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US SEC sues Coinbase, one day after suing Binance

reuters.com

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Re: US SEC sues Coinbase, one day after suing Binance

#171
post #48

If you look up the definitions of "security", "financial instrument", "commodity", and "currency", it is pretty clear that a plain vanilla crypto-currency like Bitcoin is no ordinary security nor a financial instrument. It is not a claim on something else, even less so than a traditional bank note. It is more like a commodity. Since when is "aluminum" a security? A crypto currency business however may be engaged in t…

So many of these HN conversations devolve into shit bonanzas because so many people approach this topic as if it is a "Regulation vs No Regulation" topic, instead of the more appropriate "Bad Regulation vs Good Regulation" topic, or even more appropriately the "Which agency should have jurisdiction" topic. And it is a shame, because cryptocurrency has largely outgrown the anarchocapitalist utopian's mindshare, and the people involved that actually want no regulation are an extreme minority now.

You're spot on here. The vast majority of cryptocurrencies (modulo a bunch of shittokens) are better described as foreign currencies or commodities, and they should be regulated as such. Unfortunately for the SEC, that implies that they don't have jurisdiction, and that regulatory burden lies with the CFTC. And from my handful of years as a commodities trader, I would much rather have the CFTC involved than the SEC. The SEC is too inconsistent...institutionally they act like a primadonna that is interested in making headlines more than creating effective policy. The CFTC is all business. They're not perfect, but they are damn good at their job, and they are transparent about what they do and how they work, and they don't see enforcement action as a PR move, but rather as a way to ensure functioning markets and common public interest.

The Supreme Court seems to agree. The SEC has lost 4 out of their last 5 SC cases on cryptocurrency. All indicators from those decisions are pointing in the direction of cryptocurrency being regulated as a commodity, which is pointing towards the CFTC being the ones in charge.

This case makes the news because that is how the SEC works. They won't win this case, and they will cover up that fact by doing what they always do...create more news.

Re: US SEC sues Coinbase, one day after suing Binance

#172
post #48

If you look up the definitions of "security", "financial instrument", "commodity", and "currency", it is pretty clear that a plain vanilla crypto-currency like Bitcoin is no ordinary security nor a financial instrument. It is not a claim on something else, even less so than a traditional bank note. It is more like a commodity. Since when is "aluminum" a security? A crypto currency business however may be engaged in t…

Bitcoin might be classified as a commodity, but nearly every other crypto out there, especially anything with a premine or any sort of revenue sharing, is pretty clear cut a security.

I disagree that the line between 'premine' and what happened with Bitcoin is actually all that clear.

Sure, genesis block yada yada but Satoshi (if he were alive/inclined) is still a multi-billionaire from behaviors that are pretty similar to what we call premining.

Re: US SEC sues Coinbase, one day after suing Binance

#173
post #148
post #131

Earlier quoted context omitted.

Past behaviour isn't the issue. An incorrect assertion is the issue. Let me give you another chance to answer a simple yes or no question. ---- Since it's obvious that democrats are all criminals and baby-eaters, is Elizabeth Warren a democrat? Yes or no. No hemming or hawing. I'll interrupt you as soon as I hear any words besides those two. Your answer or failure to answer will appear as a headline in the New York T…

The question was literally "is ETH a security?" To compare that to the questions you are stating is laughably bad faith argument. Though, I'll bite. What statement is made by the question "Is ETH a security?" Why is that a question that can't be answered with "Yes", "No", or "it depends how it is packaged"?

The question was literally "Because something cannot be both a security and a commodity, is Eth a security?"

The chair's answer was, as we can glean from the interruptions (but who the hell really knows, the man's not allowed to finish a sentence) 'It depends'.

Re: US SEC sues Coinbase, one day after suing Binance

#174
post #105

Earlier quoted context omitted.

There are two modalities to crypto and the law needs to treat them differently. Running a node on a crypto currency network does not generate securities. It generates commodities. We don't tax people on the FMV of gold when they dig it out of the ground. But, speculating on the price of gold by creating a virtual token/contract/etc. and selling that, well that’s obviously a security. Just because people buy gold spec…

> We don't tax people on the FMV of gold when they dig it out of the ground. The IRS considers found gold to be gross income and taxes are owed on it.

Dig out of the ground != found gold, look at the caselaw

Re: US SEC sues Coinbase, one day after suing Binance

#177
post #130
post #106

Earlier quoted context omitted.

The only question here is whether cryptocurrency is a security or a commodity. Securities fall under regulation by the SEC (SECURITIES and Exchange Commission). Commodities are regulated by the CFTC (COMMODITIES Future Trading Commission). SEC Chair Gensler agrees that Bitcoin is a commodity, but thinks everything else is a security.[1] Securities are much more tightly regulated than commodities. The SEC is making it…

Curious: is "bitcoin" being used by the SEC as a general term to mean "all cryptos that fundamentally employ a work-based consensus algorithm", or "pure" cryptos or whatever? Or is it not yet clear to the SEC that there are more instances of Nakamoto consensus networks out there and not everything other than BTC is a security? I agree that staked projects and derivative projects are securities since they are fundamen…

Of course not everything other than bitcoin is a security. My private blockchain no one knows about is not a security. It's not a universal law of the universe.

What they mean is every coin/token they looked at. If asked to evaluate litecoin for example probably they'd say it's not a security as well. They don't need to pass judgement on each of the thousands of coins individually because definitions and common sense exists.

Re: US SEC sues Coinbase, one day after suing Binance

#178

Earlier quoted context omitted.

It's absolutely unclear what the SEC is doing here at all. Why is ALGO a security and ETH is not? They do the same thing. What are the implications of this lawsuit? Completely unclear. This is vague and unhelpful. edit: Keep downvoting - the fact, with a clear example, remains.

When was ETH declared as not a security? I don't remember hearing anything about that. The SEC says only BTC is a commodity: https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-th... The CFTC says only BTC is a commodity: https://cryptoslate.com/cftc-chair-rostin-behnam-snubs-ether... People keep saying that regulation is unclear, when let's be honest, it's perfectly clear. Just not what a lot of people wanted…

> People keep saying that regulation is unclear, when let's be honest, it's perfectly clear. Just not what a lot of people wanted to hear.

I honestly don't know how you can say that with a straight face if you have ever looked into this for more than 5 minutes.

The regulation is not clear and they refuse to clarify when asked on many important topics. Compare that to other security related issues, where regulators are very proactive about clearly defining what is what, publishing explainers, etc. etc.

Re: US SEC sues Coinbase, one day after suing Binance

#179
post #56

Earlier quoted context omitted.

The SEC didn't sue them over Bitcoin. Seems obvious that Bitcoin shouldn't be unregulated and that there should be no question of which regulator has jurisdiction. Unfortunately that probably needs Congress to act.

I don't think there's any question who has jurisdiction. The SEC and CFTC have both agreed it's the CFTC: https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-th... https://cryptoslate.com/cftc-chair-rostin-behnam-snubs-ether...

The problem is this is not formalized. It needs to be a law (legislative, not administrative), ideally with the individual tokens named.

Relying on the goodwill of regulators is unwise.

Re: US SEC sues Coinbase, one day after suing Binance

#180
post #106
post #48

If you look up the definitions of "security", "financial instrument", "commodity", and "currency", it is pretty clear that a plain vanilla crypto-currency like Bitcoin is no ordinary security nor a financial instrument. It is not a claim on something else, even less so than a traditional bank note. It is more like a commodity. Since when is "aluminum" a security? A crypto currency business however may be engaged in t…

The only question here is whether cryptocurrency is a security or a commodity. Securities fall under regulation by the SEC (SECURITIES and Exchange Commission). Commodities are regulated by the CFTC (COMMODITIES Future Trading Commission). SEC Chair Gensler agrees that Bitcoin is a commodity, but thinks everything else is a security.[1] Securities are much more tightly regulated than commodities. The SEC is making it…

You capitalized the wrong word. The CFTC is the Commodities FUTURES Trading Commission. After all, a commodity is defined as anything traded with a futures contract (except for onions and movie tickets)!

https://www.law.cornell.edu/definitions/uscode.php?width=840...

A whole lot of things that aren't commodities in common parlance are within the jurisdiction of the CFTC because they are traded with futures contracts. This includes some securities. A whole lot of things that are commodities in common parlance are not within its jurisdiction, as the CFTC only deals with futures contracts.

Orange juice concentrate is a commodity by any definition. The CFTC regulates futures contracts on orange juice concentrate. It does not regulate its production, sale, transportation, or anything else unrelated to futures contracts. That is the job of the USDA, FDA, DoT, and so forth.

Stocks are securities. As they are traded with futures contracts, they are also commodities. The CFTC regulates futures contracts on securities jointly with the SEC. It does not regulate any trading of securities that does not involve futures contracts. That is the job of the SEC. The fact that people trade stocks with futures has never hampered the SEC's efforts to regulate them.

https://www.cftc.gov/IndustryOversight/ContractsProducts/Sec...

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