The FBI has a complicated history.

Yes, they may have assassinated some foreign dignitaries, a president or two, maybe they even invented crack cocaine.

But instead of drawing more mean pictures of J. Edgar Hoover in women’s underwear, we’re going to take today’s newsletter to celebrate the FBI and all they have done for crypto.

We promise this isn’t a PSYOP. Now, could we get you to say you also support the FBI? Here? Loudly? Into my breast pocket.

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☕️ Treasury and IRS Propose New Crypto Rules 🪙 ⚖

Both the Treasury and the IRS have insisted that brokers and exchanges will need to increase their crypto reporting come tax season.

The newly proposed rules from the U.S. Department of Treasury are an attempt to close the gap in crypto earnings between individual and institutional investors.

“These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets,” the Treasury wrote.

However, some feel that the new rules are misguided, such as Blockchain Association CEO Kristin Smith, who issued an official statement regarding the proposal:

“It’s critical to ensure that participants transacting with digital assets pay their taxes. If done correctly, these rules could help provide everyday crypto users with the necessary information to accurately comply with tax laws. However, it’s important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance.”

We think it’s interesting that the IRS and Treasury are proposing new rules while they refuse to run us through the rules of “Settlers of Catan” again, insisting that we’ll “get it once we start playing.”

☕️ Friend.tech’s New Fans 🤝 🙌

In a relatively unsurprising development, some of OnlyFans’ top creators are flocking to the new friend-selling app, Friend.tech

With Friend.tech’s private chatroom capabilities, in addition to the newly included ability for accounts to send photos to their key holders, this could be a match made in heaven for saucy content creators.

And according to Friday’s standings, as reported by Decrypt, four of the top 50 Friend.tech accounts were also popular OnlyFans accounts.

Maybe some of these new accounts want to be more than just friends… tech.

☕️ AI Startup Hits Multi-Billion Valuation 🤖 🤑

Hugging Face, an AI startup, raised $235 million in its series-D funding round. What’s more, Hugging Face has been valued at $4.5 billion.

Hugging Face was originally launched in 2016 as a chatbot for teens. But after open-sourcing its algorithm, Hugging Face was able to soldier its way to the forefront of AI applications.

Hugging Face provides a bevy of tools, and though the Brooklyn-based company has a mere 170 employees, it boasts 10,000 active customers and associations with 50,000 organizations.

But Hugging Face shouldn’t be confused with that other startup, Face Hugger, which is dedicated to raising parasites that implant alien warriors in your spinal cord.

Spilling the Beans

The FBI's Biggest Crypto Busts 🚨 🤑

Crypto is constantly compared to the Wild West.

Why? Because it’s a volatile, exciting country — where settlers can pick themselves up by their bootstraps and attain fabulous riches based on nothing but wiles and grit.

But more straightforwardly, the comparison may have been drawn because crypto, like the Wild West, is pretty lawless.

It’s not that there haven’t been decisive law enforcement actions in the crypto world. Highly public charges have been filed against the likes of Sam Bankman-Fried and Do Kwon.

But the primary issue is the very digital realm where these crimes go down.

You could pretty easily explain to your grandpa if someone was murdered with a knife. We’d like to see you give him a blow-by-blow account of how the Mt. Gox hack occurred.

And those sorts of crimes are no easier for cops to understand than your grandpa.

But as lawless as the Wild West was, there were lawmakers. Every town had a sheriff.

And in crypto, for now, that sheriff is the FBI.

The FBI has already had quite the year in 2023. Between March and July, it seized $1.7 million in crypto from individuals violating federal law.

And that colossal figure seems like a drop in the bucket compared to the FBI’s $3.36-billion seizure of Dark Web-connected crypto in November of 2022.

One of the biggest, simplest arguments that we employ against a crypto-skeptical dad or relative is that in an increasingly digital world, doesn’t it make sense for your money to be digital too?

And that same reasoning applies to crime. As the line between reality and online becomes ever blurrier, shouldn’t law enforcement be focused on bringing order to the digital frontier?

Your grandpa may never get it, but the FBI has seen the writing on the wall — for example, last February, it created the Virtual Asset Exploitation Unit, which is a dedicated task force for crypto crimes.

And while the FBI is at the forefront, this unit is hardly alone. Four months prior, the FBI launched the National Cryptocurrency Enforcement Team.

These bodies will work in conjunction with the Darknet Marketplace and Digital Currency Crime Task Force, which was established through the cooperation of five separate branches of law enforcement, just this June.

Yes, we never like it when the cops show up at our party, but this kind of enforcement is a serious step toward legitimization.

If an industry is worth paying attention to, it’s also worth guaranteeing that industry is a safe place for everyone.

But at the same time, we can’t help but wonder if the uptick in crypto crime is the result of congressional foot-dragging on regulatory certainty.

And, while we continue down this train of thought, wouldn’t that just make these FBI task forces the digital equivalent of Prohibition agents? Cracking down on crime that’s newly illegal and quick to change?

Yes and no. Crypto is still in its infancy, but regardless of the Congressional outcome for crypto, we want somebody bigger than you and me to prevent the worst actors from running rampant.

Self-custody is crucial and liberating, but it also has its limits in terms of safety. After all, no individual crypto investor is in it to save us from North Korean hackers, or smash down the doors at the bureau of Dark Web.

So, for now, we’re granting the FBI a pass, even if its agents are constantly breaking into our office to drug our water cooler with LSD-based truth serum.

Premium Market Report

Spot

Top 10 Cryptocurrencies (Excluding Stablecoins)

☕️ Our Take:

Meme of the Day

Can it be? A government entity being proactive about crypto?!! 🤯

Crypto 101

Funding Rounds - Series D: This is when a startup usually receives funding from venture capital firms.

We’ll take you through the additional stages of startup funding in coming newsletters.

The Last Sip

Hugging Face gives us flashbacks to the sci-fi monsters of the 1980s, it’s also giving us incredible ideas for additional startups.

Alien vs. Creditor: The ultimate showdown to determine who will provide more accessible small business loans — accredited institutions, or an interdimensional manhunter?

Evil Debt II: It’s easy to forget about the trillions in national debt when you just replaced your right arm with a chainsaw.

Goldblum Sachs: A service that puts Jeff Goldbum’s voice on your away message, your voice memos, your alarm. Everything.

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.