Robinhood Crypto Gets Wells Notice from US SEC • Hacker News Board

Re: Robinhood Crypto Gets Wells Notice from US SEC

#21

Post by siftrics » Mon, May 06, 2024, 5:31 PM UTC

ajross wrote: post #20

siftrics wrote: post #7

Earlier quoted context omitted.

The vast majority of arbitrage of fungible assets happens in commodities, not securities. The SEC regulates securities. The CFTC regulates commodities.

> The vast majority of arbitrage of fungible assets happens in commodities, not securities. Yeah, I'm gonna say no to that. I don't have numbers but if total trading volume on commodities is anything more than a tiny fraction of stock/derivatives trading on any given day I eat my proverbial hat. Regardless, "The CFTC needs to sue us, not the SEC" isn't the argument being made by Robinhood either.

Derivatives are governed by the CFTC not the SEC.

It does matter, because they aren't doing anything wrong if these crypto assets are considered commodities and not securities.

Also, just because a government agency is suing you, that doesn't mean it has any legal or moral imperative. I don't see your point.

Re: Robinhood Crypto Gets Wells Notice from US SEC

#22

Post by ikmckenz » Mon, May 06, 2024, 5:31 PM UTC

jprete wrote: post #9

siftrics wrote: post #7

Earlier quoted context omitted.

The vast majority of arbitrage of fungible assets happens in commodities, not securities. The SEC regulates securities. The CFTC regulates commodities.

Ok, but these are clearly not commodities.

From the CFTC:

> Bitcoin is considered a commodity and is the underlying asset in bitcoin futures contracts… Bitcoin futures contracts — like other commodity futures contracts such as corn futures, market index futures, or gold futures — are regulated by the CFTC and must trade on CFTC-regulated exchanges.

https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/B...

Re: Robinhood Crypto Gets Wells Notice from US SEC

#23

Post by ajross » Mon, May 06, 2024, 5:41 PM UTC

siftrics wrote: post #21

ajross wrote: post #20

Earlier quoted context omitted.

> The vast majority of arbitrage of fungible assets happens in commodities, not securities. Yeah, I'm gonna say no to that. I don't have numbers but if total trading volume on commodities is anything more than a tiny fraction of stock/derivatives trading on any given day I eat my proverbial hat. Regardless, "The CFTC needs to sue us, not the SEC" isn't the argument being made by Robinhood either.

Derivatives are governed by the CFTC not the SEC. It does matter, because they aren't doing anything wrong if these crypto assets are considered commodities and not securities. Also, just because a government agency is suing you, that doesn't mean it has any legal or moral imperative. I don't see your point.

Again, that's wrong. The CFTC absolutely does not handle regulation of options and bond funds and ETFs, etc... You seem to be invoking this "commodities" thing as a trick, and that's not how it works. We've seen this repeatably now where the SEC has to come at crypto outfits with a cluebat and explain to them (in court!) that yes: crypto assets are securities. Why do you really think it's going to be different this time?

Re: Robinhood Crypto Gets Wells Notice from US SEC

#24

Post by siftrics » Mon, May 06, 2024, 5:51 PM UTC

ajross wrote: post #23

siftrics wrote: post #21

Earlier quoted context omitted.

Derivatives are governed by the CFTC not the SEC. It does matter, because they aren't doing anything wrong if these crypto assets are considered commodities and not securities. Also, just because a government agency is suing you, that doesn't mean it has any legal or moral imperative. I don't see your point.

Again, that's wrong. The CFTC absolutely does not handle regulation of options and bond funds and ETFs, etc... You seem to be invoking this "commodities" thing as a trick, and that's not how it works. We've seen this repeatably now where the SEC has to come at crypto outfits with a cluebat and explain to them (in court!) that yes: crypto assets are securities. Why do you really think it's going to be different this t…

From the CFTC's official website:

"The Commodity Futures Trading Commission is an independent U.S. government agency that regulates the U.S. derivatives markets, including futures, options, and swaps."

Also from their official website: 20 quadrillion per week in settled trades. Too lazy to look up the equities numbers, but I would bet everything I own it's lower.

Also from the CFTC's website:

"Bitcoin is considered a commodity and is the underlying asset in bitcoin futures contracts… Bitcoin futures contracts — like other commodity futures contracts such as corn futures, market index futures, or gold futures — are regulated by the CFTC and must trade on CFTC-regulated exchanges."

Re: Robinhood Crypto Gets Wells Notice from US SEC

#25

Post by bidandanswer » Mon, May 06, 2024, 5:57 PM UTC

lenerdenator wrote: post #15

financetechbro wrote: post #10

Earlier quoted context omitted.

I doubt the SEC has a strong case here. I wouldn’t worry about anything for now

What makes you think this?

They've been reprimanded by a federal judge for blatant extrajudicial power grabs like this one. None of their huge cases claiming various cryptocurrencies are securities have succeeded, except in the super cut-and-dry cases like ICOs and centralized schemes that clearly pass the Howey test.

Re: Robinhood Crypto Gets Wells Notice from US SEC

#26

Post by smeej » Mon, May 06, 2024, 6:31 PM UTC

lenerdenator wrote: post #19

smeej wrote: post #18

Earlier quoted context omitted.

As the ongoing court case with Coinbase shows, though, part of the problem is that the SEC might not be using reasonable standards. It's letting the pitcher call the balls and strikes.

The only reasonable standard the crypto true believers would accept from the US government is that cryptocurrency tokens and derivatives are 100% unregulated and nontaxable by any current or future statute.

That's a nice ad hominem attack you've made there, but it isn't actually unreasonable to argue that Bitcoin and certain other currencies like it are not securities. Heck, even the SEC has said as much. It's even more reasonable to argue that things like NFTs are more like digital baseball cards than securities.

Re: Robinhood Crypto Gets Wells Notice from US SEC

#27

Post by gamblor956 » Mon, May 06, 2024, 6:39 PM UTC

siftrics wrote: post #21

ajross wrote: post #20

Earlier quoted context omitted.

> The vast majority of arbitrage of fungible assets happens in commodities, not securities. Yeah, I'm gonna say no to that. I don't have numbers but if total trading volume on commodities is anything more than a tiny fraction of stock/derivatives trading on any given day I eat my proverbial hat. Regardless, "The CFTC needs to sue us, not the SEC" isn't the argument being made by Robinhood either.

Derivatives are governed by the CFTC not the SEC. It does matter, because they aren't doing anything wrong if these crypto assets are considered commodities and not securities. Also, just because a government agency is suing you, that doesn't mean it has any legal or moral imperative. I don't see your point.

A trading instrument can be both a commodity and a security and thus subject to regulation by the CFTC and the SEC.

Most issuers try very hard to keep their instrument in one bucket to avoid the kind of issues that cryptocurrencies are dealing with.

Re: Robinhood Crypto Gets Wells Notice from US SEC

#28

Post by pie420 » Mon, May 06, 2024, 7:18 PM UTC

siftrics wrote: post #13

jprete wrote: post #9

Earlier quoted context omitted.

Ok, but these are clearly not commodities.

Why not? It is highly litigated and still abundantly unclear whether certain cryptocurrencies are securities or commodities. That's the whole point of these legal battles. If it was clear, they would not be ongoing.

based on the definition of what a security and what a commodity, it should be abundantly clear to anyone over the age of 5 what crypto falls under:

Commodities are consumable goods that get transformed through usage in industrial or commercial processes. Gold and silver can be transformed into jewelry. Securities, on the other hand, grant holders the right to periodic benefits like dividends, coupons, principal repayments and potential profit shares.

How are you consuming crypto? What commercial or industrial process are being used?

Re: Robinhood Crypto Gets Wells Notice from US SEC

#29

Post by JumpCrisscross » Mon, May 06, 2024, 7:27 PM UTC

siftrics wrote: post #24

ajross wrote: post #23

Earlier quoted context omitted.

Again, that's wrong. The CFTC absolutely does not handle regulation of options and bond funds and ETFs, etc... You seem to be invoking this "commodities" thing as a trick, and that's not how it works. We've seen this repeatably now where the SEC has to come at crypto outfits with a cluebat and explain to them (in court!) that yes: crypto assets are securities. Why do you really think it's going to be different this t…

From the CFTC's official website: "The Commodity Futures Trading Commission is an independent U.S. government agency that regulates the U.S. derivatives markets, including futures, options, and swaps." Also from their official website: 20 quadrillion per week in settled trades. Too lazy to look up the equities numbers, but I would bet everything I own it's lower. Also from the CFTC's website: "Bitcoin is considered a…

SEC regulates securities-based derivatives. I used to professionally make markets in those.

SEC and CFTC are both claiming jurisdiction over Bitcoin.

Re: Robinhood Crypto Gets Wells Notice from US SEC

#30

Post by JumpCrisscross » Mon, May 06, 2024, 7:29 PM UTC

bidandanswer wrote: post #25

lenerdenator wrote: post #15

Earlier quoted context omitted.

What makes you think this?

They've been reprimanded by a federal judge for blatant extrajudicial power grabs like this one. None of their huge cases claiming various cryptocurrencies are securities have succeeded, except in the super cut-and-dry cases like ICOs and centralized schemes that clearly pass the Howey test.

> None of their huge cases claiming various cryptocurrencies are securities have succeeded

A federal judge found the SEC has jurisdiction over crypto and is sending Coinbase’s case to a jury trial [1].

[1] https://www.cnbc.com/2024/03/27/sec-scores-big-win-in-lawsui...