{"id":81386,"date":"2025-08-14T05:15:15","date_gmt":"2025-08-14T05:15:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/81386\/"},"modified":"2025-08-14T05:15:15","modified_gmt":"2025-08-14T05:15:15","slug":"when-100m-isnt-enough-token-launch-roth-iras","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/81386\/","title":{"rendered":"When $100M isn\u2019t enough: Token Launch Roth IRAs"},"content":{"rendered":"

This is a segment from The Breakdown newsletter. To read more editions,\u00a0subscribe<\/a>.<\/p>\n

\u201cJust because you can doesn\u2019t mean you should.\u201d<\/p>\n

\u2014\u00a0 Aristotle, your conscience, your mom, and Jurassic Park<\/p>\n

We don\u2019t usually get data on Americans\u2019 retirement accounts, but a congressional request once prompted the Joint Committee on Taxation to reveal<\/a> just how big some can get: In 2019, just 156 Roth IRAs held $15.6 billion in assets.<\/p>\n

This begs an obvious question: Who needs a tax break on their $100 million of retirement savings?<\/p>\n

$80 million of post-tax money seems like plenty to get by on after the age of 60 (even for all the tech moguls planning to live to 120).<\/p>\n

But some have quite a lot more than that.\u00a0<\/p>\n

In 2021, ProPublica reported<\/a> that Peter Thiel held more than $5 billion in a single, giant Roth IRA account.\u00a0<\/p>\n

Helpfully, it also detailed how he did it.<\/p>\n

While you and I max out our Roth IRAs with $7,000 worth of index funds, others opt for more exotic investments \u2014 like early-stage equity.<\/p>\n

In 1999, for example, Thiel used $1,700 of Roth IRA funds to buy 1.7 million shares of PayPal. Three years later, PayPal IPO\u2019d at $13 a share \u2014 a 13,000-fold gain on his cost basis of $0.001 per share.<\/p>\n

Because it was in an IRA, he owed no tax.\u00a0<\/p>\n

Better yet, he was able to roll those winnings, tax-free, into 10.2% of Facebook \u2014 acquired for $500,000 (still held in his Roth IRA), and an undisclosed portion of his stake in Palantir (now worth many billions).<\/p>\n

Thiel was a co-founder of PayPal and Palantir and the first outside investor in Facebook, so the rest of us would never have had access to those kinds of deals.\u00a0<\/p>\n

But President Trump proposed<\/a> last week that everyone be given access to alternative investments in their retirement accounts, crypto included.\u00a0<\/p>\n

In response, critics have warned that crypto is ill-suited for retirement savings because it\u2019s too risky.<\/p>\n

But it\u2019s already available to a small sliver of people \u2014 and at virtually no risk \u2014 via \u201cToken Launch Roth IRAs,\u201d an entertainingly extreme edge case in the debate over crypto in retirement accounts.<\/p>\n

While equity founders like Peter Thiel have long been able to stash early-stage investments in their Roth IRAs, crypto founders could not \u2014 because how do you get a blockchain token into a brokerage account?<\/p>\n

You couldn\u2019t, until AnchorZero built the systems to add even pre-launch tokens to traditional retirement accounts, and Anchorage Digital Bank figured out how to custody them.<\/p>\n

Simply put, AnchorZero\u2019s Token Launch Roth IRAs are \u201cthe first and only solution for pre-launch tokens to eliminate capital gains taxes.\u201d<\/p>\n

This is not a problem I ever imagined needed solving.<\/p>\n

In its enthusiasm for helping founders not pay taxes, AnchorZero\u2019s website reads like a Scrooge McDuck parody of robber baron excess.<\/p>\n

\u201cUntil now,\u201d its product announcement<\/a> explained, \u201dthe only way to include tokens in an IRA was to wait until they were listed on a public exchange, by which time their value had often increased exponentially. AnchorZero\u2019s solution is the first to support private, pre-launch tokens and derivatives, ensuring that founders can take advantage of the low-cost basis at token creation.\u201d<\/p>\n

The website offers an illustrative example, seemingly written by someone who doesn\u2019t quite know how to read the room:<\/p>\n

\u201cConsider Alice, a crypto founder launching a new token. At creation, before public trading, the token\u2019s market cap is a modest $10,000. As a savvy tax strategist, Alice allocates a portion of the token supply to her Roth IRA. When she decides to sell, her token interest is worth $50 million, which is entirely tax-free. Had she chosen to forgo the IRA approach, Alice would have owed $18.5 million in capital gains taxes, leaving her with $31.5 million \u2014 a staggering difference of millions in tax savings.\u201d<\/p>\n

If its website had ears, they\u2019d have to be plugged while I yell at it: ALICE DOESN\u2019T NEED A TAX BREAK!!!<\/p>\n

But she was only just getting started.<\/p>\n

\u201cAnchorZero\u2019s solution allows investors to reinvest tax-free gains into new tokens, startups and venture funds. Over time, the compounding benefits of the Roth IRA become even more pronounced. In Alice\u2019s case, her IRA could grow to $815 million over 20 years, compared to $190 million without the tax advantages.\u201d<\/p>\n

These kinds of \u201cAlice\u201d examples are usually something like, \u201cAlice sends $5 to Bob.\u201d<\/p>\n

But (to paraphrase Spinal Tap) this one goes to $815 million.<\/p>\n

Gaming the byzantine US tax system is hardly a novel idea, but seeing it spelled out at that scale and on a public website feels different \u2014 as if hedge funds were running TV ads to gloat over how much money the carried-interest loophole was making them. Or Big Pharma put up billboards to crow about its Ireland tax dodges.<\/p>\n

Bury it in euphemisms! Hide it in the fine print!! Do some dog whistling!!!\u00a0<\/p>\n

Or make the numbers 100x smaller, at least, please.<\/p>\n

Because it\u2019s one thing to exploit a loophole and it\u2019s another thing to celebrate it. Especially one as egregious as this.<\/p>\n

Has there ever been a more narrowly targeted tax dodge?\u00a0<\/p>\n

The carried-interest loophole for hedge funds is pretty bad, but I\u2019d guess there are more hedge fund managers in the US than there are crypto founders.<\/p>\n

And pre-launch crypto tokens are sure to be priced even cheaper than pre-IPO PayPal shares.\u00a0<\/p>\n

On the one hand, AnchorZero is only offering to help those founders do something that the law allows.<\/p>\n

On the other hand, why???<\/p>\n

I marvel at the time, effort and investment it must have taken to build the complex systems required to help this tiny sliver of people who don\u2019t need anyone\u2019s help.<\/p>\n

Even if you think every loophole deserves exploiting, is that really what you want to do with your limited time on Earth?<\/p>\n

Personally, I\u2019m not sure I\u2019d sleep too much worse if I spent my days engineering new ways to telemarket fake tech support to seniors or catfish lonely bachelors.\u00a0<\/p>\n

Ethical considerations aside, these kinds of things can backfire, as we learned from Jurassic Park<\/a>. (\u201cYour scientists were so preoccupied with whether or not they could, they didn\u2019t stop to think if they should.\u201d)<\/p>\n

The danger here, I think, is that crypto already has an image problem.<\/p>\n

Thanks to cabal memecoins, low-float-high-FDV project tokens and digital asset treasury companies, there\u2019s a growing perception that most of the industry\u2019s profits accrue to a small number of insiders at the expense of its retail investors.\u00a0<\/p>\n

This is especially unfortunate because a big part of crypto\u2019s original appeal was that bitcoin was fair-launched and equally accessible to all.\u00a0<\/p>\n

If Token Launch Roth IRAs catch on \u2014 and how can they not? \u2014 we\u2019ll have strayed further than ever from that ideal.<\/p>\n

People will notice. Inevitably, we\u2019ll get an expos\u00e9 on a $5 billion Token Launch Roth IRA and it will make half of America hate crypto even more than it already does.\u00a0<\/p>\n

I could hardly blame them, if so.<\/p>\n

The US government is currently in the process of handing the crypto industry everything it\u2019s ever asked for.<\/p>\n

The least we could do in return is pay our taxes!<\/p>\n

Even Peter Thiel thinks the US tax system has \u201cfairness problems\u201d \u2014 because, he said, \u201cyou have super rich people paying a lower rate than people in the middle or upper middle class.\u201d<\/p>\n

Putting pre-launch tokens in retirement accounts would supercharge that problem.<\/p>\n

And crypto\u2019s image problem, too.<\/p>\n

Get the news in your inbox. Explore Blockworks newsletters:<\/p>\n","protected":false},"excerpt":{"rendered":"This is a segment from The Breakdown newsletter. To read more editions,\u00a0subscribe. \u201cJust because you can doesn\u2019t mean…\n","protected":false},"author":2,"featured_media":81387,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":["post-81386","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/81386","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=81386"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/81386\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/81387"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=81386"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=81386"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=81386"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}