Unchained Podcast, Ep. 978 – Bits + Bips: "Crypto Investing Is About Managing Risk, Not Chasing Upside"

Date: December 13, 2025
Host: Steve Ehrlich (fills in for Laura Shin)
Guests:

• Shehan Chandrasekara (Head of Strategy, CoinTracker)
• Sébastien Derivaux (Co-founder, Steakhouse Financial)

Episode Overview

This episode focuses on two timely, practical topics for crypto audiences:

1. Year-End Tax Strategies for Crypto Investors – Shehan Chandrasekara breaks down the vital tax considerations investors should know before 2025 ends, with deep dives into tax loss harvesting, wash sale rules, and the forthcoming 1099-DA reporting requirements.
2. Managing Yield and Risk in On-chain Asset Management – Sébastien Derivaux, co-founder of Steakhouse Financial, discusses how institutions approach risk in decentralized finance, the lessons learned from recent DeFi blow-ups, and how real-world assets and stablecoins are shaping the future of crypto investing.

Throughout, the conversation stresses that successful crypto investing is “…about managing risk, not chasing upside” (Sebastian Derivaux, 23:32).

Part 1: Crypto Taxes – What to Know Before Year-End (with Shehan Chandrasekara)

What Makes Crypto Taxes Unique

• IRS Classification: Crypto and NFTs are taxed as property, not currency. Tax treatment is similar to stocks, with a few key differences.
  • Key Quote: “Cryptocurrencies like bitcoin or even NFTs, they're treated as property according to the IRS rules.” (Shehan, 01:28)

Year-End Tax Planning for Crypto (02:04–07:33)

• Tax-loss harvesting is top of mind:

  • Review all wallets/exchanges for coins currently below cost basis.
  • Realize losses by selling before December 31, then optionally rebuy.
  • Losses can offset capital gains and, if those don’t cover, up to $3,000 in ordinary income; remaining losses carry forward.

• Limits clarify: The $3,000 limit only applies when you lack any capital gains. If you have gains, you can offset all of them with losses.

  • Key Quote: “It's not necessarily limited at the 3,000, it's limited at 3,000 if you don't have any capital gains. But if you have capital gains, actually there's no limit—you can offset everything.” (Shehan, 04:26)

Wash Sale Rules: Why Crypto Still Has an Edge (04:50–10:45)

• Wash Sale Rule: Applies to stocks (can't claim a loss if you buy back the same stock within 30 days), but not to crypto, because crypto is "property," not "security," under Section 1091 of the IRS code.

  • BUT: Don't abuse it—if you “sell and immediately rebuy,” IRS may challenge you under "economic substance" rules.

• Open Grey Area: No clear audits on crypto wash sales yet, but investors should be able to explain their trades if questioned.

  • Key Quote: “Even though you don't have to wait that 30 days, I would at least wait a reasonable period of time… maybe a few days.” (Shehan, 07:25)

• Legislative Watch: Several current bills in Congress could close the wash sale "loophole" for crypto. Advises listeners this is unlikely to last forever.

  • Key Quote: “I don't think this loophole...is something that's going to exist forever. I think it's going to get closed down pretty quick.” (Shehan, 10:21)

Stablecoins and Tax Nuance (10:45–14:21)

• Stablecoins ARE Taxable: Every disposal triggers a reportable event—even small purchases.
  • Still no “de minimis” exemption, so technically, you must report every coffee you buy with stablecoins.
  • Key Quote: “Even if you don't have a gain or loss, you're still required to report your StableCoin transactions on 89.49.” (Shehan, 12:10)

Newer Crypto Tax Headaches (14:21–15:49)

• Trading ETPs/ETFs: Investors now need to track underlying digital asset sales inside ETFs themselves (e.g., when funds liquidate coins to pay expenses), which won’t be shown on your 1099-B.
  • Key Quote: “If you have ETFs, there’s this second step you need to do in addition to relying on the 1099B that you are getting from the broker.” (Shehan, 15:44)

What’s Coming: The 1099-DA Era (17:19–22:31)

• New Form Requirement: In response to the 2021 infrastructure bill, US exchanges will issue a Form 1099-DA, showing proceeds (but not cost basis) for 2025 activity.

• Potential Pitfalls:

  • For 2025, no cost basis is shown—overstates gains unless you track it yourself.

  • By 2026, exchanges will start reporting cost basis only for assets bought and sold on that exchange.

  • Any transfers from self-custody, DeFi, or non-US exchanges: you’re on your own to document cost basis.

  • Key Quote: “The DA is going to show just a very partial truth... these forms still have a lot of gaps. And now you had to marry that truth that's on the DA with your books and records and hopefully everything ties when you file your taxes.” (Shehan, 22:13)

• Urgent Advice for Listeners:

  • Do year-end tax loss harvesting now—don’t wait until April.
  • Set your accounting method (FIFO, HIFO, LIFO, etc.) with your centralized exchanges before the end of the year.
  • Key Quote: “If you don’t set an accounting method...they’re going to default you to first-in, first-out, which may not be ideal.” (Shehan, 22:54)

Part 2: On-chain Yield and Risk – How Institutions Approach DeFi (with Sébastien Derivaux, Steakhouse Financial)

What is Steakhouse Financial? (24:13–25:55)

• Specializes in on-chain asset management for the “growing stablecoin economy.”
• Notable for institutional focus—runs vaults on Morpho (Ethereum), Camino (Solana), and Groove (Sky ecosystem), managing up to $3B.

Institutional Approach: "Risk Curation" as the Differentiator (25:59–28:52)

• Steakhouse avoids “long-tail” risky assets for a few extra basis points.
  • Key Quote: “It doesn't make any sense to make 1% more per year if you have 10% chance of losing all your money, which is what can happen.” (Sebastian, 23:32 / Re-emphasized at 27:09)
• Focused on providing safer “prime vaults” with strict due diligence and monitoring.
• Strongly business-to-business focused (B2B/B2B2C), not retail.

DeFi Lending Yields: Prime vs High-Yield Vaults (28:52–31:39)

• Prime Vaults: Blue-chip collateral (e.g., USDC, ETH, BTC); yields close to Treasury bill rates, with slight “risk premium.”
  • Yields generally 4–8%, sometimes higher when demand for leverage spikes.
• High-Yield Vaults: Allow more “esoteric” or on-chain collateral (e.g., DeFi tokens, RWAs)—yields 1–4% higher, but with real risk of loss, as seen in the Stream Finance/Elixir incident.

Control, Governance & Security in DeFi Vaults (31:39–35:42)

• Steakhouse can propose vault parameter changes but uses veto periods (via Aragon DAO) so depositors can block any changes—non-custodial by design.
• Institutional users watch closely and can immediately veto risky proposals, offering a strong layer of decentralized security.

Learning from Recent Market Turmoil (36:49–42:25)

• Recent major volatility/institutional failures (e.g., Stream Finance, Elixir) tested the system:
  • Stream Finance: Completely unregulated “black box” blew up, taking lenders with it.
  • Elixir: Stablecoin backed by risky assets depegged.
• Result: Many users exited high-yield vaults; some even fled prime vaults temporarily due to perceived risk. Now, flows have rebounded.
• Key Lesson: Even “safer” vaults don't escape panic, but mechanisms (repo/instant withdrawals) help restore confidence. Product-market fit for “duration” or fixed-term lending is coming, to offer higher yield with bounded risks.

Tokenized Credit Funds, RWAs, and Complexity (42:25–47:54)

• Example: Midas MF1, a tokenized private credit fund, suffered a 2% markdown from exposure to failed lender FirstBrand.

  • Private credit is less transparent than DeFi—accrues interest daily, then sudden losses hit with markdowns.

  • Users panicked at the drop, showing how little experience crypto has with illiquid, real-world assets.

  • Key Quote: “Maybe we are using the word private credit. We didn't convey enough that there was a risk. I mean, it was written in the documents, but maybe the document was too big.” (Sebastian, 49:17)

• Crosscurrents: Tokenized assets can offer real yield, but messaging, transparency, and liquidity mismatches are major challenges.

Looking Ahead: Stablecoins, Regulation & New Rails (50:01–53:47)

• GENIUS Act and similar laws could unleash trillions in regulated stablecoins. Proliferation of new issuers—banks, fintechs, tech companies—means more competition and fragmentation.

• Steakhouse is “speaking to most of them” and aims to integrate with new stablecoin-focused chains (e.g., Tempo, Ark).

• Warning: So many new stablecoins may threaten fungibility/interoperability.

• Key Quote: “We need to crack how to make sure that we don't end up with 1,000 stable coins that are not one-to-one all the time. I think that will be challenging.” (Sebastian, 52:05)

• On Tokenized Bank Deposits: Enthusiastic, but notes permissionless nature of blockchains may not translate well from fully-regulated environments—will experiment as the space evolves.

Roadmap for 2026 and Beyond (56:10–57:44)

• Two main directions:
  1. Development of new “yield curve” products (e.g., 6-month fixed lending) to meet demand beyond "overnight" repo rates.
  2. Non-USD stablecoin vaults (e.g., SGD, EUR, emerging-market currencies) to serve global and cross-currency needs.
• “A lot of users are in emerging markets…maybe they want USD, but I’m quite sure for everyday life they would be fine with a local currency stablecoin.” (Sebastian, 57:24)

Notable Quotes & Memorable Moments

• On managing risk:

  “It doesn’t make any sense to make 1% more per year if you have 10% chance of losing all your money, which is what can happen.”
  – Sébastien Derivaux (23:32, restated at 27:09)

• On the future of the wash sale workaround:

  “I don’t think this loophole...is something that’s going to exist forever.”
  – Shehan Chandrasekara (10:21)

• On stablecoins and tax reporting:

  “You still have to report that on Form 8949, even though that may not result in a significant gain or loss. Because again, stablecoins are realized property.”
  – Shehan Chandrasekara (12:10)

• On integrating with new chains:

  “Every time there is a new chain … we try to be as much everywhere as possible. … Any stablecoin chain will need lending because the lending component is the basis of the financial ecosystem.”
  – Sebastian Derivaux (52:52–53:36)

• On product-market fit and user education in DeFi:

  “It's just social evolution of the ecosystem.”
  – Sebastian Derivaux (50:01)

Timestamps: Key Segments

| Time | Topic / Segment | |----------|--------------------------------------------------------------------| | 00:54 | Crypto tax basics and year-end strategies (Shehan Chandrasekara) | | 02:29 | Tax loss harvesting in detail | | 04:50 | Wash sale rules (crypto vs. stocks) | | 10:45 | Stablecoins—tax obligations and lack of de minimis exemption | | 14:21 | Crypto ETPs/ETFs—hidden tax implications | | 17:19 | Coming 1099-DA exchange reporting changes (starting 2025/2026) | | 22:44 | Final tax tips and closing with Shehan | | 23:32 | Opening of Part 2—risk, not pure upside, is the crucial focus | | 25:13 | Steakhouse’s traction and institutional focus | | 26:31 | Vault construction and risk curation | | 29:09 | Lending rates and relation to Treasury benchmarks | | 31:39 | Security/governance: user veto rights over vault changes | | 36:49 | Handling recent DeFi blow-ups and volatility | | 42:25 | RWA/tokenized credit: transparency and user panic | | 50:01 | Genius Act, stablecoin proliferation, and infrastructure plans | | 56:10 | 2026 roadmap: yield curve products and non-USD stablecoins |

Conclusion

This episode is a must-listen for both retail and institutional crypto investors looking to actually manage the risks and obligations of crypto investing—not just blindly chase the next yield. The first half provides actionable guidance on year-end tax moves, the coming 1099-DA landscape, and ongoing legal uncertainties (especially for US listeners). The second half is a candid exploration of what “responsible” DeFi looks like at scale, the pain of learning lessons from failures, and why the next wave of yield products and new stablecoins will make careful risk management even more important.

Bottom line: If you want crypto exposure in 2026, you need a plan for taxes, record-keeping, and, above all, prudent risk selection.

For further reading and reliable updates:

• Visit unchained.com/bitsandbips for disclosures and more resources.