So to be security,
- must have investment, - profit expectation, - this profit must come from efforts of others (management) - limited or none voting right
So what is preventing digital currencies classified at securities?
SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
341–350 of 360 posts
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#342Earlier quoted context omitted.
Housing prices weren't increasing because people expected the prices would increase...home prices were increasing because the supply of money/loans for houses exponentially increased. In other words NINJAs (no income, no job applications) were being rubber stamped for million dollar plus homes with $0 down and 103% financing. And so prices continued to go up because the next NINJA would be approved to buy yesterday's…
> Housing prices weren't increasing because people expected the prices would increase...home prices were increasing because the supply of money/loans for houses exponentially increased. Why would the supply of money/loans increase unless people were taking out loans to buy houses more than usual, and why would they do that unless they expected the price to increase? The increase in supply of loans happened because pe…
>Why would the supply of money/loans increase unless people were taking out loans to buy houses more than usual
Because the regulations that limited supply of loans disappeared.
Consider that many more people want a million dollar home than can qualify for the loan (afford it).
Think about how much a single change in regulation would effect the number of people who can qualify for the loan/afford the $1M, example: cash down payment. How many more people can afford a $1M if the regulations for the loan approval require cash down of: 100%, 20% or -3% where the bank pays you $30,000 cash to take the $1M loan to buy the house.
Allowing people to finance 103% of a $1M home significantly changes the number of people who can act on the want (demand), to the extent supply of the homes drops and as a result their prices artificially increase supported by more bad loans.
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#343Earlier quoted context omitted.
So it's the shareholders who are responsible for forming an LLC? How can they prevent non-members from becoming partners in the DAO, given the software is autonomous and has no permission controls?
First LLC's don't have "shareholders" the owners/equivalent of an LLC is a Member. The process would basically be as follows: Say you form an Investment Club LLC, you create a smart contract/ICO with up to 99 tokens, and purchasers of the ICO tokens become a "member" of the LLC. Thereafter, the Investment Club LLC members could create a smart contract/investment opportunity, but you would only be able to vote/invest…
So you're suggesting that instead of Slock.it developing the smart contract, an LLC should have? How do the token buyers qualify as members of an LLC when they're anonymous buyers with no legal affiliation to a LLC? Or are you saying the LLC wouldn't be a traditional one with a legal identity and identification of its members?
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#344Isn't it also illegal to buy unlicensed securities? Couldn't the SEC also prosecute individuals who simply bought into these as unaccredited investors?
(I am not a lawyer)
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#345Earlier 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.
Do you remember when it was legal to smoke in bars? Every bar was filled with smoke. Sure a bar could opt in to going smoke free, but basically none did because it would drive potential customers away.
I guess my point is that market forces prevented bars from being smoke free, and what you suggest would lead to basically no SEC regulated investments.
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#346Earlier quoted context omitted.
What is an "unregulated company"? A bunch of geeks in a US basement could get prosecuted. A bunch of geeks in a non-US basement illegally selling unregistered securities to US persons might, too. And, if they did it personally instead of through a limited liability company of some sort, and they are found liable for their investors' losses, that will be a personal liability.
> What is an "unregulated company"? Something like a DAO contract that doesn't have an issuer (assuming the DAO had an issuer, not sure). Or a payout mechanism like zcash where the mining function pays out to founders wallets over time. It seems inconsistent that ICOs are seen as securities whereas the underlying asset isn't. I think the differentiating factor is the degree of decentralization. If the SEC could shut…
> It seems inconsistent that ICOs are seen as securities whereas the underlying asset isn't.
I'm not sure why this would be inconsistent. I admit there's some confusion in the boundary between securities and commodities, but one can certainly have a hedge fund made up from currency or gold futures (neither of which is a security) and have ownership interest in the fund be a security.
(IANAL, none of this is intended to be advice or taken as authoritative.)
> But many ICO won't have to be ... issued by humans
If AIs are issuing ICOs, then I would imagine they would have to obey the law just like anyone else. Heck, very few if any securities are issued by humans -- they're mostly issued by corporations.
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#347Earlier quoted context omitted.
> What is an "unregulated company"? Something like a DAO contract that doesn't have an issuer (assuming the DAO had an issuer, not sure). Or a payout mechanism like zcash where the mining function pays out to founders wallets over time. It seems inconsistent that ICOs are seen as securities whereas the underlying asset isn't. I think the differentiating factor is the degree of decentralization. If the SEC could shut…
> It seems inconsistent that ICOs are seen as securities whereas the underlying asset isn't. I'm not sure why this would be inconsistent. I admit there's some confusion in the boundary between securities and commodities, but one can certainly have a hedge fund made up from currency or gold futures (neither of which is a security) and have ownership interest in the fund be a security. (IANAL, none of this is intended…
> I'm not sure why this would be inconsistent
You could also think of bitcoin as an ICO. There's 21 million tokens that Satoshi sold, that people purchased with the expectation of profiting from. Boom, it's a security. If the financing model of a traditional blockchain is okay, but issuing tokens are not.. then programmers are about to get very creative with how get around loopholes.
> But many ICO won't have to be ... issued by humans
I mean the contract will be written by a person. But instead of having a central "issuer" (like a core team) the issuing mechanism is automated via the contract on the blockchain.
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#348Earlier quoted context omitted.
Is there any advantage of using ICOs as as glorified Patreon or Kickstarter compared to just taking orders in ETH? Why are you issuing a token to begin with?
there are secondary community engagement and customer/user retention (lock-in?) benefits to using a token if the token is part of or essential to a yet-to-be-developed app, but not themselves traded, I cannot see why there would be any sense of an investment. but I would in such cases never market the sale of such tokens as an ICO or crowdfunding. I would offer them up for sale, as a product pure and simple. buy now.…
All tokens get traded. This is the point that I think a lot of people are missing.
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#349Earlier quoted context omitted.
Serious question: Do you know any countries AT ALL that have no securities commission, or one that doesn't strictly regulate sale of securities, while at the same time the country allows formation of a company? Being that token sales are international, it would seem there is absolutely nothing illegal about opening a company in that country and offering securities. Even if the owners of the company are US citizens. T…
> Being that token sales are international, it would seem there is absolutely nothing illegal about opening a company in that country and offering securities. Even if the owners of the company are US citizens. Actually the US regulates companies that so much as offer securities to US citizens. Try getting an account with a forex broker that's based outside the US and you'll see what I mean. The CFTC doesn't limit its…
What about this rule:
Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities
#350Earlier quoted context omitted.
> Being that token sales are international, it would seem there is absolutely nothing illegal about opening a company in that country and offering securities. Even if the owners of the company are US citizens. Actually the US regulates companies that so much as offer securities to US citizens. Try getting an account with a forex broker that's based outside the US and you'll see what I mean. The CFTC doesn't limit its…
What about this rule: https://www.sec.gov/rules/final/2008/34-58465.pdf
The SEC has chosen not to regulate securities that meet the conditions in that document. If it wishes to, it can change its mind.