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Grayscale was unreasonably denied its Bitcoin ETF, court rules

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Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#21

Post by mrguyorama »

noman-land wrote: post #14
daxelrod wrote: post #7

Earlier quoted context omitted.

This is how a fintech Chief Compliance Officer explained it to me: The industry that the SEC regulates is full of clever people who have a financial incentive to push rules as far as possible. The concern is that if they provided a clear line between what is allowed and disallowed, that everyone will go right up to the line and then find creative ways to exploit how it’s defined. The SEC prefers to keep the line fuzz…

This sounds like a ploy to justify selective enforcement against whoever the regulators don't like at any given moment.

Sure, vague rules allow misdeeds through enforcement, but luckily we have the court system to police that. Meanwhile, vague rules allow the SEC to target the bad behavior, and not have to constantly be begging the legislature for new laws every time someone comes up with a new grift.

It's basically "unsportsmanlike conduct" for the financial system. The NFL doesn't tell you exactly how hard you have to push the other guy before it counts as unsportsmanlike conduct, because that would be stupid, extremely context sensitive, and only help players push each other around more. It's up to you as a player to actively stay on the right side of the fuzzy line for that exact reason.

Every person on here who works in tech should understand how stupid "no the rules need to be clear" is when it comes to bad actors and adversarial systems. Imagine if it was expected for you to clearly explain to a user who failed your internal risk system what caused them to fail, so that they can fix it and try again. Imagine if you were asked to implement a system that explained clearly to your users what would get blocked as "carding behavior". It's clear to those who have built or worked with these kind of systems how utterly stupid and self defeating such an endeavor would be.

There isn't even an unambiguously correct definition of "Fraud" in the first place!

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#22

Post by mrguyorama »

kelthuzad wrote: post #13
daxelrod wrote: post #7

Earlier quoted context omitted.

This is how a fintech Chief Compliance Officer explained it to me: The industry that the SEC regulates is full of clever people who have a financial incentive to push rules as far as possible. The concern is that if they provided a clear line between what is allowed and disallowed, that everyone will go right up to the line and then find creative ways to exploit how it’s defined. The SEC prefers to keep the line fuzz…

If the line is intentionally fuzzy it doesn't make sense for them to lie about how the line is supposedly clear, because lying tends to diminish the trust and credibility of the SEC. I still don't buy this explanation regardless, because it makes navigating the space impossible.

It's weird, because that line has been in place for decades, and the financial industry has mostly had no problems complying, yet a bunch of script kiddies trying to get rich are finding it oh so difficult to stay on the right side of the line?

Ain't that just the darndest thing.

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#23

Post by mrguyorama »

shrimpx wrote: post #18
mcpackieh wrote: post #12

Earlier quoted context omitted.

I'm well aware of how vague and stupid regulatory laws can get. And I know that the government only provides clarity when they deign to do so, I'm not entitled to it. I can write a letter to the ATF asking if my shoestring with two loops tied in it counts as a machine gun if I also own a certain rifle, or if I only own certain parts of that rifle, or if I sell it to a guy who owns that rifle; they might respond but m…

In the end it comes down to poorly written laws. The laws overreach broadly with vague language, and then citizens and corporations are afraid to act due to fear of lawsuits. The idea of "guidance" is "hey, would you fine or sue me if I act like this, in this gray area, that's genuinely hard for me and my lawyers to determine if it's within the law?" The court decisions to refute the ATF on bump stocks and SEC on cry…

If you've never worked with a rules engine that interacts with the mushiness of human interaction than you don't understand how insane it is to claim there needs to be "very clear" rules.

Human interaction is fuzzy, THAT'S why the rules are fuzzy. Also, the SEC itself isn't the arbiter of what the law says, that's the court's job.

Go ahead, try to write a complete and comprehensive and unambiguous system for defining human interaction.

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#24

Post by pg_1234 »

ascendantlogic wrote: post #19
daxelrod wrote: post #7

Earlier quoted context omitted.

This is how a fintech Chief Compliance Officer explained it to me: The industry that the SEC regulates is full of clever people who have a financial incentive to push rules as far as possible. The concern is that if they provided a clear line between what is allowed and disallowed, that everyone will go right up to the line and then find creative ways to exploit how it’s defined. The SEC prefers to keep the line fuzz…

"The people we're regulating are really clever so we can't tell you what the rules are" Is a terrible way to handle things.

Inconsistent enforcement of rules is a proven way to instill caution via fear and uncertainty.

When you are dealing with sociopaths (i.e. most of the industry that the SEC regulates), reason and compassion are useless as tools for getting people to do the right thing ... but fear still works.

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#25

Post by tmn »

googlryas wrote: post #10
fjalakgneixow wrote: post #6

Earlier quoted context omitted.

a other reason to hold spot ETF, it is another way to hold crypto custodially and might give you a way to bet on Bitcoin without fear of a wrench attack

Wouldn't the wrench attack in this instance just make you type your password to your broker, sell the ETF, and then transfer the money to some third party bank account?

This is already the case for the majority of asset (stock or bond) wealth. The threshold to pull this off is way higher than simply getting a private key or hardware key device off someone. In the first case there are many controls to halt or prevent this sort of thing. In the second, if the perp gets the key, they've won.

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#26

Post by worrycue »

shrimpx wrote: post #18
mcpackieh wrote: post #12

Earlier quoted context omitted.

I'm well aware of how vague and stupid regulatory laws can get. And I know that the government only provides clarity when they deign to do so, I'm not entitled to it. I can write a letter to the ATF asking if my shoestring with two loops tied in it counts as a machine gun if I also own a certain rifle, or if I only own certain parts of that rifle, or if I sell it to a guy who owns that rifle; they might respond but m…

In the end it comes down to poorly written laws. The laws overreach broadly with vague language, and then citizens and corporations are afraid to act due to fear of lawsuits. The idea of "guidance" is "hey, would you fine or sue me if I act like this, in this gray area, that's genuinely hard for me and my lawyers to determine if it's within the law?" The court decisions to refute the ATF on bump stocks and SEC on cry…

Frankly, the SEC is probably feeling their way around too. They have an internal model of what is and isn’t lawful and they sue based on that. But that’s their internal model, not the actual law - as decided by politicians and the courts. Their internal model will be revised based on court rulings.

Frankly, these crypto bros seem to be trying to get the SEC to publicly contradict themselves, and plan to use that as ammo to turn the court of public opinion against them, but the SEC isn’t interested in playing their game.

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#27

Post by worrycue »

solumunus wrote: post #16
daxelrod wrote: post #7

Earlier quoted context omitted.

This is how a fintech Chief Compliance Officer explained it to me: The industry that the SEC regulates is full of clever people who have a financial incentive to push rules as far as possible. The concern is that if they provided a clear line between what is allowed and disallowed, that everyone will go right up to the line and then find creative ways to exploit how it’s defined. The SEC prefers to keep the line fuzz…

> The SEC prefers to keep the line fuzzy so that actors keep their behavior well on the “allowed” side. In crypto it appears the exact opposite is happening.

Then crypto will get sued again and again while the SEC refine their internal model of what is lawful based on the outcome of court cases.

On the bright side, it clarify things. The downside is it cost a lot of money.

They can always do what traditional money does, stay within the safe zone with well established precedents.

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#28

Post by saurik »

mrguyorama wrote: post #23
shrimpx wrote: post #18

Earlier quoted context omitted.

In the end it comes down to poorly written laws. The laws overreach broadly with vague language, and then citizens and corporations are afraid to act due to fear of lawsuits. The idea of "guidance" is "hey, would you fine or sue me if I act like this, in this gray area, that's genuinely hard for me and my lawyers to determine if it's within the law?" The court decisions to refute the ATF on bump stocks and SEC on cry…

If you've never worked with a rules engine that interacts with the mushiness of human interaction than you don't understand how insane it is to claim there needs to be "very clear" rules. Human interaction is fuzzy, THAT'S why the rules are fuzzy. Also, the SEC itself isn't the arbiter of what the law says, that's the court's job. Go ahead, try to write a complete and comprehensive and unambiguous system for defining…

> Also, the SEC itself isn't the arbiter of what the law says, that's the court's job.

To the extent to which we are taking about the laws (and not rules), it is worth noting that the SEC--despite claiming these laws are clear--is almost hilariously bad at understanding them given that they are now on a losing streak in the courts ;P. So far, they have lost on their enforcement of Ripple, were told the reasons they denied Greyscale were unacceptable, and the courts have them on a right timeline (refusing to cede jurisdiction) to provide to Coinbase the regulatory clarity they petitioned for (which is currently supposed to happen by October 11th, but we'll see if they figure out how to delay further).

Re: Grayscale was unreasonably denied its Bitcoin ETF, court rules

#30

Post by rcme »

pg_1234 wrote: post #24
ascendantlogic wrote: post #19

Earlier quoted context omitted.

"The people we're regulating are really clever so we can't tell you what the rules are" Is a terrible way to handle things.

Inconsistent enforcement of rules is a proven way to instill caution via fear and uncertainty. When you are dealing with sociopaths (i.e. most of the industry that the SEC regulates), reason and compassion are useless as tools for getting people to do the right thing ... but fear still works.

> Inconsistent enforcement of rules is a proven way to instill caution via fear and uncertainty.

Where was this proven? My experience is the opposite. Inconsistent enforcement makes people think they can get away with breaking the rules. And because the enforcement is inconsistent, they have a guaranteed non-zero probability of succeeding.

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