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> 9. The LAW. SO MUCH LAW. SO. MUCH. LAW. > 10. There's actually a good chance that there's not a single person in your entire state or country that knows how

> 9. The LAW. SO MUCH LAW. SO. MUCH. LAW. > 10. There's actually a good chance that there's not a single person in your entire state or country that knows how to do your taxes. And this is because your entire business model is to get around laws that were put in place ON PURPOSE.

ypeterholmes 6y ago
Not really.. most of these companies aren't trying to evade the law- in fact the industry is mostly begging for regulatory clarity in order to be in compliance. Nobody wants to invest millions into something that may or may not end up being designated as illegal.
- knorker 6y ago
  I actually think that this is at the core of most of these companies. Take anonymous money transfers for any amounts. This is why KYC/AML laws exist. If someone could show how a cryptocurrency with anonymous features can follow KYC/AML laws, I'm all ears. Begging for regulatory clarity makes it seems one-sided. It seems very clear to me that the dream the cryptocurrency companies are trying to sell is fundamentally incompatible with the intent of the regulation, even if not yet its text. What can they be left with afterwards? We'll see, but it won't be the vision they've sold. > Nobody wants to invest millions into something that may or may not end up being designated as illegal. The bitcoin blockchain has child porn on it. And BTC is explicitly designed to break KYC/AML laws. Yet people invest.
  - wmf 6y ago
    If someone could show how a cryptocurrency with anonymous features can follow KYC/AML laws, I'm all ears. Zcash has done a lot of work on this. https://z.cash/compliance/ https://z.cash/compliance/
vmception 6y ago
Nah. There are really dumb laws that you need a powerful defense or deterrent against. The biggest problem is that you cant talk about them, or even share the deterrents, because it makes you a target for the regulators if you do. Its actually better that the regulators simply know you have a lawyer, and that they have no idea what your legal strategy is. In finance, ignorance of the law is an excuse (“scienter”), they codified the law specifically that way for themselves, and so giving any knowledge about the law undermines the defense of your own actions, and being able to say “my lawyer made me do it” is an even better defense. This also means that each and every project has to recreate the legal guidance, until Congress explicitly makes a safe harbor route a default regulatory regime. Corporate Securities lawyers know it, exchanges and service providers know it, they carved out a niche for themselves to provide this legal service and it costs 6 figures easily. It is not a perfect defense. Many crypto project issuers are victims in this regard, with everyone onboard with this racket, they cant even talk to the SEC about what’s wrong. Taxes aren't that hard but most providers overthink the word “crypto” when they hear it and confuse themselves.
- knorker 6y ago
  You seem to be describing exactly what I said. They are trying to get around the law, and trying to get around the intent of the law. So the aim is to break the intent of the law. Laws that were put there on purpose. So I really don't understand what you mean by "nah". It's exactly that. Company sees the law, says "that's dumb, I'm going to break that but in a complicated way" and then does breaks it using what they consider a loophole. "Nah"? No, you exactly agree. > In finance, ignorance of the law is an excuse Yet you can also get convicted for tax fraud without having intent. And the flip side of what you said is also that (depending on jurisdiction) it can be illegal to do something legal, if your motive was to get around the intent of the law. Using loopholes can be illegal, even though the act is legal. > This also means that each and every project has to recreate the legal guidance, until Congress explicitly makes a safe harbor route a default regulatory regime. This is just delusional. I think you forgot who has the guns.
  - vmception 6y ago
    Lets focus on securities laws because as I said tax is solved and not that hard. I’m not talking about tax fraud so lets focus instead of being all over the place: So basically crypto projects dont mind securities laws, they do mind that the securities laws have lots of unnecessary contigencies added to them that makes it impossible to couple with utility. If a crypto token actually was a registered security, then nobody could list it because they arent broker dealers. All the partnership projects could not be because the partner would have to be a broker dealer. There would be zero framework to potentially add utility at all, if they complied with laws that didn't consider issued assets existing peer to peer outside of any walled garden. Alternatively, it can exist as a consumer product under the consumer framework, no different than the secondary market for Nike shoes, and thats what people do. Upon asking “how does Nike do it? People can walk in the shoes but many people buy their shoes with an expectation of profit” my securities attorney told me that Nike probably has securities legal opinions too. Congress and commissioners at the SEC are warm to helping this, you are going to have to retire your talking points to the last decade as the grownups are building and some are representatives.

ypeterholmes 6y ago

Not really.. most of these companies aren't trying to evade the law- in fact the industry is mostly begging for regulatory clarity in order to be in compliance. Nobody wants to invest millions into something that may or may not end up being designated as illegal.

knorker 6y ago
I actually think that this is at the core of most of these companies. Take anonymous money transfers for any amounts. This is why KYC/AML laws exist. If someone could show how a cryptocurrency with anonymous features can follow KYC/AML laws, I'm all ears. Begging for regulatory clarity makes it seems one-sided. It seems very clear to me that the dream the cryptocurrency companies are trying to sell is fundamentally incompatible with the intent of the regulation, even if not yet its text. What can they be left with afterwards? We'll see, but it won't be the vision they've sold. > Nobody wants to invest millions into something that may or may not end up being designated as illegal. The bitcoin blockchain has child porn on it. And BTC is explicitly designed to break KYC/AML laws. Yet people invest.
- wmf 6y ago
  If someone could show how a cryptocurrency with anonymous features can follow KYC/AML laws, I'm all ears. Zcash has done a lot of work on this. https://z.cash/compliance/ https://z.cash/compliance/

vmception 6y ago

Nah. There are really dumb laws that you need a powerful defense or deterrent against. The biggest problem is that you cant talk about them, or even share the deterrents, because it makes you a target for the regulators if you do. Its actually better that the regulators simply know you have a lawyer, and that they have no idea what your legal strategy is. In finance, ignorance of the law is an excuse (“scienter”), they codified the law specifically that way for themselves, and so giving any knowledge about the law undermines the defense of your own actions, and being able to say “my lawyer made me do it” is an even better defense. This also means that each and every project has to recreate the legal guidance, until Congress explicitly makes a safe harbor route a default regulatory regime. Corporate Securities lawyers know it, exchanges and service providers know it, they carved out a niche for themselves to provide this legal service and it costs 6 figures easily. It is not a perfect defense. Many crypto project issuers are victims in this regard, with everyone onboard with this racket, they cant even talk to the SEC about what’s wrong. Taxes aren't that hard but most providers overthink the word “crypto” when they hear it and confuse themselves.

knorker 6y ago
You seem to be describing exactly what I said. They are trying to get around the law, and trying to get around the intent of the law. So the aim is to break the intent of the law. Laws that were put there on purpose. So I really don't understand what you mean by "nah". It's exactly that. Company sees the law, says "that's dumb, I'm going to break that but in a complicated way" and then does breaks it using what they consider a loophole. "Nah"? No, you exactly agree. > In finance, ignorance of the law is an excuse Yet you can also get convicted for tax fraud without having intent. And the flip side of what you said is also that (depending on jurisdiction) it can be illegal to do something legal, if your motive was to get around the intent of the law. Using loopholes can be illegal, even though the act is legal. > This also means that each and every project has to recreate the legal guidance, until Congress explicitly makes a safe harbor route a default regulatory regime. This is just delusional. I think you forgot who has the guns.
- vmception 6y ago
  Lets focus on securities laws because as I said tax is solved and not that hard. I’m not talking about tax fraud so lets focus instead of being all over the place: So basically crypto projects dont mind securities laws, they do mind that the securities laws have lots of unnecessary contigencies added to them that makes it impossible to couple with utility. If a crypto token actually was a registered security, then nobody could list it because they arent broker dealers. All the partnership projects could not be because the partner would have to be a broker dealer. There would be zero framework to potentially add utility at all, if they complied with laws that didn't consider issued assets existing peer to peer outside of any walled garden. Alternatively, it can exist as a consumer product under the consumer framework, no different than the secondary market for Nike shoes, and thats what people do. Upon asking “how does Nike do it? People can walk in the shoes but many people buy their shoes with an expectation of profit” my securities attorney told me that Nike probably has securities legal opinions too. Congress and commissioners at the SEC are warm to helping this, you are going to have to retire your talking points to the last decade as the grownups are building and some are representatives.