261–270 of 308 posts
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Canada follows Basel rules for banking, which are much more complicated than that.
Basel does not hold sway over the Dominion of Canada! We follow Her Majesty's Bank Act. https://laws-lois.justice.gc.ca/eng/acts/b-1.01/
https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/basel23_...
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Easy to have the best of both worlds, though. FDA can continue to collect and publish data on safety and efficacy of medications which is incredibly useful and absolutely worth the tax money. But if you want to take something not approved, then they should have no right to tell you that you can't take the risk.
And if you get seriously sick from that we let you die by the wayside? The first way to take advantage there is to outsource the cost of dangerous experiments to (sometimes) desperate people and then to society at large for picking up the pieces.
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> Banks, for instance, don't just co-mingle customer funds, they invest those funds on their own behalf and reap the profits for themselves. Sometimes a bank will share a portion of its profit with its customers, in the form of intest; more often, the bank pays little or no interest, and actually charges the customer fees. A bank will risk its customers' money, and its customers will pay for that privilege. Banking h…
Fractional reserve banking is exactly how this works, albeit banks do not "invest" the customers' money, instead they lend it.
The investments that banks can make are restricted, but it is not inaccurate to call them investments.
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> And given that we've seen exchange after exchange fail to perform basic tasks like "don't commingle customer funds," I have a hard time feeling any sympathy for cryptocurrency companies here. There is nothing per se nefarious about co-mingling customer funds, provided that you are otherwise compliant with the law. Banks, for instance, don't just co-mingle customer funds, they invest those funds on their own behalf…
Kraken has been operating under the money transmitter licensing scheme for a decade, and like banks, money transmitters don't have any legal requirement to segregate customer funds—although they do have the responsibility to maintain sufficient cash balances or liquid investments to cover all of what they owe to customers. I think you meant to say here and unlike banks , because banks absolutely do not need to have s…
Both banks and money transmitters (including Kraken) need to maintain sufficient assets to cover customer obligations. The difference is that for money transmitters those assets have to be liquid, while for banks they do not have to be liquid (which is why SVB got into trouble).
On the other hand, neither banks nor money transmitters need to designate specific assets as being held on behalf of customers, specifically, separate and apart from their own capital or operating accounts. Designating specific accounts or balances as being held on behalf of customers is typically what is meant by “segregating customer funds”.
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And if you get seriously sick from that we let you die by the wayside? The first way to take advantage there is to outsource the cost of dangerous experiments to (sometimes) desperate people and then to society at large for picking up the pieces.
Yes. I'm not willing to have government busybodies take away my rights to make my own choices and live with the consequences so that you feel better.
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I checked, and the complaint[1] lists specific tokens, including ADA (Cardano), NEAR, SOL (Solana), ALGO (Algorand), MATIC (Polygon) and others. I have purchased some of these in the past from Kraken to evaluate the technology on my own terms. It would be a shame if the SEC forces consumers to use less reputable exchanges to access these tokens all in the name of "consumer protection." There appears to be no clear pa…
> "There appears to be no clear path forward for crypto exchanges to legally list new crypto tokens to the public." That's American securities law. The exchanges can always sell these tokens to accredited investors, but that's not the business they want to be in, I guess. Of the tokens you mention, Solana was a major component of Sam Bankman-Fried's fraud empire. You dismiss the consumer protection aspect, but clearl…
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> if Bernie Madoff were to go to the SEC and ask them "I don't know how to run a Ponzi scheme legally, can you please update the guidelines to make it easier", of course the SEC is going to refuse. The actual problem is that no part of the government wants to be the one to tell you if something is legal, because whoever actually makes the decision takes the blame for the consequences one way or the other. So Congress…
> The actual problem is that no part of the government wants to be the one to tell you if something is legal, because whoever actually makes the decision takes the blame for the consequences one way or the other. One really interesting thing I found about moving out of the US is that this is not always the case around the world. At a startup in the Netherlands we were discussing whether or not we could use a particul…
Have you tried? I haven’t tried it with the IRS, but I have tried asking my states permitting and planning department about the legality of various rental schemes for a property (that I didn’t own) and they were happy to look up the permits and tell me that indeed what I was asking about was not legal for that property. And further they let me know that tons of people do it anyway and that they don’t really check, but it’s a risk.
I feel like this won't end up going well for the SEC. This whole methodology of telling exchanges "I don't know, you figure it out" when they ask for clarity and then turning around and suing them for not figuring it out is extremely shaky legal ground.
Honest question: is it normal for a business to be able to ask law enforcement "is this legal?" and expect to get a binding answer? IANAL, but I would think it'd be the job of the business in question to hire lawyers, who would then offer their opinion on the matter.
It’s for the courts to decide then. That’s what they’re literally for.
You could argue that a more productive approach would be to come up with something at the lawmaker level. Even if it’s so restrictive that it drives most exchanges out, such as Canada has done.
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> so stringent, the laws on penny stocks are extremely well established. Crypto is asking for a free ride just because.
Perhaps the laws on penny stock registration don't translate well to crypto tokens? How do you explain that basically no one registers? Surely, "just because" is not it.
They don't register because they think they can get away without it, it's pretty simple.
Pointing at all the other scofflaws doesn't make you not a scofflaw.
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> And given that we've seen exchange after exchange fail to perform basic tasks like "don't commingle customer funds," I have a hard time feeling any sympathy for cryptocurrency companies here. There is nothing per se nefarious about co-mingling customer funds, provided that you are otherwise compliant with the law. Banks, for instance, don't just co-mingle customer funds, they invest those funds on their own behalf…
> For what its worth, banks don't just co-mingle customer funds, they invest those funds on their own behalf and reap the profits for themselves. And that is why banks are regulated, must register, follow certain rules etc. > Kraken has been operating under the money transmitter licensing scheme for a decade Yeah, but that doesn't give them a license to operate a securities exchange, or a bank. How many other money t…
Quite a few. In fact, all of the major centralized exchanges operating in the US are authorized to do so because they are licensed money transmitters (with the exception of some that might be operating under the NYS "Trust" licensing scheme), and none of them are broker-dealers regulated by the SEC, because until very recently the SEC has taken the position that broker-dealers are not allowed to sell crypto assets.
For years the money transmitter licensing scheme was understood to be the correct (and sufficient) licensing scheme under which a crypto exchange could legally operate in the United States. It is only since the beginning of the Biden administration that the SEC has taken the position that crypto exchanges have an obligation to register with the SEC. The Ripple lawsuit was filed at the tail end of the Trump administration (after the election), but it was not targeted at exchanges. It's also worth noting that the judge in the Ripple case found that exchange-traded XRP tokens are not securities. In other words, the SEC's assertion of authority over exchange-traded Ripple tokens was explicitly denied.
There is good reason to believe that SEC will be unsuccessful in asserting even broader authority over all tokens that are available on Kraken.