9 ms·

Opening Remarks at the Securities Regulation Institute

144 points by thisisit 9y ago

benwilber0 9y ago
> Before I move on to the next topic I want to raise one more narrow, distributed ledger or "blockchain"-related legal issue by means of a hypothetical. I doubt anyone in this audience thinks it would be acceptable for a public company with no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology to (1) start to dabble in blockchain activities, (2) change its name to something like "Blockchain-R-Us," and (3) immediately offer securities, without providing adequate disclosure to Main Street investors about those changes and the risks involved. The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering.
- xur17 9y ago
  And there is at least one company that has done exactly this [0]. [0] https://www.vanityfair.com/news/2017/12/iced-tea-company-changes-name-to-long-blockchain-stock-immediately-skyrockets https://www.vanityfair.com/news/2017/12/iced-tea-company-cha...
  - ceejayoz 9y ago
    At least two (and this one's probably more egregious, in the SEC's eyes): https://www.theverge.com/2018/1/9/16869998/kodak-kodakcoin-blockchain-platform-ethereum-ledger-stock-price https://www.theverge.com/2018/1/9/16869998/kodak-kodakcoin-b...
    - mywittyname 9y ago
      Kodak has a plausible argument for pursuing BC; the iced tea company is just flagrant.
      - ceejayoz 9y ago
        The iced tea was first, though. Kodak went into their announcement knowing what happened to the iced tea company's stock.
        TomK32 9y ago
        Not first, everyone's forgotten the dot-com-mania?
        ceejayoz 9y ago
        The iced tea company was the first to stumble upon the fact that adding "blockchain" to your company's name and making no other significant changes could boost your shares by 50% instantly. They have some plausible deniability that they truly intended to pivot the company and didn't know it'd have those effects.
        josh2600 9y ago
        I’m assuming you haven’t looked into the Kodak ICO? It’s actually quite well done.
        TallGuyShort 9y ago
        Kodak had a very original idea to use blockchain technology to complement their existing business, targeting the same customers. It was done well enough that I bet they can provide a paper-trail of the idea that pre-dates what happened to the iced tea company's stock. They might get investigated, but I would bet confidently they'll walk away clean.
      - philfrasty 9y ago
        „Pull a Kodak“ https://www.urbandictionary.com/define.php?term=pull+a+Kodak https://www.urbandictionary.com/define.php?term=pull+a+Kodak
    - tlb 9y ago
      The Kodak plan seems pretty good to me. Digital photograph copyrights are a solid basis for a coin. They're an asset class sensible people might want to make long-term investments in.
  - PeterisP 9y ago
    The key part of that comment is "without providing adequate disclosure" - it is acceptable for a public company to do everything listed above as long as the change in business model and the change in risk profile is properly disclosed; as long as what they're advertising (we're now working on a new super cryptoproduct!!!) to potential investors is actually true, and the shareholders (both current and future) are on board with what their company is doing.
- elmar 9y ago
  For context let´s get into the Bitcoin "Slang" including "pump and dump". 7 Popular Bitcoin and Cryptocurrency "Slang" Terms via CNBC [1:35 duration] https://www.youtube.com/watch?v=bbhesgGZw2A https://www.youtube.com/watch?v=bbhesgGZw2A
ohazi 9y ago
Poor Kodak can't seem to get a break...
- kevin_thibedeau 9y ago
  This just isn't their moment.
deckarep 9y ago
Isn’t the whole point of crypto-based currencies is to develop a system that has no need to be regulated by a government agency or any single entity at all? If this is about protecting the consumer, perhaps the consumer shouldn’t be meddling in a space that is still being developed where there are big risk factors at this point in time. Or maybe I just dont get it.
- dmd 9y ago
  You can't just unilaterally decide that laws don't apply to you.
  - atwebb 9y ago
    Uber and AirBnb seemed to make out alright in the end (or middle as it may be).
    - erikpukinskis 9y ago
      You can add “* unless you’re rich enough” caveat if you like, but it doesn’t change the general rule.
      - ameliaquining 9y ago
        They weren't that rich when they started doing it.
  - tzahola 9y ago
    I can, if said laws cannot be enforced. Thaf’s the whole premise of cryptocurrencies. Not that they don’t need to be regulated, but that they cannot be regulated.
    - JumpCrisscross 9y ago
      > they cannot be regulated People say this as if laws and rules didn’t work in the days of cash transactions.
yohann305 9y ago
i was a bit too young to observe but has anyone here seen something similar when the internet craze came out? 1) Were public companies changing their names to reflect the "e"/"i"? If so which ones? 2) Isn't the "i" from iPhone/iMac taken from the word "internet"? Okay it's a product and not a company name, but where does the distinction starts/ends? Could we expect an incoming "bPhone" (blockchain) or cPhone(crypto), dPhone(decentralized) .. it actually sounds cool, right?
- erikpukinskis 9y ago
  I doubt we’ll see a mass market blockchain phone for two reasons: 1) blockchain adds overhead. Mobile is about efficiency 2) blockchains are only necessary for adversarial collaboration. Your phone is wholly owned and controlled by you, so there’s no need to host adversarial realities on it.
  - TomK32 9y ago
    ad 1) with a lot of people having more than one device, why not a block-chain app between just your devices to make sure information is shared between them correctly? It's all about finding a valid use-case, barely anyone does though.
    - mkirklions 9y ago
      > why not a block-chain app between just your devices to make sure information is shared between them correctly Blockchain is ONLY a public verified ledger. A peer to peer blockchain is not public verified. This is running a server on your phone.
    - mywittyname 9y ago
      You don't need a block chain to do this. Every iPhone and Android have this capability and it works quite well.
    - sova 9y ago
      +1 for "Find a Valid Use Case" there are many, indeed. It may take many moons, keep digging!
bob_theslob646 9y ago
There definitely is a difference between talk and action. Will be interesting to see if they actually do anything because in the end it will end up with a ton of litigation that they may or may not want to do.
maxxxxx 9y ago
What does it mean when a company pivots to blockchain? Does their business change fundamentally? Maybe I don't understand blockchain well enough but it seems more like an implementation detail to, not a fundamental change.
- paulie_a 9y ago
  It means they talked to their marketing department to make their advertising more "blockchainy"
kgwgk 9y ago
I don’t remember what the original title of the submission was, but it was orders of magnitude better than the current one.
- chaostheory 9y ago
  "SEC Chief says looking closely at public companies pivoting to Blockchain"
hal9000xp 9y ago
SEC completely fails to acknowledge that their regulatory burden is way too heavy for small blockchain startups. If you want to be fully complaint with SEC to issue your tokens as a security you have to spend shitload of money on laywers and wait for approval for months if not years. In fast-paced world of blockchain, it's equal to suicide. Another thing is deeply discriminatory concept of accredited investor. They said that it's to protect investors. In reality it means that most lucrative deals will be out of reach for not wealthy individuals. And I hate whole concept that the big brother prevents me for taking risks because they think I'm too stupid for thinking for myself. And constantly referring to ICO scams is not excuse at all. They don't want to shutdown scammy ICO, then want to shutdown all ICOs including ones with exceptionally brilliant ideas. SEC is not friendly at all and they don't want to adapt. If they were friendly and willing to provide lightweight regulatory framework for ICO and cryptocurrencies, they would be very welcomed by many in blockchain world.
- paulie_a 9y ago
  Yes they want to shutdown scams, ie ICOs
  - deleted 9y ago
    [deleted]
trhway 9y ago
old slogan for new times - we're the block in the blockchain.
Animats 9y ago
The SEC is being clear enough. "Take the money and run" is not an acceptable business plan. Doesn't matter if it's "crypto". Doesn't matter if it's "blockchain". Doesn't matter if it's "binary options". This isn't a new thing. Previous generations of scams included "street railways", "real estate investment trusts", and "multi-level marketing". Read "Extraordinary Popular Delusions and the Madness of Crowds", which is over a century old yet will sound very familiar to anyone who's followed ICOs. The history of scams should be taught in school. At least read the Wikipedia entry.[1] High school students should learn about small cons like the pigeon drop up through big ones like Madoff. The SEC is mostly reactive. After the thing tanks and people complain, they go after people who acted like crooks. [1] https://en.wikipedia.org/wiki/List_of_confidence_tricks https://en.wikipedia.org/wiki/List_of_confidence_tricks
- perl4ever 9y ago
  Real estate investment trusts (REITs) are a perfectly mainstream category of publicly traded investment products today.[1] And multi-level marketing companies, while they tend to be controversial[2], also include quite a few large publicly traded stocks. [1] https://www.investor.gov/introduction-investing/basics/investment-products/real-estate-investment-trusts-reits https://www.investor.gov/introduction-investing/basics/inves... [2] See the feud between Carl Icahn and Bill Ackman over Herbalife and whether it is a scam.

144 points by thisisit 9y ago

> Before I move on to the next topic I want to raise one more narrow, distributed ledger or "blockchain"-related legal issue by means of a hypothetical. I doubt anyone in this audience thinks it would be acceptable for a public company with no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology to (1) start to dabble in blockchain activities, (2) change its name to something like "Blockchain-R-Us," and (3) immediately offer securities, without providing adequate disclosure to Main Street investors about those changes and the risks involved. The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering.

xur17 9y ago
And there is at least one company that has done exactly this [0]. [0] https://www.vanityfair.com/news/2017/12/iced-tea-company-changes-name-to-long-blockchain-stock-immediately-skyrockets https://www.vanityfair.com/news/2017/12/iced-tea-company-cha...
- ceejayoz 9y ago
  At least two (and this one's probably more egregious, in the SEC's eyes): https://www.theverge.com/2018/1/9/16869998/kodak-kodakcoin-blockchain-platform-ethereum-ledger-stock-price https://www.theverge.com/2018/1/9/16869998/kodak-kodakcoin-b...
  - mywittyname 9y ago
    Kodak has a plausible argument for pursuing BC; the iced tea company is just flagrant.
    - ceejayoz 9y ago
      The iced tea was first, though. Kodak went into their announcement knowing what happened to the iced tea company's stock.
      - TomK32 9y ago
        Not first, everyone's forgotten the dot-com-mania?
        ceejayoz 9y ago
        The iced tea company was the first to stumble upon the fact that adding "blockchain" to your company's name and making no other significant changes could boost your shares by 50% instantly. They have some plausible deniability that they truly intended to pivot the company and didn't know it'd have those effects.
      - josh2600 9y ago
        I’m assuming you haven’t looked into the Kodak ICO? It’s actually quite well done.
      - TallGuyShort 9y ago
        Kodak had a very original idea to use blockchain technology to complement their existing business, targeting the same customers. It was done well enough that I bet they can provide a paper-trail of the idea that pre-dates what happened to the iced tea company's stock. They might get investigated, but I would bet confidently they'll walk away clean.
    - philfrasty 9y ago
      „Pull a Kodak“ https://www.urbandictionary.com/define.php?term=pull+a+Kodak https://www.urbandictionary.com/define.php?term=pull+a+Kodak
  - tlb 9y ago
    The Kodak plan seems pretty good to me. Digital photograph copyrights are a solid basis for a coin. They're an asset class sensible people might want to make long-term investments in.
- PeterisP 9y ago
  The key part of that comment is "without providing adequate disclosure" - it is acceptable for a public company to do everything listed above as long as the change in business model and the change in risk profile is properly disclosed; as long as what they're advertising (we're now working on a new super cryptoproduct!!!) to potential investors is actually true, and the shareholders (both current and future) are on board with what their company is doing.
elmar 9y ago
For context let´s get into the Bitcoin "Slang" including "pump and dump". 7 Popular Bitcoin and Cryptocurrency "Slang" Terms via CNBC [1:35 duration] https://www.youtube.com/watch?v=bbhesgGZw2A https://www.youtube.com/watch?v=bbhesgGZw2A

ohazi 9y ago

Poor Kodak can't seem to get a break...

kevin_thibedeau 9y ago
This just isn't their moment.

deckarep 9y ago

Isn’t the whole point of crypto-based currencies is to develop a system that has no need to be regulated by a government agency or any single entity at all? If this is about protecting the consumer, perhaps the consumer shouldn’t be meddling in a space that is still being developed where there are big risk factors at this point in time. Or maybe I just dont get it.

dmd 9y ago
You can't just unilaterally decide that laws don't apply to you.
- atwebb 9y ago
  Uber and AirBnb seemed to make out alright in the end (or middle as it may be).
  - erikpukinskis 9y ago
    You can add “* unless you’re rich enough” caveat if you like, but it doesn’t change the general rule.
    - ameliaquining 9y ago
      They weren't that rich when they started doing it.
- tzahola 9y ago
  I can, if said laws cannot be enforced. Thaf’s the whole premise of cryptocurrencies. Not that they don’t need to be regulated, but that they cannot be regulated.
  - JumpCrisscross 9y ago
    > they cannot be regulated People say this as if laws and rules didn’t work in the days of cash transactions.

yohann305 9y ago

i was a bit too young to observe but has anyone here seen something similar when the internet craze came out? 1) Were public companies changing their names to reflect the "e"/"i"? If so which ones? 2) Isn't the "i" from iPhone/iMac taken from the word "internet"? Okay it's a product and not a company name, but where does the distinction starts/ends? Could we expect an incoming "bPhone" (blockchain) or cPhone(crypto), dPhone(decentralized) .. it actually sounds cool, right?

erikpukinskis 9y ago
I doubt we’ll see a mass market blockchain phone for two reasons: 1) blockchain adds overhead. Mobile is about efficiency 2) blockchains are only necessary for adversarial collaboration. Your phone is wholly owned and controlled by you, so there’s no need to host adversarial realities on it.
- TomK32 9y ago
  ad 1) with a lot of people having more than one device, why not a block-chain app between just your devices to make sure information is shared between them correctly? It's all about finding a valid use-case, barely anyone does though.
  - mkirklions 9y ago
    > why not a block-chain app between just your devices to make sure information is shared between them correctly Blockchain is ONLY a public verified ledger. A peer to peer blockchain is not public verified. This is running a server on your phone.
  - mywittyname 9y ago
    You don't need a block chain to do this. Every iPhone and Android have this capability and it works quite well.
  - sova 9y ago
    +1 for "Find a Valid Use Case" there are many, indeed. It may take many moons, keep digging!

bob_theslob646 9y ago

There definitely is a difference between talk and action. Will be interesting to see if they actually do anything because in the end it will end up with a ton of litigation that they may or may not want to do.

maxxxxx 9y ago

What does it mean when a company pivots to blockchain? Does their business change fundamentally? Maybe I don't understand blockchain well enough but it seems more like an implementation detail to, not a fundamental change.

paulie_a 9y ago
It means they talked to their marketing department to make their advertising more "blockchainy"

kgwgk 9y ago

I don’t remember what the original title of the submission was, but it was orders of magnitude better than the current one.

chaostheory 9y ago
"SEC Chief says looking closely at public companies pivoting to Blockchain"

hal9000xp 9y ago

SEC completely fails to acknowledge that their regulatory burden is way too heavy for small blockchain startups. If you want to be fully complaint with SEC to issue your tokens as a security you have to spend shitload of money on laywers and wait for approval for months if not years. In fast-paced world of blockchain, it's equal to suicide. Another thing is deeply discriminatory concept of accredited investor. They said that it's to protect investors. In reality it means that most lucrative deals will be out of reach for not wealthy individuals. And I hate whole concept that the big brother prevents me for taking risks because they think I'm too stupid for thinking for myself. And constantly referring to ICO scams is not excuse at all. They don't want to shutdown scammy ICO, then want to shutdown all ICOs including ones with exceptionally brilliant ideas. SEC is not friendly at all and they don't want to adapt. If they were friendly and willing to provide lightweight regulatory framework for ICO and cryptocurrencies, they would be very welcomed by many in blockchain world.

paulie_a 9y ago
Yes they want to shutdown scams, ie ICOs
- deleted 9y ago
  [deleted]

trhway 9y ago

old slogan for new times - we're the block in the blockchain.

Animats 9y ago

The SEC is being clear enough. "Take the money and run" is not an acceptable business plan. Doesn't matter if it's "crypto". Doesn't matter if it's "blockchain". Doesn't matter if it's "binary options". This isn't a new thing. Previous generations of scams included "street railways", "real estate investment trusts", and "multi-level marketing". Read "Extraordinary Popular Delusions and the Madness of Crowds", which is over a century old yet will sound very familiar to anyone who's followed ICOs. The history of scams should be taught in school. At least read the Wikipedia entry.[1] High school students should learn about small cons like the pigeon drop up through big ones like Madoff. The SEC is mostly reactive. After the thing tanks and people complain, they go after people who acted like crooks. [1] https://en.wikipedia.org/wiki/List_of_confidence_tricks https://en.wikipedia.org/wiki/List_of_confidence_tricks

perl4ever 9y ago
Real estate investment trusts (REITs) are a perfectly mainstream category of publicly traded investment products today.[1] And multi-level marketing companies, while they tend to be controversial[2], also include quite a few large publicly traded stocks. [1] https://www.investor.gov/introduction-investing/basics/investment-products/real-estate-investment-trusts-reits https://www.investor.gov/introduction-investing/basics/inves... [2] See the feud between Carl Icahn and Bill Ackman over Herbalife and whether it is a scam.