Jake Chervinsky

@jchervinsky

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2545 Followers

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Here is my conversation with @jchervinsky, chief legal officer at @variant, previously at the blockchain association and compound. We talk about: - how US govt/regulation works from first principles - how crypto played a role in this election - how legislation could change with the new administration - how to use the DUNA for building protocols Podcast here: intothebytecode.com/47-jake-chervinsky

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Daniel Barabander

I’m being boosted so going to take advantage. I think Farcaster is a serious unlock for agents and I’m extremely excited about this category. If you’re building, or thinking of building, an agent on Farcaster, I want to hear from you. Please reach out.

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Jake Chervinsky

It's a good time for a narrative shift from memecoins back to utility anyway. We're heading into a policy environment that should allow founders to build real products and services that have been "blocked by legal" for years. Memes are fun, but so is rebuilding the internet 🙌

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Daniel Barabander

I’m thrilled to share that I’ve been promoted to General Counsel & Investment Partner @variant! As GC I’ll continue the work I’ve been doing alongside @jchervinsky to help our industry define legal & regulatory strategy, & going deep (code-level) w/ founders on their product ideas. I'm also excited to continue working closely w/ founders as a member of the investment team. If you’re working on something new, I’d love to hear from you!

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Jake Chervinsky

Outside counsel and consultants are shifting their view on doing crypto business in the USA at light speed. Everyone expects a massive reduction in regulatory risk. Nobody knows exactly what's going to happen, but it's enough that the new conventional wisdom is "stay here." 🇺🇸

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Jake Chervinsky

Yes. Historically that doesn’t happen so quickly or completely since agencies don’t want to appear fickle and staff is supposed to be non-political, but it won’t be surprising if Trump agencies are glad to immediately undo anything that came from the Biden administration.

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Jake Chervinsky

President Trump will take office on January 20. Crypto policy will immediately and significantly shift when new leaders take over the federal agencies. Between now and then, the outgoing administration may be busy finalizing rules and filing enforcement actions. Stay frosty 🥶

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Jake Chervinsky

True. But (and not to stretch the analogy) sometimes the rewards you get from hard mode are worth the extra time and effort.

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Jake Chervinsky

One way to understand the impact of the presidential election on crypto policy: Trump would be like playing on easy mode, Harris like hard mode. But it's the same game — working with Congress, fighting in the courts, etc. — and we'll win either way. Crypto isn't going anywhere.

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Jake Chervinsky

The SEC spent years saying "tokens are securities." Then last month they took it back, pretended they didn't say it at all, and fake apologized for the confusion it caused. Sorry, but @atuminelli and I aren't buying it, so we told the truth 👇 https://blockworks.co/news/sec-wrong-about-crypto-asset-securities

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Jake Chervinsky

6/ Special thanks to @ohaiom, a true expert on geofencing, for his review and feedback. We’ve been getting many questions from founders at @variantfund about geofencing. We hope this guide helps them and their counsel decide how it fits into their compliance strategy ✌️ [end]

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Jake Chervinsky

5/ The guide ends with a summary of best practices for companies and their counsel to consider in establishing an effective U.S. geofence. It also gives suggestions for how to implement each one.

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Jake Chervinsky

6/ The Morrison court held that: - if a statute has an explicit extraterritoriality provision, then it applies outside U.S. borders, but only up to the provision's limits. - if not, then it only applies to domestic activity under the “presumption against extraterritoriality."

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Jake Chervinsky

4/ Geofencing is useful when neither of those options work. It’s a pretty extreme solution to the problem of regulatory uncertainty — completely abandoning the US market — but sometimes there’s just no other way. We then do a deep dive into the case law on geofencing.

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Jake Chervinsky

3/ Geofencing is essentially a “when all else fails” fallback option when a company can’t: - satisfy applicable compliance obligations, like registration, disclosures, KYC, etc.; or - design the product in such a way that no compliance obligations apply in the first place.

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Jake Chervinsky

2/ Our guide explains what you (and your counsel) need to know about geofencing. Geofencing means stopping people in a certain "geography" from accessing a product by creating a virtual “fence” around it. We start by explaining when it's useful as a compliance strategy.

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Jake Chervinsky

1/ As U.S. regulators continue their war on crypto, many founders are thinking about geofencing as a compliance strategy. It can work, but only if it's done right. That’s why @dbarabander and I wrote this Practical Guide to Geofencing: https://blog.variant.fund/newsletter-legal-regulatory-affairs

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Jake Chervinsky

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Jake Chervinsky

No one said rebuilding the global financial system would be easy, and hard things tend to hurt. Sentiment in crypto is scary bad right now. But as Churchill said, "success is stumbling from failure to failure with no loss of enthusiasm." Keep grinding. In the end, we win.

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Jake Chervinsky

"Equally" references the common enterprise prong of the Howey test. Horizontal commonality typically exists when investors are entitled to a pro rata distribution of profits and losses. But this is a complex issue, vertical commonality is different, and you *really* need your own lawyer if you want to do a token.

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