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Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

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Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#221

Post by tomkarlo »

JumpCrisscross wrote: post #177
tomkarlo wrote: post #175

Earlier quoted context omitted.

It's not clear that the number of people holding Bitcoin gains, multiplied by the wealth effect, is creating any significant impact on the global economy. Similarly, even if everyone who used credit cards to buy Bitcoin went bankrupt, that still wouldn't be that big a deal for the economy. Right now Bitcoin lacks the kind of leverage and interconnection with other asset classes that made the real estate crash have a…

> any significant impact on the global economy I agree. I do not believe the cryptocurrency crash will foment a global economic crisis. I do believe it will create temporary hardships for many Americans, hardships which will in some form flow onto state and federal balance sheets.

When you say "many", how many do you think, and what are you basing that number on? I'm not sure the total wealth from bitcoin to Americans is material to the national economy, much less the potential negative change in that wealth.

The stats I've seen indicate that essentially nobody owns bitcoin when you compare it to other commonly forms of wealth, like homes or traditional equities.

I think one estimate was that less than 500K people - worldwide - own more than one bitcoin, approximately worth $10K. Compare that to the US housing market, where there's 100M-odd homeowners with an average value of ~$220K. Let's say there's 200K bitcoin holders in the US with a bitcoin each, so that's ~2 billion dollars in value vs say 22 trillion in home assets, very rough calc. (And yes, some of those have a lot more than one bitcoin, but some houses are worth more than $220K, and the wealth effect tends to happen breadthwise, primarily.)

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#222

Post by omarchowdhury »

gwbas1c wrote: post #115
TallGuyShort wrote: post #8

So if some anonymous person invents cryptocurrencies, at what point are you supposed to be considered securities? If the first exchange had gone to SEC to register as a securities exchange, would the SEC not have laughed in their face? The headline itself really captures the ambiguity and uncertainty of all of this: "potentially unlawful".

The reason why many cryptocurrencies are considered securities is because there's a certain group of people promoting them as in investment. They are claiming that their cryptocurrencies will rise in value. If you study the definition of money, and what makes a good currency, there's no kind of money that rises in value merely because you own it. Money is meant to be spent or invested, not hoarded. (Adam Smith's "Wea…

"You will need to figure out how to keep the value stable on a day-to-day and year-to-year basis. That means that the supply needs to expand and contract quickly based on demand. "

Radix DLT.

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#223

Post by nosuchthing »

saosebastiao wrote: post #79
Animats wrote: post #18

This is going to put a dent into the classic Bitcoin exchange business models of "claim we were hacked", "front run the customers", and "speculate with the funds on deposit".

Money transmitter regulation at state level already enforce the first and third. Money transmitters must retain and account for all customer funds on deposit. That is why I won't put any money into an exchange that avoids states that regulate exchanges as money transmitters (looking at you, Kraken). I really wish the SEC or FinRA would supercede the state level money transmitter regulations. It makes little sense for…

Except, most of the major exchanges are registered in places like Seychelles or the British Virgin Islands as shell corporations.

Bitfinex and Bitmex are two of the largest exchanges and it certainly seems like there's frequent incredibly shady activity with frequent large flash crashes presumably as insider trading to liquidate margin calls and/or stop loss orders.

https://medium.com/@bitfinexed/latest

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#224

Post by Legogris »

TallGuyShort wrote: post #8

So if some anonymous person invents cryptocurrencies, at what point are you supposed to be considered securities? If the first exchange had gone to SEC to register as a securities exchange, would the SEC not have laughed in their face? The headline itself really captures the ambiguity and uncertainty of all of this: "potentially unlawful".

The SEC generally applies the "Howey test"[0] when deciding is something is to be declared as a security or not. It is "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party." So a token from an ICO that might accumulate in value if the team delivers is a security. A pure utility token or cryptocurrency is not. This is a major reason why many ICOs shoehorn in some kind of use for their token in their platform (when they could just have used e.g. ETH for payment) in order to skirt being classified as a security.

https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#225

Post by aje403 »

CryptoPunk wrote: post #86
Edmond wrote: post #70

Earlier quoted context omitted.

The problem with these analogous argument about what money means fails to account for the implicit contract that we all sign as members of a society. If you buy your own island like Sir Richard Branson then by all means do what you please. Legal tender is perhaps the most important corner stone of a modern nation state, if an entrepreneur can invent their own money and subsume the one issued by a government then you…

>>if an entrepreneur can invent their own money and subsume the one issued by a government then you don't have a government. I for one prefer having a government. Nonsense. We've had non-political money before. During the free banking era we had thousands of bank-issued currencies that competed in an open market, and the state was alive and well. The state exists as long as it has a monopoly on force within its juris…

So wait, okay, in the 1800s state-and-gold-backed banks issued legal tender in lieu of anything else, this is a fair analogy to cryptocurrency and anybody against cryptocurrency just wants to see people in jail

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#226

Post by figgis »

Sangermaine wrote: post #190
drcode wrote: post #26

Earlier quoted context omitted.

Yup, we'll probably be stuck with only 2-4 exchanges that are able to afford the regulatory burden and then the regulators will claim a victory for "helping the little guy."

Which it will be, as the vast, vast majority of people aren't committed to accepting endless fraud and embezzlement out of ideological zealotry. Libertarians can still form their own exchanges where they are free to be continuously swindled and conned.

>Libertarians can still form their own exchanges where they are free to be continuously swindled and conned.

Would all of this not also remove the ability to create those 'free exchanges'?

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#227

Post by Legogris »

tomkarlo wrote: post #170
d0lph wrote: post #131

Earlier quoted context omitted.

Firstly, I don't think it's likely a cryptocoin is going to destroy any major currency. I don't agree having a non government issued currency means you don't have a government, for one there seem to be a few countries that use the Dollar or Euro as the de-facto currency.

When they allow a foreign currency to become the de-facto medium of exchange in a nation, the government is basically admitting that it's lost the ability to issue currency and manage its own economy. The loss of economic control involved is so extreme that you'd only do it if you had essentially no other options left - the government is close to failure.

Not necessarily. Government can delegate things up or down - the Euro is not an effect of Germany, the UK or France admitting economic defeat but a realization that a shared economy can benefit all.

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#228

Post by mbgaxyz »

JustAnotherPat wrote: post #216
mbgaxyz wrote: post #197

Earlier quoted context omitted.

Source?

https://cointelegraph.com/news/sec-refuses-request-for-infor... >"This exemption protects from disclosure records compiled for law enforcement purposes, the release of which could reasonably be expected to interfere with enforcement activities. Since Exemption 7(A) protects the records from disclosure, we have not determined if other exemptions apply. Therefore, we reserve the right to assert other exemptions when Ex…

Hmm, also this:

https://www.coindesk.com/cryptos-biggest-icos-stay-silent-se...

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#229

Post by tomkarlo »

Legogris wrote: post #227
tomkarlo wrote: post #170

Earlier quoted context omitted.

When they allow a foreign currency to become the de-facto medium of exchange in a nation, the government is basically admitting that it's lost the ability to issue currency and manage its own economy. The loss of economic control involved is so extreme that you'd only do it if you had essentially no other options left - the government is close to failure.

Not necessarily. Government can delegate things up or down - the Euro is not an effect of Germany, the UK or France admitting economic defeat but a realization that a shared economy can benefit all.

Yes, but that's very different - the Eurozone countries are not allowing another nation's currency to become their defacto currency, they're creating a pooled economy where they all still have a voice in the management of the common currency. (And it's still causing a ton of problems, when you consider what's happened in Spain, Italy and Greece.)

It's radically different from allowing your defacto currency to be one managed by another country, particuarly one that has no common economic interest with yours.

Re: Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

#230

Post by tomkarlo »

d0lph wrote: post #180
tomkarlo wrote: post #170

Earlier quoted context omitted.

When they allow a foreign currency to become the de-facto medium of exchange in a nation, the government is basically admitting that it's lost the ability to issue currency and manage its own economy. The loss of economic control involved is so extreme that you'd only do it if you had essentially no other options left - the government is close to failure.

Good point, what about the Euro?

See my other comment, but TLDR it's not a foreign currency if you're a Eurozone country.
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