This is a segment from The Breakdown newsletter. To read more editions, subscribe. “Just because you can doesn’t mean you should.” — Aristotle, your conscience, your mom, and Jurassic Park We don’t usually get data on Americans’ retirement accounts, but a congressional request once prompted the Joint Committee on Taxation to reveal just how big some can get: In 2019, just 156 Roth IRAs held $15.6 billion in assets. This begs an obvious question: Who needs a tax break on their $100 million of retirement savings? $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). But some have quite a lot more than that. In 2021, ProPublica reported that Peter Thiel held more than $5 billion in a single, giant Roth IRA account. Helpfully, it also detailed how he did it. While you and I max out our Roth IRAs with $7,000 worth of index funds, others opt for more exotic investments — like early-stage equity. 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’d at $13 a share — a 13,000-fold gain on his cost basis of $0.001 per share. Because it was in an IRA, he owed no tax. Better yet, he was able to roll those winnings, tax-free, into 10.2% of Facebook — acquired for $500,000 (still held in his Roth IRA), and an undisclosed portion of his stake in Palantir (now worth many billions). 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. But President Trump proposed last week that everyone be given access to alternative investments in their retirement accounts, crypto included. In response, critics have warned that crypto is ill-suited for retirement savings because it’s too risky. But it’s already available to a small sliver of people — and at virtually no risk — via “Token Launch Roth IRAs,” an entertainingly extreme edge case in the debate over crypto in retirement accounts. While equity founders like Peter Thiel have long been able to stash early-stage investments in their Roth IRAs, crypto founders could not — because how do you get a blockchain token into a brokerage account? You couldn’t, 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. Simply put, AnchorZero’s Token Launch Roth IRAs are “the first and only solution for pre-launch tokens to eliminate capital gains taxes.” This is not a problem I ever imagined needed solving. In its enthusiasm for helping founders not pay taxes, AnchorZero’s website reads like a Scrooge McDuck parody of robber baron excess. “Until now,” its product announcement explained, ”the 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’s 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.” The website offers an illustrative example, seemingly written by someone who doesn’t quite know how to read the room: “Consider Alice, a crypto founder launching a new token. At creation, before public trading, the token’s 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 — a staggering difference of millions in tax savings.” If its website had ears, they’d have to be plugged while I yell at it: ALICE DOESN’T NEED A TAX BREAK!!! But she was only just getting started. “AnchorZero’s 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’s case, her IRA could grow to $815 million over 20 years, compared to $190 million without the tax advantages.” These kinds of “Alice” examples are usually something like, “Alice sends $5 to Bob.” But (to paraphrase Spinal Tap) this one goes to $815 million. 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 — 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. Bury it in euphemisms! Hide it in the fine print!! Do some dog whistling!!! Or make the numbers 100x smaller, at least, please. Because it’s one thing to exploit a loophole and it’s another thing to celebrate it. Especially one as egregious as this. Has there ever been a more narrowly targeted tax dodge? The carried-interest loophole for hedge funds is pretty bad, but I’d guess there are more hedge fund managers in the US than there are crypto founders. And pre-launch crypto tokens are sure to be priced even cheaper than pre-IPO PayPal shares. On the one hand, AnchorZero is only offering to help those founders do something that the law allows. On the other hand, why??? 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’t need anyone’s help. Even if you think every loophole deserves exploiting, is that really what you want to do with your limited time on Earth? Personally, I’m not sure I’d sleep too much worse if I spent my days engineering new ways to telemarket fake tech support to seniors or catfish lonely bachelors. Ethical considerations aside, these kinds of things can backfire, as we learned from Jurassic Park. (“Your scientists were so preoccupied with whether or not they could, they didn’t stop to think if they should.”) The danger here, I think, is that crypto already has an image problem. Thanks to cabal memecoins, low-float-high-FDV project tokens and digital asset treasury companies, there’s a growing perception that most of the industry’s profits accrue to a small number of insiders at the expense of its retail investors. This is especially unfortunate because a big part of crypto’s original appeal was that bitcoin was fair-launched and equally accessible to all. If Token Launch Roth IRAs catch on — and how can they not? — we’ll have strayed further than ever from that ideal. People will notice. Inevitably, we’ll get an exposé on a $5 billion Token Launch Roth IRA and it will make half of America hate crypto even more than it already does. I could hardly blame them, if so. The US government is currently in the process of handing the crypto industry everything it’s ever asked for. The least we could do in return is pay our taxes!