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Statement on Cryptocurrencies and Initial Coin Offerings

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Re: Statement on Cryptocurrencies and Initial Coin Offerings

#141

Post by projmayhem »

It's obvious the SEC intends to enforce securities regulations on crypto markets. The big exchanges already and typically employ experts in regulatory compliance specifically related to AML and KYC laws on a federal and state-by-state level. The reason being access to Americans is by and large more important than access to any other set of customers. And "everyone" knows ICO's exist only to side-step securities laws and make a quick buck. There are very few legitimate offerings. Expect the SEC enforcement arm to come down like the hammer of god.

What I find funny is this idea crypto won't be the next level of monitoring and control of the money supply. You crypto proponents are going to be very unhappy when you see what Uncle Sam has in store. Fiat currency has much better built-in anonymity then this block chain nonsense. And see how that is controlled, regulated, and tracked through treaties, laws, and digital mechanisms?

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#142

Post by ataturk »

Why do we let this crap happen? ICOs and cryptocoins are a bubble that is now big enough to be an existential threat to the overall markets and when they blow, they are going to take down all kind of other things with them. I went through this with the dot-com bubble, the housing bubble, now the freaking crypto "nothingness is something to invest in" bubble.

Some people really saw Millenials coming from a mile away.

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#143

Post by jackpeterfletch »

jashkenas wrote: post #2

A little emphasis, focusing on the aftermath from the SEC's July report on the DAO: > "Following the issuance of the 21(a) Report, certain market professionals have attempted to highlight utility characteristics of their proposed initial coin offerings in an effort to claim that their proposed tokens or coins are not securities. Many of these assertions appear to elevate form over substance. Merely calling a token a…

I think people are viewing this as an attack on crypto, when its actually just common sense. People put too much faith the 'Contract' half of 'Ethereum/Smart Contract'

Basically. Today ICOs are selling tokens as shares of equity in their company, or similar. Which you can then sell on.

The problem is these companies essentially reserve the right to disregard that contract and could then sell their company, domestically or overseas, for cash, without recompensating any token holders.

Securities regulation and law stops that. But the tokens do need to be lawful securities in order for the court to recognize them.

Otherwise how can the court help you, and who else is going to help you?

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#144

Post by Frogolocalypse »

derefr wrote: post #84
lojack wrote: post #21

Earlier quoted context omitted.

I don’t understand why being premined makes any difference? A company could easily create an equity pool and a new mineable currency, and make that currency worth a proportional amount of equity. That would very clearly fall under the umbrella of security. Similarly someone could create a premined currency and evenly distribute it to anyone who asked for it, in exchange for nothing with no guarantees about it being r…

If anyone can mine a thing for themselves (i.e. create more supply of it), then that thing is a commodity . (Gold, for example, is a commodity.) By definition, no one entity can really restrict the supply or trade of a commodity; and thus the government can't really make useful laws about what any one entity does with their holdings of a commodity. Any valuable thing that isn't a commodity, is a security. Every fiat…

That's a really interesting insight. Thanks.

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#145

Post by [deleted] »

ojr wrote: post #139
xorcist wrote: post #135

Earlier quoted context omitted.

Not only is that not true. The founder of Bitcoin even took the additional steps of proving in the genesis block that he did not give him/herself a headstart. In fact, even that block containing the proof itself was made inspendable on purpose.

did they make the first million bitcoins they mined unable to spend? No founder reward means no mining so it is very true, there was an advantage, the crytokitties creators are not allowed to breed kitties, but take a cut from every sale which is more fair

[deleted]

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#146

Post by notyourday »

iMuzz wrote: post #4

> I believe that initial coin offerings – whether they represent offerings of securities or not – can be effective ways for entrepreneurs and others to raise funding, including for innovative projects. > We at the SEC are committed to promoting capital formation. The technology on which cryptocurrencies and ICOs are based may prove to be disruptive, transformative and efficiency enhancing. I am confident that develop…

> This is amazing! The SEC haven't quite stepped in yet. But I fully expect them to. And this gives some great insight into what we can expect in the future

In my view, the biggest issue that we currently have is that SEC is not going after attorneys and accountants who are facilitating these schemes. Do note that I'm not talking about a company performing ICO hiring a law firm to do it correctly, crossing the Ts and dotting the Is. What I'm talking is SchmoeCo going to a law firm specializing in ICOs ( sidebar: can you even believe that there are now law firms that specialize in ICOs?! ) basically disclosing that their ICO is a gigantic fraud scheme and those law firms and accountants help them to pull off this scheme, often for a percentage of the money raised.

Going after those firms will relegate the ICO scams and frauds to the pink sheet pump and dump scheme level while letting the legitimate companies to use ICOs to raise money for legitimate even if very speculative projects.

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#147

Post by Alex3917 »

sah2ed wrote: post #103
AlexCoventry wrote: post #82

Earlier quoted context omitted.

Unless they're using expensive KYC procedures, I doubt that many ICOs have done enough to exclude US investors that the law will excuse them from SEC regulations.

Filecoin's ICO seems to be one of the few exceptions to follow securities law. https://www.cryptocoinsnews.com/filecoin-ico-raises-record-2...

> Filecoin's ICO seems to be one of the few exceptions to follow securities law.

The SEC commissioner said that no ICO has registered as a security so far. Given that Filecoin was one of the only ICOs to openly advertise themselves as being a security, it seems like they could be in even more legal trouble than everyone else.

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#148

Post by thinkmassive »

username223 wrote: post #77
modeless wrote: post #45

Earlier quoted context omitted.

This is not my impression. It seems to me that the dumb money is people who made early fortunes in crypto or regular people looking to ride the next pump and dump. If Wall Street money is coming in it's mostly to take advantage of the dumb money for a quick profit, for example by getting preferential pricing or timing so they can sell to later investors).

> If Wall Street money is coming in it's mostly to take advantage of the dumb money for a quick profit,... Examples? Is Goldman playing in the current bubble?

Yes. https://www.bloomberg.com/news/articles/2017-12-07/goldman-s...

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#149

Post by jessriedel »

eternalban wrote: post #48
mrb wrote: post #8

This is not a statement from the SEC, but from chairman Clayton. See footnote [1]: « This statement is my own and does not reflect the views of any other Commissioner or the Commission. This statement is not, and should not be taken as, a definitive discussion of applicable law, all the relevant risks with respect to these products, or a statement of my position on any particular product. »

Something about that bothers me. Even in this thread some are discussing this as "SEC says". In a way this is a 'pump' for cryptos and that [1] footnote could have been straight up front in the "Public Statement".

Part of what should bother us is that it signals that the law has become too vague to predict, so things are legal and illegal based on the inklings of the law enforcers. This means people are forced to read tea leaves in the enforcer's statements to determine what will be illegal in the future, rather than just reading an objective law on paper.

Re: Statement on Cryptocurrencies and Initial Coin Offerings

#150

Post by sillysaurus3 »

Kadin wrote: post #93
zemo wrote: post #80

Earlier quoted context omitted.

> almost all ICOs so far are illegal. a lot of them are offering to sell you an asset that they advertise as being sure to appreciate, with the subtext that you will sell the asset at a later point for a gain. Selling something purely to be a store of value and appreciation is basically the textbook definition of a security, isn't it?

This is the (literal) textbook definition of a security: any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undi…

Mobile friendly. (Mostly because I'm on mobile and no way am I going to swipe back and forth 40 times to read this):

any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. [1]

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