Altcoin Pain at 5-Year High… Reversal Next? #CryptoTownHall

**Dave** (0:00)
Well, good morning, everyone. Happy Wednesday. And markets are kind of sitting here.
This title from CryptoQuant about altcoin pain. I guess it depends what altcoins. If you're in Hyperliquid, unless you're Arthur Hayes, who sold, I think, below 60, you're pretty happy with what's going on. There's actually a lot of news for a change. I mean, there's this Illinois law. We have a Fed meeting today.
There's a lot of ongoing things. You can take this in any direction. I actually was wondering, Carlo, you're an attorney. You may not know the answer, though, is it seems to me that Illinois, of all places, putting a ridiculous tax law in on taxing digital assets but not regular assets, is courting the possible death of the CME in terms of their market share with Bitcoin and other digital asset futures, because it seems that unless there's an exemption for market makers, that pretty much the market makers won't be able to operate, at least within Illinois. I mean, I don't know, but to me, that seems like a big deal. No one's given me an answer. Do you have any idea?

**Carlo** (1:10)
Look, it's even, good morning, Dave. It's an even bigger problem than that. I mean, this is an absolute assault on the freedom to transact, and one thing that I wrote about this morning that I'll put up for anyone who wants to get a little more information on this, it's available on my sub stack, always, is that this particular bill also bleeds over in the stable coins. While I understand that it's limited to broker-dealer transactions, nevertheless, sending and receiving through your broker stable coins triggers a taxable event, which I think is making this ripe for a lawsuit based on the dormant commerce clause.
The federal government is probably not going to take kindly to this, and we may see a lawsuit come from the United States against this, because it's actually infringing on the free movement of digital dollars. This is a continuation of the war on crypto, and what I don't like about this, Dave, is that it sets a precedent for any other revenue hungry states that want to look for low-hanging fruit to tax, to also attack the crypto sector. This is chasing innovation out of the state of Illinois. It's stupid, it's probably going to fail, and it's counterproductive.

**Dave** (2:28)
Well, I mean, that will fail is guaranteed. I mean, as I said, if they don't have, if there's no exemption for market makers, you can pretty much assume the CME will go to, their market share will drop dramatically.

**Carlo** (2:42)
Yeah, that's a very great observation I didn't even think of.

**Dave** (2:46)
It's amazingly good for competitors, you know, some of which have been well behind, even though they have legal Bitcoin and other futures, have been way behind CME liquidity. But if all the CME market makers have to stop and the spreads go really wide, because of course, if you have to put 20 basis points, and by the way, it's not just the transactions. I mean, if you're a market maker and you hold your Bitcoin, and if you're in an ARB position, you got to take that as well. So it's on the buy side, it's on the sell side, it's on the hold side. It's actually at least 60 basis points, as far as I could tell, to conduct an arbitrage if you're physically resident in the state of Illinois.

**Carlo** (3:28)
And it discriminates against one asset class instead of all asset classes.

**Dave** (3:33)
Those are legal issues. I'm just talking practically. Assuming it's true, like Citadel, for example, right? Citadel is already moving out of Illinois as fast as he can into Miami, and he's having a food fight with New York as well, but we'll see. But this one is a big deal. But there's a lot of other firms. I mean, I have friends and I could probably find out at firms like IMC and others, which are global firms that have big offices in Chicago. It's like, well, why get me in Chicago? I mean, for me, it sucks. I mean, look, I went to school out there.
I have fond feelings of Chicago in many respects, but I mean, Jesus, it feels, this is actually, it's just very surprising. Maybe it's not quite as stupid as what the Netherlands is doing in terms of taxing unrealized wealth, but it's pretty far up there.
And I just, I just kind of think it's a big deal. But weirdly, it's incredibly bullish. It will, it's going to create some interesting things. So if you're hyperliquid, for example, and let's just say Chair Selig figures out a way to work with hyperliquid and make it legal in the United States.