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This literally changes nothing. Regulated companies already knew what the findings would be. Unregulated companies still don't care.

brucephillips 9y ago
What is an "unregulated company"?
- empath75 9y ago
  Criminal enterprises.
  - brucephillips 9y ago
    Which are still regulated. They just flout the regulations.
- pishpash 9y ago
  There are unregulated exchanges, usually small.
binarymax 9y ago
This 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 ago
  I don't think the findings unequivocally imply that ETH and BTC are securities. Or am I missing something?
  - tannhauser23 9y ago
    It's saying that companies raising money through ICOs are issuing securities in form of ownership tokens in their companies.
    - brucephillips 9y ago
      No, it's specifically referencing "DAO" tokens, which are a subset of tokens sold through ICOs.
  - wmf 9y ago
    AFAIK 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 ago
  No, 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.
  - krschultz 9y ago
    Good luck building the "economy of the future" without the US banking system. There is a reason banking sanctions are the US's most powerful non-military diplomatic tool.
    - resf 9y ago
      Tell that to WeChat, Alipay et al.
    - stale2002 9y ago
      If you want to build an economy of the future using the banking system, you already have a much better option. And that much better option is to just use the regular banking system. Cryto currencies have massive costs and disadvantages, and there is no point at all to them if you take about the fundamental premise and purpose of them, which is decentralization.
amluto 9y ago
What 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.

brucephillips 9y ago

What is an "unregulated company"?

empath75 9y ago
Criminal enterprises.
- brucephillips 9y ago
  Which are still regulated. They just flout the regulations.
pishpash 9y ago
There are unregulated exchanges, usually small.

binarymax 9y ago

This 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 ago
I don't think the findings unequivocally imply that ETH and BTC are securities. Or am I missing something?
- tannhauser23 9y ago
  It's saying that companies raising money through ICOs are issuing securities in form of ownership tokens in their companies.
  - brucephillips 9y ago
    No, it's specifically referencing "DAO" tokens, which are a subset of tokens sold through ICOs.
- wmf 9y ago
  AFAIK 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 ago
No, 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.
- krschultz 9y ago
  Good luck building the "economy of the future" without the US banking system. There is a reason banking sanctions are the US's most powerful non-military diplomatic tool.
  - resf 9y ago
    Tell that to WeChat, Alipay et al.
  - stale2002 9y ago
    If you want to build an economy of the future using the banking system, you already have a much better option. And that much better option is to just use the regular banking system. Cryto currencies have massive costs and disadvantages, and there is no point at all to them if you take about the fundamental premise and purpose of them, which is decentralization.

amluto 9y ago

What 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.