201–210 of 327 posts
Interesting coincidence. From yesterday: "Cathie Wood of ARKK sold 160,887 shares of Coinbase, COIN, today." https://twitter.com/unusual_whales/status/163833492762331136...
The entire executive staff has been purely selling for months. xD
There’s a lot of discussion on what constitutes a Security so I think it’s a good idea to shine a light on this topic. In 1946, SEC v W.J. Howey Co. (328 U.S. 293) ruled the meaning of “security” as used in the provision of § 2(1) of the Securities Act of 1933 defining “security” as : “For purposes of the Securities Act, an investment contract (undefined by the Act) means a contract, transaction, or scheme whereby a…
And Coinbase's position is that none of the crypto assets it lists meet that test. For the coins Coinbase lists: - Criteria #2 is debatable - They don't meet criteria #3 - Or they don't meet criteria #4 Lots of coins look like commodities. They represent a digital asset, not ownership in a common enterprise or a loan. Coinbase believes that all of the tokens they list are securities. The SEC will need to tell Coinbas…
Because the aspect that the SEC is going after is not any crypto asset it lists- it's Coinbase Earn. Staking-as-a-service products are securities according to the SEC [1]
> The SEC will need to tell Coinbase specifically what it believes they are doing wrong
That's not the purpose of a Wells notice
> For digital assets that do look like securities, the SEC provides no way to register them
This is just completely false. There are digital securities currently registered with the SEC. You can register digital securities with Form 10. Most notably, I'm sure you've heard about those ICO's that were previously punished by the SEC for being an unregistered security... they were just fined and forced to register- they now exist as registered securities. [2]
[1] https://www.pymnts.com/cryptocurrency/2022/secs-gensler-says...
[2] https://www.sec.gov/news/public-statement/digital-asset-secu...
Some here have said it’s the SEC who should have a more collaborative spirit. But all of their incentives, job descriptions, and reason to exist are to _enforce laws_ not be chummy with startup executives. The “mean” approach to securities enforcement is what we as a society need…there are far too many scams and people who run them, and those scams seem especially concentrated within the crypto world. After the blitz…
In the blog past Coinbase General Counsel asks for "guidance". The guidance for future "crypto entrepreneurs" is going to come from the outcomes of these enforcement actions. CryptoExpert: "We want guidance. We want regulation." SEC: "Your product/service is a security." CryptoExpert: "No it's not!" Damodoran called cryptocurrency "currency made by the paranoid for the paranoid." [paraphrase] Let's be honest, coopera…
Coinbase claims there is "no path to registration". But that is not the SEC's problem. If Coinbase runs its operation in a way that precludes it from being able to comply with securities laws, then that is a problem with Coinbase's operation, not the SEC.
Ultimately whether or not something is a security is determined by the courts, not the SEC. The statute states that a security can be an investment contract. However "investment contract" is not defined. The definition is left to the courts.
That's why the test for a security is based on a definition used in a 1946 decision, SEC v W.J. Howey.
The SEC can state they believe crypto is a security. "Crypto experts" can state they believe crypto is not a security. But only a court can decide what actually is a security. The SEC cannot tell Coinbase if their products are securities, only a court can do that. The SEC can tell Coinbase that it thinks their products are securities. The SEC can decide to enforce the securities laws at its own discretion.^1 With the Wells notice Coinbase knows unequivocally that the SEC thinks its products could be securities.
The ball is in Coinbase's court.
The question is, then, if the SEC suggests that crypto is a security, or even that it ever might be one, what is the best course of action for a "crypto entrepreneur".
(a) stop
(b) continue
(c) comply
Coinbase and others are choosing (b). That is their decision to make. Maybe they think they can win against the SEC in court.
One of the most well-known treatise authors on the subject of securities regulation, along with Louis Loss and Joel Seligman, is Thomas Lee Hazen at UNC Chapel Hill.
He has weighed in on crypto. For example, see
Hazen, T. L. (2018). Virtual or Crypto Currencies and the Securities Laws. SSRN Electronic Journal. doi:10.2139/ssrn.3257449
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3257449
"Although some have argued that virtual or crypto currencies are not securities,36 The better view is that virtual or crypto currency transactions often, if not always, are subject to the securities laws.37"
Personally I cannot read Hazen's article and conclude that it's prudent to assume crypto is not subject to securities laws. But then I am not being paid to argue in crypto's favour.
IMO, much if not all of what we read in defense of crypto is written by folks who stand to gain from its popularity. That is not just limited to people who have spent money on it.
1. It does not need the CFTC's permission. For example, it served Paxos Trust with a Wells notice and Paxos stopped minting BUSD. CFTC might think BUSD is a commodity but that did not stop the SEC from acting to protect the public.
Earlier quoted context omitted.
I was under the impression it was due to the initial distribution mechanism. It was all open mine, no presale. Basically everything else has had a presale or premine. I could be wrong, because if that were the justification forks should qualify too by virtue of inheriting the chain history.
In the Ethereum pre-sale they explicitly state it is not intended to be a security or investment offering: https://blog.ethereum.org/2014/07/22/launching-the-ether-sal... Staking and maybe EIP-1559 could change things? It's sad since it seems like Coinbase is now directly collaborating with Ethereum developers https://eips.ethereum.org/EIPS/eip-3651 > The COINBASE address shall be warm at the start of transaction exe…
If you are Coinbase, your primary product is a sort of regulatory arbitrage -- there is legal risk associated with it, and so one of your primary expenses would be an army of lawyers to decide where on the risk-reward curve you would want to be. The army of lawyers is too expensive? Buddy, no one is forcing you to be in this business. Just because you made profits in the earlier years with little to no regulation doe…
> Just because you made profits in the earlier years with little to no regulation doesn't mean that government is bound to let you keep making that profit forever. Coinbase has repeatedly asked for clear regulation. If anything your issue should be with the regulators for not regulating, not Coinbase for trying to operate a business responsibly as possible without clear regulation. > Deal with it like a grown busines…
No, no, no, no. That clear regulation exists, today. It's just Coinbase choosing to not comply with it and saying "it can't apply to us, we're different", then asking for special rules that make it easier for them. Coinbase is the one choosing the operate outside the law.
I can take my money and put it into a slot machine, gamble it on horses, gamble it on sports games. I can buy useless thousand dollar sneakers, I can buy pokemon cards. I can waste my money on absurdly overpriced art, give it to scammy non-profits, donate it to scammy spoiler political candidates. In some states I can use my money to hire hookers, or buy drugs. But if I want to buy crypto, all of a sudden that is a p…
Not so much protecting you, but ensuring a fair playing ground. If crypto is "finance", then it has to be subject to financial regulations.
Person A: spends $1k per year on lottery tickets and doesn't win anything.
Person B: puts $1k into BTC at the years high and sells at the bottom getting back $200.
Both people had the goal of making a double percentage return. One had an arguably significantly higher chance of doing that.
One person was able to buy their lottery tickets at the corner store in cash, no questions asked.
The other had to file a ream of identity documents, sign an investment statement and keep constant watch on "regulations", tax obligations and even in some cases the base legality.
And then Person C comes along, and over the course of the same year sinks $1k into a bunch of clothes they never wear and eventually throws away and nobody bats an eye.
When it comes to "finance", whose money is it, really?
Earlier quoted context omitted.
>Everyone knows what they are doing when gambling etc No they absolutely do not.
Gambling is a pretty easy concept to understand, and it’s been with all of us since we were kids. Person A wagers an amount that a certain outcome will occur. Person B accepts that wager and agreed to the terms of the wager. If every kid on the playground can understand how a bet works I guarantee adults can too.
Earlier quoted context omitted.
And Coinbase's position is that none of the crypto assets it lists meet that test. For the coins Coinbase lists: - Criteria #2 is debatable - They don't meet criteria #3 - Or they don't meet criteria #4 Lots of coins look like commodities. They represent a digital asset, not ownership in a common enterprise or a loan. Coinbase believes that all of the tokens they list are securities. The SEC will need to tell Coinbas…
That’s interesting to hear your perspective. Do you really believe that any given token does not qualify as a common enterprise? Crypto tokens seem to pretty clearly meet that definition. Additionally, if I were to buy any given token and then it gains or loses value without any effort on my part, that would pretty clearly satisfy #3. Not sure what #4 is that you’re referencing
Some tokens qualify as common enterprise and some don't. And lots and lots of tokens are sold on the expectation of profit, almost all of them.
Some here have said it’s the SEC who should have a more collaborative spirit. But all of their incentives, job descriptions, and reason to exist are to _enforce laws_ not be chummy with startup executives. The “mean” approach to securities enforcement is what we as a society need…there are far too many scams and people who run them, and those scams seem especially concentrated within the crypto world. After the blitz…