8 ms·
BOOM! the game just changed... > In light of the facts and circumstances, the agency has decided not to bring charges in this instance, or make findings of vio
by joeyspn 9y ago
BOOM! the game just changed...
> In light of the facts and circumstances, the agency has decided not to bring charges in this instance, or make findings of violations in the Report, but rather to caution the industry and market participants: the federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.
- smokeyj 9y agoThis literally changes nothing. Regulated companies already knew what the findings would be. Unregulated companies still don't care.
- brucephillips 9y agoWhat is an "unregulated company"?
- empath75 9y agoCriminal enterprises.
- brucephillips 9y agoWhich are still regulated. They just flout the regulations.
- pishpash 9y agoThere are unregulated exchanges, usually small.
- binarymax 9y agoThis changes lots of things. You can't just open an DAO/ETH/BTC exchange, you need to be compliant with securities law and regulation. Those who operate as an exchange now but do not file the proper paperwork (which is expensive) should expect audits, fines, and shutdown.
- brucephillips 9y agoI don't think the findings unequivocally imply that ETH and BTC are securities. Or am I missing something?
- tannhauser23 9y agoIt's saying that companies raising money through ICOs are issuing securities in form of ownership tokens in their companies.
- brucephillips 9y agoNo, it's specifically referencing "DAO" tokens, which are a subset of tokens sold through ICOs.
- wmf 9y agoAFAIK the SEC considers BTC a commodity but that doesn't mean it's unregulated. CFTC, IRS, FinCEN, and state regulations impose all kinds of restrictions on cryptocurrency that almost no companies are following.
- oneplane 9y agoNo, they don't. That organisation only works in the USA, they can't do anything for 'the world'. Let me clarify this: Just because the US SEC wants something doesn't make it happen on the internet. They can do things with governments and companies, and that's about it. If some random hacker in Ukraine decides to use a ETH or BTC or smart contract or create a new coin, the SEC isn't going to be able to influence that. There is no point of control there.
- amluto 9y agoWhat is an "unregulated company"? A bunch of geeks in a US basement could get prosecuted. A bunch of geeks in a non-US basement illegally selling unregistered securities to US persons might, too. And, if they did it personally instead of through a limited liability company of some sort, and they are found liable for their investors' losses, that will be a personal liability.
- smokeyj 9y ago> What is an "unregulated company"? Something like a DAO contract that doesn't have an issuer (assuming the DAO had an issuer, not sure). Or a payout mechanism like zcash where the mining function pays out to founders wallets over time. It seems inconsistent that ICOs are seen as securities whereas the underlying asset isn't. I think the differentiating factor is the degree of decentralization. If the SEC could shut down bitcoin they would. But they can't. So instead they'll go after ICO issuers who happen to be in the US. But many ICOs won't have to be in the US, or issued by humans for that matter. Personally, the genie is out of the bottle. Value exists in the decentralized digital world, and it now has programmable properties. Trying to regulate securities has become the equivalent of regulating TCP packets. It can be done but at what cost..
- amluto 9y ago> It seems inconsistent that ICOs are seen as securities whereas the underlying asset isn't. I'm not sure why this would be inconsistent. I admit there's some confusion in the boundary between securities and commodities, but one can certainly have a hedge fund made up from currency or gold futures (neither of which is a security) and have ownership interest in the fund be a security. (IANAL, none of this is intended to be advice or taken as authoritative.) > But many ICO won't have to be ... issued by humans If AIs are issuing ICOs, then I would imagine they would have to obey the law just like anyone else. Heck, very few if any securities are issued by humans -- they're mostly issued by corporations.
- smokeyj 9y ago> I'm not sure why this would be inconsistent You could also think of bitcoin as an ICO. There's 21 million tokens that Satoshi sold, that people purchased with the expectation of profiting from. Boom, it's a security. If the financing model of a traditional blockchain is okay, but issuing tokens are not.. then programmers are about to get very creative with how get around loopholes. > But many ICO won't have to be ... issued by humans I mean the contract will be written by a person. But instead of having a central "issuer" (like a core team) the issuing mechanism is automated via the contract on the blockchain.
- JumpCrisscross 9y ago> Unregulated companies still don't care If a company makes a mistake, the SEC first goes after the company. "Unregulated company" sounds like "no company" [1]. In that case, the SEC goes straight after the individuals involved. [1] Do you mean unregulated or unregistered? Unregulated means sole proprietorship. Unregistered could be an LLC or corporation that just never filed anything with the SEC.
- Animats 9y agoYes. The SEC is indicating that they're not going to apply this retroactively. Any upcoming Initial Coin Offering to US persons, though, is in trouble. Like all the ones listed here.[1] [1] https://www.icoalert.com/ https://www.icoalert.com/
- modeless 9y agoI would not count on them not applying this retroactively. The DAO is safe (along with Bitcoin and Ethereum themselves) but everyone else is not. I've heard interviews with some ICO people and it's clear that they know what they're doing is legally questionable. They're doing it anyway because of the obscene amount of money on the table. The SEC will not look kindly on these people.
- hudon 9y agoAre we sure Ethereum is safe? Bitcoin never did a premined token sale but the Ethereum Foundation did, so it looks much more like theDAO than Bitcoin does.
- uncoder0 9y agoYeah this is my question... A lawyer that spoke @ Devcon 2 almost a year ago seemed to think Ether(ETH) did not pass the Howey test. http://www.ibtimes.co.uk/devcon-2-ethereum-may-pass-howey-test-us-securities-law-1582029 http://www.ibtimes.co.uk/devcon-2-ethereum-may-pass-howey-te...
- 52-6F-62 9y agoI think there might be a gotcha there. SEC rulings only apply to dealings within the United States. Being that Ethereum is [at least in general, if arguably not] decentralized, and largely pegged to a Canadian, and started in Switzerland it might not be so simple. The Ethereum Foundation itself is a Swiss nonprofit. Of course, it remains to be seen what this will turn into. Even if it comes crashing down in the United States, that has little effect on the viability in the rest of the world... especially as of late. I just wouldn't want to try and run an ICO in the US as a resident of the US!
- lossolo 9y agoThis changes nothing to most of the ICOs, most of them have information that they do not offer their tokens to US citizens.
- joosters 9y agoAre they obliged to check this, though? The only checks I've ever seen are making investors tick a box on a webpage to confirm that they aren't a US citizen. Is that good enough, or are these ICOs expected to do more thorough checking? Some ICOs have advertised their sales in the US, I wonder if the SEC will look on that as offering their tokens to US citizens, whatever the wording they put on their websites?
- qznc 9y agoThe price of ETH and various ICO was not affected at all. Most ETH volume is in Asia, so maybe they just don't care.