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Even the SEC realizes that not all token sales are securities. Some people in the industry simply aren't getting it, they are creating a straw man which the age

Even the SEC realizes that not all token sales are securities. Some people in the industry simply aren't getting it, they are creating a straw man which the agency isn't even arguing for. > The agency said that it would focus on coins that should be categorized as securities. So there are all these people on the periphery just HOPING for their prophecy of a heavy handed government breaking the cryptocurrency rush. They read the headlines. They create the headlines. They purposefully don't read the SEC report or consider any information to the contrary of what they are expecting. Despite S.E.C. WARNING? This is an article about everyone getting smarter and restructuring their offering where necessary, and continuing to move forward. Even the WARNING in the SEC's DAO report two weeks ago acknowledged that not all token offerings were securities. But detractors and regulated entities with a legitimate reason to be skittish, used it as the WELP SHOW'S OVER GUYS argument which is completely unfounded. > Nick Morgan, formerly a lawyer in the S.E.C.’s enforcement division, said that the security label was likely to apply to any coin that an investor buys with the expectation that it will increase in value as a result of the efforts of the entrepreneurs who created it. The SEC still answers to the courts, and this consolidation of capital will allow these new organizations to take it to the courts efficiently. The Howey test from the 1940s did not consider this kind of asset to ever exist. It isn't an end all be all, it is a test. The SEC is not mandated by Congress to undermine interstate commerce, it is created to provide confidence. So far, they've been playing it smart.

wmf 9y ago
It looks like around 90% of ICOs are securities and "restructuring" them to not be securities would probably make them unprofitable and thus pointless. The only way for most ICOs to comply with SEC regulations is to not exist.
- ringaroundthetx 9y ago
  while simultaneously reaffirming that regulated broker-dealers can trade securitized tokens that are properly registered bringing trillions of dollars into the crypto space overnight when TD Ameritrade and ETrade starts trading these.
  - akvadrako 9y ago
    The issue is that they can't really do that without going public. And then why bother?
kgwgk 9y ago
Matt Levine, today: https://www.bloomberg.com/view/articles/2017-08-08/ico-risks-and-wells-fargo-mistakes https://www.bloomberg.com/view/articles/2017-08-08/ico-risks... "To me, it seems odd that people would pay millions of dollars to reserve space on a new cloud storage network, and obvious that they're really paying that money for a speculative investment." "If you do an illegal securities offering, people who bought your securities have a right to get their money back. If token prices keep rising everywhere, this is not a big concern -- why would anyone want their money back when they have such valuable cloud storage? But if the ICO mania fades, expect a lot of lawsuits from investors who are shocked to learn that they were buying unregistered securities."
- ringaroundthetx 9y ago
  Everybody and their brother with a soundboard has stated an opinion about ICOs and the SEC guidance. Literally anyone influential has said something and if they haven't, expect them to say it tomorrow. The gradient of opinions is just as abstract as the weeks before. It would be a mistake to take that as canonical just because you respect that particular entrepreneur's non sequitur criticism of existing token sales. When the argument is that not all token sales are securities offerings, not even the SEC has made that mistake, and the argument is that new token sales don't have to be securities offerings, but they can be too. Here is what the SEC will never get: they will never get investor protection from this asset class. Their entire regulatory framework is around that. Congress can modify the SEC's mandate to support this. Congress can create a completely new agency and regulatory framework to provide for more applicable confidence and protections in this asset class. The SEC will never ever ever use the Securities Act of 1933 and the Securities Exchange Act of 1934 as currently written to ensure a fair market of all cryptographic token issuances.
  - JumpCrisscross 9y ago
    > The SEC will never ever ever use the Securities Act of 1933 and the Securities Exchange Act of 1934 as currently written to ensure a fair market of all cryptographic token issuances If the SEC categories an asset as a security, it has rule making powers over the trading of those assets provided an American buys or sells the asset, inadvertently or not. Many respected lawyers and lawmakers, as well as the SEC, say many ICOs look like securities. Note that coins offered in ICOs being securities isn't a death knell to the concept. Just to the scammy elements of the market. Disclaimer: I am not a lawyer. This is not legal nor securities advice. Don't be a dummy and treat Internet comments as anything but casual banter.
JumpCrisscross 9y ago
> This is an article about everyone getting smarter and restructuring their offering where necessary, and continuing to move forward The article specifically states "only three projects have said they are canceling or postponing the sale of coins because of the warning." It's not a doom and gloom article. It's just saying the vast majority of ICOs are (a) probably noncompliant and (b) doing nothing about it. > the SEC still answers to the courts The SEC is an independent agency [1]. Congress delegated to it the Congresses' powers to make rules in and around securities with the Securities Act of 1934, as amended [2]. Courts grant agencies, like the SEC, wide rule-making authority [3]. In any case, the SEC "answers to" the courts in the same way the Congress does. > the SEC is not mandated by Congress to undermine interstate commerce The SEC is a creature of the federal government. Its specific jurisdiction is interstate commerce. In fact, one way to get around some SEC rules (though not all--consult a lawyer before doing something stupid) is to exclusively conduct your business within a single state. [1] https://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_government https://en.wikipedia.org/wiki/Independent_agencies_of_the_Un... [2] https://en.wikipedia.org/wiki/Securities_Exchange_Act_of_1934 https://en.wikipedia.org/wiki/Securities_Exchange_Act_of_193... [3] https://en.wikipedia.org/wiki/Exxon_Mobil_Corp._v._Saudi_Basic_Industries_Corp https://en.wikipedia.org/wiki/Exxon_Mobil_Corp._v._Saudi_Bas... Dislaimer: I am not a lawyer. This is not legal nor securities advice.
- ringaroundthetx 9y ago
  If you read the Securities Act of 1933 there are TONS of ways to get around SEC rules. And as such I think your intrastate offering idea is a red herring, but I'll entertain you: Did you know that anything that is super obviously a security can be completely exempt if it matures or expires in less than 270 days? Its written right there. Turns out there is a huge market called "commercial paper" that takes advantage of this specifically. I personally had no idea about it until I read the law itself. And there are lots of exemptions. Most of them are completely impractical for most of us.
  - JumpCrisscross 9y ago
    > Did you know that anything that is super obviously a security can be completely exempt if it matures or expires in less than 270 days? The United States is a common law country [1]. Implicitly stapled to the law are rulings and SEC rules. TL; DR There are more requirements to the commercial paper exemption than just the 270-day tenor. That said, you are generally correct–there are lots of exemptions to registration. For example, Regulation D provides a safe harbor within which almost all private-company stock is issued [2]. The trouble with ICOs, currently, is promoters seem to be overusing this "we're marketing a product, not a security" line. As a result, they're not taking advantage of these exemptions. Failing to qualify for an exemption is a difficult mistake to undo ex post facto. (The Filecoin ICO mentioned in the article does take advantage of one such exemption.) [1] https://en.wikipedia.org/wiki/Common_law https://en.wikipedia.org/wiki/Common_law [2] https://www.federalreserve.gov/bankinforeg/regdcg.htm https://www.federalreserve.gov/bankinforeg/regdcg.htm Disclaimer: I am not a lawyer. This is not legal nor securities advice.

wmf 9y ago

It looks like around 90% of ICOs are securities and "restructuring" them to not be securities would probably make them unprofitable and thus pointless. The only way for most ICOs to comply with SEC regulations is to not exist.

ringaroundthetx 9y ago
while simultaneously reaffirming that regulated broker-dealers can trade securitized tokens that are properly registered bringing trillions of dollars into the crypto space overnight when TD Ameritrade and ETrade starts trading these.
- akvadrako 9y ago
  The issue is that they can't really do that without going public. And then why bother?

kgwgk 9y ago

Matt Levine, today: https://www.bloomberg.com/view/articles/2017-08-08/ico-risks-and-wells-fargo-mistakes https://www.bloomberg.com/view/articles/2017-08-08/ico-risks... "To me, it seems odd that people would pay millions of dollars to reserve space on a new cloud storage network, and obvious that they're really paying that money for a speculative investment." "If you do an illegal securities offering, people who bought your securities have a right to get their money back. If token prices keep rising everywhere, this is not a big concern -- why would anyone want their money back when they have such valuable cloud storage? But if the ICO mania fades, expect a lot of lawsuits from investors who are shocked to learn that they were buying unregistered securities."

ringaroundthetx 9y ago
Everybody and their brother with a soundboard has stated an opinion about ICOs and the SEC guidance. Literally anyone influential has said something and if they haven't, expect them to say it tomorrow. The gradient of opinions is just as abstract as the weeks before. It would be a mistake to take that as canonical just because you respect that particular entrepreneur's non sequitur criticism of existing token sales. When the argument is that not all token sales are securities offerings, not even the SEC has made that mistake, and the argument is that new token sales don't have to be securities offerings, but they can be too. Here is what the SEC will never get: they will never get investor protection from this asset class. Their entire regulatory framework is around that. Congress can modify the SEC's mandate to support this. Congress can create a completely new agency and regulatory framework to provide for more applicable confidence and protections in this asset class. The SEC will never ever ever use the Securities Act of 1933 and the Securities Exchange Act of 1934 as currently written to ensure a fair market of all cryptographic token issuances.
- JumpCrisscross 9y ago
  > The SEC will never ever ever use the Securities Act of 1933 and the Securities Exchange Act of 1934 as currently written to ensure a fair market of all cryptographic token issuances If the SEC categories an asset as a security, it has rule making powers over the trading of those assets provided an American buys or sells the asset, inadvertently or not. Many respected lawyers and lawmakers, as well as the SEC, say many ICOs look like securities. Note that coins offered in ICOs being securities isn't a death knell to the concept. Just to the scammy elements of the market. Disclaimer: I am not a lawyer. This is not legal nor securities advice. Don't be a dummy and treat Internet comments as anything but casual banter.

JumpCrisscross 9y ago

> This is an article about everyone getting smarter and restructuring their offering where necessary, and continuing to move forward The article specifically states "only three projects have said they are canceling or postponing the sale of coins because of the warning." It's not a doom and gloom article. It's just saying the vast majority of ICOs are (a) probably noncompliant and (b) doing nothing about it. > the SEC still answers to the courts The SEC is an independent agency [1]. Congress delegated to it the Congresses' powers to make rules in and around securities with the Securities Act of 1934, as amended [2]. Courts grant agencies, like the SEC, wide rule-making authority [3]. In any case, the SEC "answers to" the courts in the same way the Congress does. > the SEC is not mandated by Congress to undermine interstate commerce The SEC is a creature of the federal government. Its specific jurisdiction is interstate commerce. In fact, one way to get around some SEC rules (though not all--consult a lawyer before doing something stupid) is to exclusively conduct your business within a single state. [1] https://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_government https://en.wikipedia.org/wiki/Independent_agencies_of_the_Un... [2] https://en.wikipedia.org/wiki/Securities_Exchange_Act_of_1934 https://en.wikipedia.org/wiki/Securities_Exchange_Act_of_193... [3] https://en.wikipedia.org/wiki/Exxon_Mobil_Corp._v._Saudi_Basic_Industries_Corp https://en.wikipedia.org/wiki/Exxon_Mobil_Corp._v._Saudi_Bas... Dislaimer: I am not a lawyer. This is not legal nor securities advice.

ringaroundthetx 9y ago
If you read the Securities Act of 1933 there are TONS of ways to get around SEC rules. And as such I think your intrastate offering idea is a red herring, but I'll entertain you: Did you know that anything that is super obviously a security can be completely exempt if it matures or expires in less than 270 days? Its written right there. Turns out there is a huge market called "commercial paper" that takes advantage of this specifically. I personally had no idea about it until I read the law itself. And there are lots of exemptions. Most of them are completely impractical for most of us.
- JumpCrisscross 9y ago
  > Did you know that anything that is super obviously a security can be completely exempt if it matures or expires in less than 270 days? The United States is a common law country [1]. Implicitly stapled to the law are rulings and SEC rules. TL; DR There are more requirements to the commercial paper exemption than just the 270-day tenor. That said, you are generally correct–there are lots of exemptions to registration. For example, Regulation D provides a safe harbor within which almost all private-company stock is issued [2]. The trouble with ICOs, currently, is promoters seem to be overusing this "we're marketing a product, not a security" line. As a result, they're not taking advantage of these exemptions. Failing to qualify for an exemption is a difficult mistake to undo ex post facto. (The Filecoin ICO mentioned in the article does take advantage of one such exemption.) [1] https://en.wikipedia.org/wiki/Common_law https://en.wikipedia.org/wiki/Common_law [2] https://www.federalreserve.gov/bankinforeg/regdcg.htm https://www.federalreserve.gov/bankinforeg/regdcg.htm Disclaimer: I am not a lawyer. This is not legal nor securities advice.