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SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

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Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#221

Post by DennisP »

joosters wrote: post #146
DennisP wrote: post #16

Earlier quoted context omitted.

It might not change the overall ecosystem that much. Many companies doing ICOs are already locating themselves in friendlier jurisdictions, and making some effort to block U.S. contributors.

What efforts are these? All I've seen are checkboxes on their web site making the user tick a box confirming that they aren't a US citizen. Geo-blocking US IP addresses won't work either, because an ethereum contract can't refuse a transaction based upon its source IP address (it doesn't know it). So if an ICO publishes their ethereum contract address online (e.g. via a twitter post), they are implicitly advertising…

The most serious effort I've seen had a geoblocked website that worked with a Chrome plugin. You could get around it, without even using a proxy, but only if you could understand the smart contract code and figure out how to prepare the data it required.

To my way of thinking, if you're sophisticated enough to do that, you're sophisticated enough in blockchain matters to make your own investment decisions.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#222

Post by regulation_d »

wuliwong wrote: post #201
regulation_d wrote: post #186

Earlier quoted context omitted.

Securities is my go-to example of government regulation that has a net-positive market effect. Whatever we lose in market efficiency we more than make up for in market confidence.

If I were to apply the idea initially expressed to your comment it would be to say "why not give people the choice to invest in non-SEC regulated markets." If the effect is net-positive, than why would you have to force people to choose SEC regulated markets. Obviously if it was not actually positive then not having the choice is pretty crappy.

For sure. Regulation without justification is "pretty crappy". The starting point should always be "no regulation". Occasionally, we override the starting point following the occurrence of massive market failure, where market forces simply are insufficient to apply the right pressure to actors involved.

In environmental regulations, we had the Love Canal which exposed a lot of school children to toxic waste. The market failed, we responded was CERCLA and the EPA.

In the case of securities regulation, the market failure was a big one in 1929. We responded with major legislation in 1933. And in general, that legislation has been a rousing success. But it's important to note that the goal of security regulation, of preventing crappy investments, isn't just to protect mom-and-pop, but also to prevent against another 1929. In my mind, it's really hard to argue that the effect of US securities regulation hasn't been a net positive.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#223

Post by sillysaurus3 »

tptacek wrote: post #81
oneplane wrote: post #30

Earlier quoted context omitted.

Why? Nobody is forcing crypto currenency on anyone. I get that registered companies might have some other deal with the govenment and with hacker organisations, but a free and open (and non-country-bound) system should really not be 'managed' by some random organisation in a random country.

Is there some way we can just replace these kinds of threads with a link to some canonical thread about why the concept of security laws is fundamentally unjust or unwise? This discussion really has nothing to do with the topic at hand.

This discussion really has nothing to do with the topic at hand.

It's possible to veer off-topic in a substantive way. Some of the more interesting HN comments have been spawned that way.

Whether subsequent comments will be high-quality depends on the topic and the amount of energy thrown into the conversation, but fresh perspectives are good as long as people are introducing them productively.

Threads like this shouldn't be auto-collapsed. One of the main reasons people write quality responses in an off-topic conversation is because it will be seen. Take away the eyeballs and you take away the quality.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#224

Post by Jabanga »

Fej wrote: post #211
m777z wrote: post #11

I'm not terribly happy with the decision, though I can't say I'm surprised. I enjoy the drama of the Wild West that is Ethereum and the rest of the cryptocurrency ecosystem. Minimal regulation encourages innovation, while regulated markets can exist for people who want stability and certain guarantees to prevent fraud (or at least make it difficult). I wonder what would happen if financial regulations became more "op…

At one point, financial regulations were somewhat optional. The SEC was created to put an end to securities fraud, because it turns out that having no rules on speculation is a bad idea. Do we need to repeat history, just to prove that financial regulations are a good idea? We had a Depression once. I'd not like to do it again.

>it turns out that having no rules on speculation is a bad idea.

Source?

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#225

Post by hudon »

52-6F-62 wrote: post #217
hudon wrote: post #170

Earlier quoted context omitted.

Are we sure Ethereum is safe? Bitcoin never did a premined token sale but the Ethereum Foundation did, so it looks much more like theDAO than Bitcoin does.

I think there might be a gotcha there. SEC rulings only apply to dealings within the United States. Being that Ethereum is [at least in general, if arguably not] decentralized, and largely pegged to a Canadian, and started in Switzerland it might not be so simple. The Ethereum Foundation itself is a Swiss nonprofit. Of course, it remains to be seen what this will turn into. Even if it comes crashing down in the Unite…

It doesn't matter if Ethereum is a crypto-decentralized-blockchain-p2p-network-thingamagig. If the Ethereum Foundation sold their thing to US residents, it is under the purview of the SEC.

The only question is if the Ethereum Foundation's token sale passes the Howey Test. An analysis of this must be done like was done in their report of the DAO. I'm not qualified to do this analysis, which is why I ask. I know they said Bitcoin was not a security but that's all I know.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#226

Post by memossy »

Cshelton wrote: post #6

There was no doubt in my mind this was coming. Still waiting for them to come down hard on a company as an example. In this article it says they won't bring charges in this instance, meaning The DAO, however; if you have taken part in an unregistered sale of securities recently as a U.S. "company", you may want to seek legal advice on how to proceed right away. Maybe a deal can be made with the SEC for "ICO"'s that h…

The main reason they didn't come down hard on the DAO is because of the hard fork..

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#227

Post by Jabanga »

xorcist wrote: post #80
armenarmen wrote: post #45

Earlier quoted context omitted.

There's no room for buyer beware? I mean c'mon. People participating in ICOs are still pretty sophisticated technically. Seems like we're regulating interactions between well informed consenting adults.

Every one of these scams that have imploded, including the DAO itself, have had participants crying out for interventions. That should speak volumes about the amount of consent involved (and indeed the sophistication).

There are hundreds of projects that have held token sales. The vast majority have not imploded.

For what it's worth, I think the majority will fail to produce a profit. That's okay. A high failure rate is fine in an emerging industry. Venture capitalists can easily tolerate 90% failure rates for example.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#228

Post by mifeng »

If you read the actual report (https://www.sec.gov/litigation/investreport/34-81207.pdf), you may notice that the SEC is careful to apply securities law DAO specifically.

In particular, they apply the security test: "did investors invest money with a reasonable expectation of profits derived from managerial efforts of others?" Since DAO was a wisdom-of-crowd VC fund, the answer is a clear YES.

On the other hand, they are careful to say that other token sales MAY be securities but will be treated based on their specific facts and circumstances.

My takeaway is that this doesn't change anything. The SEC is proceeding cautiously: applying securities law in clear-cut cases, "studying the effects" generally.

It's also not a bad thing to comply with securities regulation. FileCoin is doing quite well selling only to accredited investors on CoinList.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#229

Post by julian_1 »

Cshelton wrote: post #69
Jabanga wrote: post #43

Earlier quoted context omitted.

>but to protect U.S. citizens from being scammed all the time. US citizens shouldn't be treated like children that need to protected from their own stupidity.

Very smart people are scammed and conned all the time.

> Very smart people are scammed and conned all the time.

Including regulators.

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