result in privacy pools or white labeling, it could even result in liqudity fragmentation. The real issue is that policymakers understand defi platforms cannot themselves do KYC/AML, but they are (reasonably) not willing to junk all KYC/AML. So we’re moving towards a situation where you can trade on a DeFi platform without undergoing KYC/AML but only legally if you’re a retail trader doing relatively small transactions. This may mean there is a legal right to have true defi but that it is too small to be very lucrative. At the same time, most people will probably access defi through regulated cefi exchanges (the mullet) which KYC/AML and the institutions are already directly regulated and under KYC/AML mandates. So in the end, the fear of mass defi trading without KYC/AML was probably always a phantom.

@jameswester This is an excellent summary. You should be helping make this case!

You had me at "crypto market structure nerds." I think these are good questions in good faith, so I'll approach one point you make specifically that might (I hope?) explain at least the direction some are coming from. (Not all, but I fall into this camp.) You ask: "Won't regulators want a nexus to the DeFi platforms themselves to feel comfortable allowing DeFi transactions?" They certainly will. But the issue is that "Defi" and "nexus" can't co-exist since truly decentralized financial services would mean there is no "nexus." It's a fundamental issue that would turn "defi" back into "centralized exchanges" where access, risk, and liquidity are all controlled. That's the opposite of what Defi is trying to accomplish. The tension here is whether DeFi is treated as infrastructure or an intermediary. If it's an intermediary, then regulators being regulators will want to attach all of the rule-keeping obligations (KYC) to the platform. But if it's infrastructure, then compliance shifts to those parties operating on top of it and regulating them. That's the issuers, custodians, and front-end operators. So for me, I see DeFi as infrastructure. I admit that regulators are not accustomed to seeing markets that way, but if decentralized protocols become something closer to the internet, then the hoped-for path forward is not forcing protocols to run KYC but embedding compliance in the assets and the regulated entities that issue and distribute them. Otherwise, I believe “DeFi with KYC” turns into centralized exchanges under a different name, and we haven't accomplished anything. The big issues is being able to articulate that perspective in a way that regulators will understand and agree with, or (as you said) they may never be comfortable with it.

Stablecoins have zero kyc/aml in DeFi today (I think?) meaning someone can sell boatloads to anonymous counterparties in DeFi with no KYC. I think that is part of why stables are working well. I just don’t think regulators will let that fly for, say, treasuries or nvidia stock. But I am not sure.

@ThomasFarley I think it could/shoudl work pretty similarly to how the stablecoin stack works today where the responsability is on the issuer. I am more concerned on people/retail potentially buying things that doesn't actually give them any right to the underlying stock/security.

@chayesdc Agree “up in the air,” I’m trying to form a view of the optimal outcome. Centralized front-ends such as the Uniswap Interface is easier to deal with. I’m focusing more around the more pure-play DeFi elements such as the core Uniswap DeFi protocol.

@ThomasFarley This includes potential AML obligations of the issuer - note that investment companies issuing tokenized funds are “financial institutions under the BSA”, and potential additional Exchange Act requirements for DeFi players dealing in securities. Much of this remains in the air.

@JasonCoombsCEO @CorySwan One thing I’ve heard multiple times is that issuers will neeed smart contracts that require whitelisting for buy/sell of the token. So while the kyc/aml may not be their responsibility, the infrastructure that allows it may be.

@CorySwan @ThomasFarley People have, for my entire career, falsely claimed that I am required to do KYC/AML when selling shares of my own startup to my investors. As the “issuer” there has never been and most likely will never be any KYC/AML requirement imposed on me as part of my capital formation. ⚖️

A wise and decent man. Happy birthday Art! See you across the street!

@pudgypenguins Identical

Nearly indistinguishable logos!!! A judge will throw this case out in 3 seconds. Maybe 2.