Research Summary
The report discusses Bitcoin’s 15th anniversary, MakerDAO’s Endgame Plan, and a new tax provision that includes digital assets. It highlights Bitcoin’s growth and resilience, MakerDAO’s ambitious plan to overhaul its ecosystem, and the implications of the new tax law on digital assets.
Key Takeaways
Bitcoin’s 15th Anniversary
- Bitcoin’s Growth: Bitcoin network turned 15 this week, facilitating the settlement of more than $41.3tn in value, including approximately $13.4tn in peer-to-peer transfers. The value of Bitcoin’s native currency, BTC, has risen 6.2 billion % since it first traded for any value in 2010.
- Bitcoin’s Resilience: Despite a decade and a half of growth in adoption and value, Bitcoin’s cultural and economic impact is set to grow even more in 2024. New technological developments are poised to extend Bitcoin’s capabilities and new market access vehicles will expand its ownership.
MakerDAO’s Endgame Plan
- MakerDAO’s Evolution: MakerDAO experienced a resurgence in interest this week as observers prepare for the rollout of the Endgame Plan and the next evolution of Maker. Endgame will overhaul the Maker ecosystem through a five-phase plan focused on enhancing Maker’s “efficiency, resilience, and participation.”
- Risks and Opportunities: Execution is a huge risk. Endgame requires considerable engineering and governance coordination across a multi-year timespan in a highly volatile market. However, this challenging environment has also created a cohort of DAO operators that understand the nuances of executing across the technical, political, economic/financial, and social/cultural aspects of DAO governance.
New Tax Provision Including Digital Assets
- Implications of the New Law: A new law amending section 6050I of the IRS Code of 1986, as amended (the “Code”), became effective on January 1. The amendment added in the definition of cash “any digital asset (as defined in section 6045(g)(3)(D) [of the Code]).” This law incentivizes the use of digital assets through intermediaries and institutions over peer-to-peer (P2P) activity.
- Challenges in Compliance: The nature of transactions on distributed ledgers and the applications built on top of them makes the amended filing requirement incredibly difficult, if not impossible, to comply with. The amendment applies to some of the most straightforward and widely adopted use cases of digital assets and distributed ledgers, making compliance strenuous and physically impossible in some cases.
Actionable Insights
- Monitor Bitcoin’s Evolution: As Bitcoin continues to grow in adoption, value, and importance worldwide, it’s crucial to keep an eye on new technological developments and market access vehicles that could extend Bitcoin’s capabilities and expand its ownership.
- Understand MakerDAO’s Endgame Plan: Given the potential impact of MakerDAO’s Endgame Plan on the Maker ecosystem, it’s important to understand the plan’s details, its five-phase implementation, and the potential risks and opportunities it presents.
- Stay Informed About Tax Laws: With the new tax law including digital assets now in effect, it’s essential to stay informed about its implications, challenges in compliance, and potential impact on the use of digital assets.
