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The SEC has told us it wants to sue us over Lend. We don’t know why

blog.coinbase.com

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Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#271

Post by imtringued »

capableweb wrote: post #207
chinathrow wrote: post #193

Earlier quoted context omitted.

That's because the two things are not related or even comparable. I do use OSS and I want open banking. What I do not want is that lots of people lose money due to fraud or high volatility.

> I want open banking ... What I do not want is that lots of people lose money due to fraud or high volatility That's a bit like saying you want open source without the bugs, drama, forks or the ability for people to see the code you're publishing. Things come with tradeoffs. Open banking comes with the tradeoff that fraud and loosing your funds become easier, but it also means that it's easier for people without acc…

I honestly am tired of the idea of a store of value.

99% of the time people talk about some sort of commodity (gold) or pseudo commodity (Bitcoin).

1% of the time they talk about bonds and fiat that is backed by bonds (via government or banks).

The idea of storing value in a non degrading commodity is a fallacy. Gold is special because it doesn't degrade. Yet when you sell grain to buy gold there is no guarantee that you can buy grain in the future. Why? Because unconsumed grains simply rot away. So when you decided to save for your retirement by piling up gold you simply assumed that the pile of grains is still there, hoping that someone else started farming and maintained the pile for you. There is a mismatch between the supply of gold and grains.

The debt system is slightly better. There is now an obligation to deliver a pile of grains. There is a different problem though. People are obligated to work, but you get to choose when. The problem you run into isn't whether the pile of grains is still there because that part is guaranteed, the next problem is whether there are enough workers to start farming. There is a mismatch between the supply of fiat and labor.

When you consider this, then the reason why our pension systems are unsustainable is simply because we let the "good" years of population growth take care of the problem for us. The thought of planning 50 years ahead never occurred to us.

The moral of the story is that storing value is more complex than putting your dollars somewhere. The dollars are only worth something because there is a big machine (our society) that is running the economy, yet we believe we can isolate ourselves from that machine when it is failing. Financial independence really is just a different form of dependence.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#272

Post by dboreham »

Ah, the "We're nowt but simple pirates" defense.

Pretty hard to believe when Conibase's raison d'etre is to be the US-regulatory-regime-compliant face of the cryptocurrency industry, and when they are presumably represented by a law firm that has had previous clients subject to Howey test enforcement actions.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#273

Post by dboreham »

dehrmann wrote: post #115
modeless wrote: post #22

Earlier quoted context omitted.

It's there for me. Copied below if people are still having trouble seeing it. The SEC has told us it wants to sue us over Lend. We don’t know why. By Paul Grewal, Chief Legal Officer Last Wednesday, after months of effort by Coinbase to engage productively, the SEC gave us what’s called a Wells notice about our planned Coinbase Lend program. A Wells notice is the official way a regulator tells a company that it inten…

> Chief Legal Officer And Coinbase has a market cap of $70B. I'm scared of investing in a company valued at that much that facilitates trading what are essentially digital trading cards with a chief legal officer with such a poor read on the SEC.

They will also have outside council, from one of the high end firms specializing in cryptocurrency regulation.

Note that there _is_ some debate within the SEC about the application of Howey (e.g. https://www.sec.gov/news/public-statement/peirce-concurrence...) but they don't seem to be making those arguments.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#274

Post by thelastbender12 »

zaptheimpaler wrote: post #242

Its called a f**ing bond. Its probably the largest and most important piece of the global securities market. Coinbase is shocked that their bond-in-a-trenchcoat is going to be regulated like a bond? I don't think there's any confusion at all to anyone remotely familiar with finance why it would be regulated this way. Crypto likes to rebrand decades old ideas and pretend they're new to confuse people who don't know be…

For cryptocurrency to flourish, the end goal would be to have everyone as a stakeholder (not intended as an indictment), so additions/changes to the laws that are favorable to the industry have public support.

As others point out, Coinbase must know the current legality of the lending offering. The likely objective of this piece is to gain support of those invested in the industry, and for them to push their legislators to reformulate laws.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#275

Post by solaarphunk »

USDC IS A BASKET OF SECURITIES. It’s literally cash plus treasuries. I don’t think Coinbase is acting in good faith when they say they don’t understand why they are getting blasted by the SEC. This is the exact same issue with the original libra coin.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#276

Post by danaris »

vmception wrote: post #256
qwertox wrote: post #211

Earlier quoted context omitted.

This is such a good explanation. It made me understand that this is all about protecting the customers investment, and, if nobody is protecting it, then it would have to be the SEC who does it, but they can only do this if it is a security. If it isn't a security which has to be protected by the SEC -- like Coinbase is claiming -- then who is protecting it? This appears to be what the SEC wants to have answered. Coin…

Which should be a choice for all US residents to participate in, residents who can also go lose their money at casinos if they wanted, but are literally barred from participating in positive expected value financial systems. Just like Texas abortion laws, this is not enforced against the US resident, it is against the service providers, which has allowed this framework to persist for 70 years.

Because there is a power and information asymmetry at work, and humans are not perfect rational actors.

The institutions that would want to operate these have the power to run massive advertising campaigns promoting them as the best place to earn money (with a bunch of quick disclaimers just like the various medical ads that people have gotten so used to now).

The people who would be preyed upon by this are not those with the education and experience to tell what's a sound investment and what's a bunch of bullshit, but precisely the opposite.

And though I know that there are many—perhaps you're among them, perhaps not—who would say "anyone who can fall for such a scheme deserves to lose their shirt", personally, I believe that we live in a society and we have a greater duty to care about each other than that.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#277

Post by stevespang »

. . . Specifically for Lend, we’re seeking to allow eligible customers to earn interest on select assets on Coinbase, starting with 4% APY on USD Coin (USDC) . . .

4% is WAY MORE than banks and credit unions pay - - - so Coinbase is "rocking the boat" - - and accordingly the dark forces of the established finance industry have told their government bed partners to prosecute - - we can't have 4% !

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#279

Post by jrochkind1 »

vmception wrote: post #270
jrochkind1 wrote: post #265

Earlier quoted context omitted.

Casinos are pretty highly regulated.

at the state level, and the choice is still available to participants to lose their money whether it is plainly obvious or buried in 30 pages of disclaimers

The SEC appears to be arguing that Coinbases product should be regulated as a security.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#280

Post by gitfan86 »

Paradigma11 wrote: post #239
paulgb wrote: post #223

Earlier quoted context omitted.

Exactly. Capital lent is always at risk; effectively risk-free interest is an abstraction created by deposit insurance. (Which, too, could fail) I don’t understand where DeFi yields come from, but I can tell you they’re not risk-free, for the same reason a physicist can tell you your perpetual motion machine doesn’t work without studying the blueprints.

They could already be subject to those risks without getting the benefits. But yes, DeFi seems to me mostly zero sum gambling where the risks are shifted around until nobody understands the system any more which naturally means that there is no risk any more.

The way to guarantee return on investment is to denominate it in Monopoly money. I can guarantee that I will update your account with 5% more Monopoly coins every week if I have already minted my own trillions of monopoly coins and have them in reserve.
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