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Coin Center isn't an unbiased source, but they do have the advantage of actually being lawyers: https://coincenter.org/entry/no-ether-is-not-a-security https://

Coin Center isn't an unbiased source, but they do have the advantage of actually being lawyers: https://coincenter.org/entry/no-ether-is-not-a-security https://coincenter.org/entry/no-ether-is-not-a-security Full disclosure: I am also a lawyer, and I work in markets trading at a bank. That's not an endorsement of Coin Center's conclusions, but it's my informed opinion their arguments are sounder than the idle speculation of the author. If there's anything that Ether is similar to, it's a currencies (my area), collectibles, or commodities (adjacent to my area). There's no underlying business that's being invested in or paying dividends to you. It's 100% a speculation on appreciation. I'll give you an example. Say Vitalik owned a oil exploration company, and he also owned oil rights to a big patch of oil in Texas somewhere. Instead of selling shares in his company to raise money, he pre-sells the oil. "You give me money for the oil, and I'll go dig it up for you." You don't own shares in his company. You own oil. Oil isn't a security.

pastor_bob 8y ago
Being a lawyer is irrelevant. that article cites Gary Gensler who is NOT a lawyer despite being Chairman of the CFTC.
will_brown 8y ago
I respectfully disagree. As a fellow lawyer, I think it’s the standard legal answer...maybe. Oil is a commodity and as described by you that transaction wouldn’t be a security. However, the way you frame it: >There's no underlying business that's being invested in or paying dividends to you. >You don't own shares in his company. You make it sound that only equity/shares are securities, which isn’t the standard. >It's 100% a speculation on appreciation. While there is massive speculation, that’s not the standard either, and I don’t think your factual conclusion is accurate either. The investors are relying on the efforts of others for their profits. The article you link concludes Ether isn’t a security because the investors aren’t relying on the issuer/promoter rather 3rd party developers. But case law doesn’t limit the reliance to the promoter it specifically uses the word “others”, but even so, I think it’s easily argued investors are relying on the foundation to bring 3rd party developers to the table. At the end of the day...the SEC could have done a Howey analysis on Ether itself, which in my opinion would have been much more interesting and informative than the SEC retroactively doing an analysis on the DAO.
- bmcusick 8y ago
  > The investors are relying on the efforts of others for their profits. Are investors in gold relying on the efforts of others for their profits? After all, there are people out there making gold exchanges, developing gold mines, marketing gold jewelry, minting coins and bars for vaults, etc. etc. There's your efforts of third parties which drives up value of gold. Of course the answer is "maybe" until the law is written or the case decided, but let's not lose sight of the fact that the law already has categories that are a closer fit. Who's the third party in a decentralized ecosystem? Everyone who's ever contributed a line of code? Everyone who has developed a DAPP that feeds the demand side of the market? Where's the common enterprise that's being invested in?
  - will_brown 8y ago
    Well as lawyers we know why gold isn’t a security according to case law, and that logic definitely doesn’t apply to Ethereum/Ether. >Where's the common enterprise that's being invested in? The DAO was a decentralized ecosystem and yet the SEC issued an opinion. So what in your mind distinguishes Ether from the DAO tokens and makes Ether deserve to be treated like gold or another commodity like oil?
burritofanatic 8y ago
Flashing back to Seg Reg class over a decade ago, I could not have imagined we'd talk about such a scenario -- granted, I didn't know what a pointer was, and that hashing in my vernacular did not involve cryptography. Believers should really read the Howey decision: https://www.law.cornell.edu/supremecourt/text/328/293 https://www.law.cornell.edu/supremecourt/text/328/293 It's fairly short, and it will give people an appreciation of the discussion. There is a lot to consider in the analysis.
nivertech 8y ago
What was presold in Ethereum's "software crowdsale" was $ETH, not gas. Since it was used to fund the development of Ethereum, it was (and maybe still is) a security. $ETH is a stake in a network with an artificially limited supply of units, which grants you a write access rights to Ethereum's mainnet. Gas is a non-tradeable Unit-of-Account, which uses $ETH as the only approved/possible method of payment. The relationship between $ETH and gas is similar to the one between petrodollars and oil. Assuming $ETH transforming from security into something else, it can not become commodity, since gas is already a non-tradeable underlying commodity with spot prices determined on Ethereum mainnet. It can only transform into an exotic commodity derivative of gas. Or it may stay a security (which is even more likely with transition to PoS). Also, don't forget about secondary sales by Stiftung Ethereum. Those who bought in ICO have no reason to sue, but those who bought in secondaries and lost - do.
- nivertech 8y ago
  EDIT: IANASL, IANASA, IANA{S,C}* I’m not a securities lawyer I’m not a securities attorney I’m not a securities/crypto anything

pastor_bob 8y ago

Being a lawyer is irrelevant. that article cites Gary Gensler who is NOT a lawyer despite being Chairman of the CFTC.

will_brown 8y ago

I respectfully disagree. As a fellow lawyer, I think it’s the standard legal answer...maybe. Oil is a commodity and as described by you that transaction wouldn’t be a security. However, the way you frame it: >There's no underlying business that's being invested in or paying dividends to you. >You don't own shares in his company. You make it sound that only equity/shares are securities, which isn’t the standard. >It's 100% a speculation on appreciation. While there is massive speculation, that’s not the standard either, and I don’t think your factual conclusion is accurate either. The investors are relying on the efforts of others for their profits. The article you link concludes Ether isn’t a security because the investors aren’t relying on the issuer/promoter rather 3rd party developers. But case law doesn’t limit the reliance to the promoter it specifically uses the word “others”, but even so, I think it’s easily argued investors are relying on the foundation to bring 3rd party developers to the table. At the end of the day...the SEC could have done a Howey analysis on Ether itself, which in my opinion would have been much more interesting and informative than the SEC retroactively doing an analysis on the DAO.

bmcusick 8y ago
> The investors are relying on the efforts of others for their profits. Are investors in gold relying on the efforts of others for their profits? After all, there are people out there making gold exchanges, developing gold mines, marketing gold jewelry, minting coins and bars for vaults, etc. etc. There's your efforts of third parties which drives up value of gold. Of course the answer is "maybe" until the law is written or the case decided, but let's not lose sight of the fact that the law already has categories that are a closer fit. Who's the third party in a decentralized ecosystem? Everyone who's ever contributed a line of code? Everyone who has developed a DAPP that feeds the demand side of the market? Where's the common enterprise that's being invested in?
- will_brown 8y ago
  Well as lawyers we know why gold isn’t a security according to case law, and that logic definitely doesn’t apply to Ethereum/Ether. >Where's the common enterprise that's being invested in? The DAO was a decentralized ecosystem and yet the SEC issued an opinion. So what in your mind distinguishes Ether from the DAO tokens and makes Ether deserve to be treated like gold or another commodity like oil?

burritofanatic 8y ago

Flashing back to Seg Reg class over a decade ago, I could not have imagined we'd talk about such a scenario -- granted, I didn't know what a pointer was, and that hashing in my vernacular did not involve cryptography. Believers should really read the Howey decision: https://www.law.cornell.edu/supremecourt/text/328/293 https://www.law.cornell.edu/supremecourt/text/328/293 It's fairly short, and it will give people an appreciation of the discussion. There is a lot to consider in the analysis.

nivertech 8y ago

What was presold in Ethereum's "software crowdsale" was $ETH, not gas. Since it was used to fund the development of Ethereum, it was (and maybe still is) a security. $ETH is a stake in a network with an artificially limited supply of units, which grants you a write access rights to Ethereum's mainnet. Gas is a non-tradeable Unit-of-Account, which uses $ETH as the only approved/possible method of payment. The relationship between $ETH and gas is similar to the one between petrodollars and oil. Assuming $ETH transforming from security into something else, it can not become commodity, since gas is already a non-tradeable underlying commodity with spot prices determined on Ethereum mainnet. It can only transform into an exotic commodity derivative of gas. Or it may stay a security (which is even more likely with transition to PoS). Also, don't forget about secondary sales by Stiftung Ethereum. Those who bought in ICO have no reason to sue, but those who bought in secondaries and lost - do.

nivertech 8y ago
EDIT: IANASL, IANASA, IANA{S,C}* I’m not a securities lawyer I’m not a securities attorney I’m not a securities/crypto anything