5 ms·

I mean why not go after Coinbase? The argument that everyone else is doing it why not go after them doesn't hold much water. Sometimes it makes sense to go afte

I mean why not go after Coinbase? The argument that everyone else is doing it why not go after them doesn't hold much water. Sometimes it makes sense to go after the biggest fish first. Also, is Coinbase saying Lend isn't an investment contract? It sure sounds like one to me. Lend my crypto to Coinbase and I get a 4% return? I like the idea but it sure sounds like an investment contract to me.

JohnJamesRambo 5y ago
To me it sounds like banks can’t compete and just keep the 4%, so now they have the SEC go after their competition that can. I don’t see the difference at all between a USD that makes (pitiful) interest in a bank savings account and a peg to USD that makes awesome interest in a Coinbase savings account. When I invest my USD with Wells Fargo bank they are converted to Wells Fargo Bucks that are tied to how efficient and generous the bank is (they aren’t) and my interest received is tied to that common enterprise. Those Wells Fargo Bucks aren’t classified as securities. The $1 portion will always be $1. No one invests in Tether or USD hoping their investment increases in value, that is absurd. It’s always a $1, so it is always losing value unfortunately.
- goodcanadian 5y ago
  Your "Wells Fargo Bucks" aren't classified as securities because Wells Fargo is a regulated bank (with all of the restrictions and protections that come with that). Coinbase is not a bank. It is as simple as that. This is really more like buying a corporate bond (which is a security) rather than putting a money in a savings account.
  - ncallaway 5y ago
    It seems pretty apparent that there are two options for a company that wants to offer this product: - Offer it as a bank, while complying with the regulations for being a bank, OR - Offer it as a security, while complying with the regulations for offering securities. My read on this blog post is that Coinbase is trying to get out of the securities option by kinda pretending to be the banking option, but without actually complying with or falling under the jurisdiction of banking regulations. Is that about right?
- rocqua 5y ago
  The difference is that the Bank has really tight regulatory requirements on how much collateral they need to have for each dollar in a savings account. There are much more regulatory requirements on banks that limit how effectively they can invest your savings account money. This all to ensure that the bank does not accidentally lose your money / cause a bank run. Bank accounts count as a security. But they are regulated more tightly by bank-account rules, so they are exempt from the less stringent Security rules. Meanwhile Coinbase is much free-er to do with your money as they like. If they play it too risky and go bankrupt, that is your money gone. To offset this risk, securities law requires they register as a security and make the required disclosures and limit speculative statements etc. So "banks can't compete on interest" is maybe true, but not a fair comparison since banks also have to be much more careful with your money.

JohnJamesRambo 5y ago

To me it sounds like banks can’t compete and just keep the 4%, so now they have the SEC go after their competition that can. I don’t see the difference at all between a USD that makes (pitiful) interest in a bank savings account and a peg to USD that makes awesome interest in a Coinbase savings account. When I invest my USD with Wells Fargo bank they are converted to Wells Fargo Bucks that are tied to how efficient and generous the bank is (they aren’t) and my interest received is tied to that common enterprise. Those Wells Fargo Bucks aren’t classified as securities. The $1 portion will always be $1. No one invests in Tether or USD hoping their investment increases in value, that is absurd. It’s always a $1, so it is always losing value unfortunately.

goodcanadian 5y ago
Your "Wells Fargo Bucks" aren't classified as securities because Wells Fargo is a regulated bank (with all of the restrictions and protections that come with that). Coinbase is not a bank. It is as simple as that. This is really more like buying a corporate bond (which is a security) rather than putting a money in a savings account.
- ncallaway 5y ago
  It seems pretty apparent that there are two options for a company that wants to offer this product: - Offer it as a bank, while complying with the regulations for being a bank, OR - Offer it as a security, while complying with the regulations for offering securities. My read on this blog post is that Coinbase is trying to get out of the securities option by kinda pretending to be the banking option, but without actually complying with or falling under the jurisdiction of banking regulations. Is that about right?
rocqua 5y ago
The difference is that the Bank has really tight regulatory requirements on how much collateral they need to have for each dollar in a savings account. There are much more regulatory requirements on banks that limit how effectively they can invest your savings account money. This all to ensure that the bank does not accidentally lose your money / cause a bank run. Bank accounts count as a security. But they are regulated more tightly by bank-account rules, so they are exempt from the less stringent Security rules. Meanwhile Coinbase is much free-er to do with your money as they like. If they play it too risky and go bankrupt, that is your money gone. To offset this risk, securities law requires they register as a security and make the required disclosures and limit speculative statements etc. So "banks can't compete on interest" is maybe true, but not a fair comparison since banks also have to be much more careful with your money.