181–190 of 257 posts
NFTs were supposed to be an end-run around the Howey Test. ICOs were clearly securities offerings, and the SEC shut down most of those. NFTs were specifically designed to evade that test, by claiming they were really "digital artworks". This one, though, was clearly marketed as Make Money Fast. The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-m…
Earlier quoted context omitted.
Not trying to kill the vibe of your comment, I just want to point out that the burden of proof historically has fallen on the accuser, the regulator, the plaintiff, (point is: not the defendant,) to prove that some behavior is illegal and problematic. So I’m not sure I agree that it’s good to foster a regulatory regime where everyone trying to innovate is questioning whether the political winds will change in the fut…
The burden of proof to prove a crime still falls on the accuser. Nothing has changed there. I also don't think the interpretation has changed at all. We're still using the Howey test. The SEC took no immediate position on the cryptoetcetera community's various inventions, but they certainly didn't give anything their approval that they have since withdrawn. I'll note how much the more socially legitimate end of that…
Nothing has changed about the legal system, you’re right, but you expressed a desire to live in a more ambiguous regulatory regime where people are unsure whether they’re committing crimes or not because we’re okay with a changing interpretation of how regulations apply. That rubs me the wrong way and frankly feels pretty dystopian.
Yeah I agree that practically it’s good to not have a bunch of buffoons running around doing quasi-legal securities offerings by a different name. But would it really have hurt to have the SEC say “we’ll be applying the Howey Test to NFTs, if you plan to sell one we’d recommend consulting a lawyer versed in securities law before proceeding”. Were consumers really damaged when their founders keys weren’t worth anything? Who in their right mind even treats a founders key as an honest security? Seems like there’s some blame on both sides here.
It’s conversely not great to have consumers not using their brains, applying zero scrutiny, and buying into whatever the new street fad is then wailing for the Uncle SEC when their little crypto tokens became worthless.
In short, I don’t think you need an ambiguous regulatory regime to achieve a climate of healthy innovation. You just need the SEC to not drag its feet on action and a little up front “hey don’t be idiots we consider this stuff a security so do your homework”.
NFTs were supposed to be an end-run around the Howey Test. ICOs were clearly securities offerings, and the SEC shut down most of those. NFTs were specifically designed to evade that test, by claiming they were really "digital artworks". This one, though, was clearly marketed as Make Money Fast. The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-m…
> if it is marketed, bought, sold, and held as a money-making thing, it's a security No, sorry, no such legal language exists and how absurd of a law would that be. Anything which goes up and down in value could be bought or sold as "a money making thing" including collectible video games, books, Pokemon cards, .com domain names, pork bellies, houses, bar codes, imported goods, rare sneakers, wholesale products, golf…
1. They buy the cards
2. The Pokemon show and franchise
3. They keep them in MINT CONDITION and don’t open them
4. If the show fails to entice more kids in the future then everyone will forget about that special charazard card, so it all depends on the show and movies to keep the pokemon franchise kickin
So really, all the holier-than-thou types should realize how many of the counterexamples who never got sued are just SEC exercising their discretion
NFTs were supposed to be an end-run around the Howey Test. ICOs were clearly securities offerings, and the SEC shut down most of those. NFTs were specifically designed to evade that test, by claiming they were really "digital artworks". This one, though, was clearly marketed as Make Money Fast. The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-m…
> The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-making thing, it's a security That doesn't seem right. You're missing a really fundamental part of what makes a security a security. Let's steal the cut phrase from investopedia > an investment contract, for the purposes of the Securities Act means a contract, transaction or scheme whereby a pe…
Earlier quoted context omitted.
> The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-making thing, it's a security That doesn't seem right. You're missing a really fundamental part of what makes a security a security. Let's steal the cut phrase from investopedia > an investment contract, for the purposes of the Securities Act means a contract, transaction or scheme whereby a pe…
What if I call the NFT: i_will_buy_this_back_with_the_proceeds_of_the_company_sale_in_2025?
Earlier quoted context omitted.
> The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-making thing, it's a security That doesn't seem right. You're missing a really fundamental part of what makes a security a security. Let's steal the cut phrase from investopedia > an investment contract, for the purposes of the Securities Act means a contract, transaction or scheme whereby a pe…
The good news is that judges can read the law and interpret it without having a myopic focus on specific wordings. They also don't use investopedia as a legally-binding source. Whether an NFT (or any other crypto token) is a security is still very much up in the air, and I am assuming is not able to be uniformly defined. People making noises like "you are investing in a project" and "there will be airdrops to NFT hol…
Hmm, sort of but the specific set of requirements here are important. That's the point of a test like this.
> They also don't use investopedia as a legally-binding source.
Sure, but it's literally a quote from the supreme court case, I was pointing out that I got that from investopedia. https://supreme.justia.com/cases/federal/us/328/293/
> Whether an NFT (or any other crypto token) is a security is still very much up in the air, and I am assuming is not able to be uniformly defined.
Correct. NTFs are very simple data structures, it depends on the token and how it's sold as to whether it counts as a security or not.
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I'm not even a crypto bro, but it's honestly more exhausting to listen to someone go on about how private backends with user facing storefronts and relational databases solve the same problems as blockchain, than it is to listen to a crypto bro explain why we can't trust companies to manage records in their own relational database.
Just wanted to point out that one of these things necessarily follows the other, and billions have been wasted by people who listened to the cryptocurrency advocates, but failed to heed the warnings offered within those hyper-verbose responses. There’s a well-established effect, common enough at this point to where some academic has probably given it a name like “The Twitter Dilemma” or something, that describes how…
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low key want to see the entire sneakerhead drop industry convulse under securities fraud and unlicensed securities exchange charges
One key difference between MTG cards (or baseball cards, or most any traditional collectible item) and NFTs: If the SEC shut down Wizards of the Coast and/or caused them to radically alter their businesses, old Magic cards would likely rise in value as a result, rather than cease having any material value whatsoever, as is the case with most digital assets.
if the primary market evaporates because of a lack of secondary market, so be it
I dont think the point you are trying to make means what you think it means to me
(although with onchain exchanges the possibility of liquidity pools being formed by any market participant is going to keep that interest)
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I really appreciate the way the Howey Test matches the regulatory purpose, its operationalist approach to the question. That it's stood up to nearly a century of scammer "innovation" is admirable. It does have the drawback of requiring some interpretation, some thought. But I think that's necessary. Rather than requiring regulators to keep creating ever-broader definitions of "security", patching every scammer hole,…
Not trying to kill the vibe of your comment, I just want to point out that the burden of proof historically has fallen on the accuser, the regulator, the plaintiff, (point is: not the defendant,) to prove that some behavior is illegal and problematic. So I’m not sure I agree that it’s good to foster a regulatory regime where everyone trying to innovate is questioning whether the political winds will change in the fut…
Earlier quoted context omitted.
> if it is marketed, bought, sold, and held as a money-making thing, it's a security No, sorry, no such legal language exists and how absurd of a law would that be. Anything which goes up and down in value could be bought or sold as "a money making thing" including collectible video games, books, Pokemon cards, .com domain names, pork bellies, houses, bar codes, imported goods, rare sneakers, wholesale products, golf…
Actually, Pokemon cards fit all four prongs of Howey as does Yu Gi Oh etc. SEC would have a slam dunk against these sales (to children, no less!) but they just chose never to pursue that. 1. They buy the cards 2. The Pokemon show and franchise 3. They keep them in MINT CONDITION and don’t open them 4. If the show fails to entice more kids in the future then everyone will forget about that special charazard card, so i…