Alternative Investing Report - December 31, 2024

*as of 12/30; Sources: S&P, BTC, FTSE, DJRE, CL50

New IRS regulations released last week will now classify hundreds of decentralized finance (DeFi) protocols as brokers, requiring substantial reporting of customer transactions. Such brokers would have to report gross proceeds from cryptocurrency and digital asset sales, as well as details about taxpayers involved in such transactions, which they would be required to collect as part of “Know Your Customer” (KYC) requirements. If the regulations are put into place, it would take effect in the 2026 tax year with reporting requirements to begin in 2027.

➨ TAKEAWAY: The regulations prompted an immediate lawsuit from the Blockchain Association, and with the incoming administration promising a friendlier crypto environment - and with President Trump’s family launching a DeFi platform - it seems likely they will never end up being implemented. If they are, prominent DeFi platforms could end up blocking U.S. users, which could end up driving DeFi innovation offshore.

As if social media platforms are not already being overrun by bots and AI accounts, Meta, the parent company of Facebook and Instagram, is planning to purposely deploy AI-generated users to its platforms. The goal is for these “users” to drive engagement, post AI-generated content and get actual human users to interact with them. This would seem to lead to all sorts of misinformation issues and defeat some of the purpose of social media, which is meant to connect people. If you can’t wait for this AI-filled future, there is always the dystopian-sounding SocialAI, a Twitter clone where every user but you is an AI bot.

🏢 Commercial pricing update: The CoStar Commercial Repeat Sales value-weighted U.S. Composite Index rose 1.3% in October, marking the fourth straight month of gains, though the index is still down 2.5% year-over-year. Repeat-sales volume did grow by 7.4% year-over-year, showing that market activity has picked up and likely hit its bottom in 2023.

⌚ Tough year for watches: The WatchCharts Overall Market Index fell by 5.8% in 2024 and is down 15.8% the past two years, with all price levels and major luxury brands (Rolex, Patek Phillippe, Audemars Piguet) seeing declines in value.

🏡 Housing supply at 4-year high: The total number of homes for sale in the U.S. rose by 0.5% in November and is up 12.1% year-over-year, hitting the highest level since 2020, due mostly to the 54.5% of listings that are “stale” - more than 60 days old.

🚀 Bench to be acquired: The accounting startup that surprisingly shut its doors last week was bought in a last-minute deal by Employer.com for an undisclosed price, meaning its customers will again have access to their accounting and tax data.

🍷 Jayer Richebourg record: A magnum of 1978 Richebourg Grand Cru burgundy produced by winemaker Henri Jayer sold for over $120,000, becoming the most expensive magnum sold at auction in 2024.

This 2.65 acre estate in Kapalua, on the northwestern tip of Maui, is now on the market for a cool $16.6 million. The property is located right on a cliff’s edge overlooking Honokahua Bay, and is entirely powered by solar energy. The 8,252 square-foot main residence, which was completed in 2006, has 6 bedrooms, 2 bathrooms, a terrace, lanai, floor-to-ceiling fireplace, and a media room. The property also includes a gym, pool, hot tub, and a 2-bedroom guesthouse.