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> Binance said documents reviewed by Reuters were “partial and do not accurately reflect the full picture I believe that, having worked with many lawyers over

> Binance said documents reviewed by Reuters were “partial and do not accurately reflect the full picture I believe that, having worked with many lawyers over a variety of crypto projects over the last half decade most of the information is with different attorneys under attorney client privilege. They know the law better than the public sector agencies do, spending months on a rationale from a variety of case law, journals, and less binding private opinions from the same regulators. and law firms may even accept liability on behalf of their client. Even if its not “better”, as it is inconvenient for a regulator to disagree with you at any point, it is more expensive for a regulator by orders of magnitude for two reasons: 1) The regulator doesnt know how you’re structured or what legal rationale you are relying on. They dont know what exemption or compliance you are relying on. And there are many possibilities, sometimes infinite permutations. 2) They dont get to know even because of the attorney client privilege. They cant assume you’re doing something wrong just because Reuters decided to use some negative adjectives for things likely currently legal. Regulators are stuck with a high expense to most likely just embarrass themselves. Its better for them to go after lower hanging fruit. Binance is accurate in that legislatures have not made a specific encompassing law. So regulators are flying blind. Legislatures also dont know what to pass since nobody will talk to them either, the firms most effected dont want anything on the piblic record because then an overzealous regulator will know about any weakness in the company’s regulatory strategy. Legislatures are also at a place where they could neuter the regulator agency, its not a specific anti-crypto future that people think “governments” are heading towards. So literally everyone is flying blind, while the well funded fiat-interfacing crypto service has the most comprehensive view of the law because of their expensive lawyers.

Zerverus 5y ago
Wasn’t enough to fool Singapore’s MAS, who are likely the most capable regulator in this space. It’s no surprise the vast majority of companies who applied for a license ended up silently withdrawing or having it rejected, even Binance.sg who have significant investment from Temasek (state linked investment arm)
arberx 5y ago
> So literally everyone is flying blind, while the well funded fiat-interfacing crypto service has the most comprehensive view of the law because of their expensive lawyers. This is literally the case with anything. Well funded tech monopolies have the most comprehensive view on...everything.
- vmception 5y ago
  Yep. A lot of crypto detractors levy standards at crypto things that they seem to not know apply to things they respect or ignore. So its just worthwhile spelling out whats happening and how its happening. Many people don't know that the crypto space is and has been so comprehensive already behind the scenes, since its more of an entertainment sector in front of the scenes, so people underestimate it.
salawat 5y ago
The solution to that conundrum is you tell the lawyer "come talk with us". It's Administrative Law. It is what the regulator says it is. And no, an attorney cannot with old that information. That is what they call, "bad faith". The tough part is actually sitting down, combing through the paperwork, and coming up with questions. Regulation is as much a descriptive as a prescriptive exercise.
- djbebs 5y ago
  So guilty whenever the bureaucrat wants you to be? Is this an actual stance that you hold?
  - efdee 5y ago
    That's pretty much what a regulator does. Using the pejorative "bureaucrat" doesn't change that.
    - drdeca 5y ago
      Regardless of what you call the person, doesn’t that seem a bit on the “rule of man” side (as opposed to the “rule of law” side) ? I recognize that in the end decisions need to be made by people, but, under the principle of the rule of law, it should be feasible to understand the laws relating to your likely activities to a sufficient degree that one can determine what things won’t get one in legal trouble? (Of course, some things might be somewhat ambiguous, but, still.), right?
      - salawat 5y ago
        That is Administrative Law sadly. One of the saddest realizations of my life. Congress ceded fine-grained lawmaking to executive agencies established under statute for that purpose. It's just how it works. Regulators won't ruin your day during onboarding, unless you're not even trying to be legit. Even then, they'll evaluate where you are at, and help you develop a compliance roadmap consistent with best practices. Now if you fail to meet that or drag your feet...
omginternets 5y ago
Re #1: in theory, could we require companies like Binance to disclose how they are structured, and to declare a priori the legal rationale for why this is allowed? The idea here is that they would be bound to that particular legal theory in the event of regulatory investigations. Or does this run afoul of some constitutional issues?
- vmception 5y ago
  Its more of a business decision of the government, as well as risking the need for a complete overhaul of contract law. Jurisdictions are in competition with each other. While the business can always form a local subsidiary shielded from the rest while pooling most processes. Binance already has Binance US, for example. A lot of people dont like the idea of governments having overlapping conditions of a business, but it is something you can rely on. They can shoot themselves in the foot all they want. A no action letter from the SEC, for example, does limit a business to a specific unchanging structure and circumstances. But people arent going to risk going to the regulator to find out. I get that you are thinking of a requirement in advance. Bye bye businesses if you try that.
- rosndo 5y ago
  That would simply be ridiculous. It’s the governments job to explain why something you are doing is illegal, not the other way around.
skybrian 5y ago
Suppose the company needs to get regulators to approve something. Couldn't they just say "no" to anything new that they don't understand? All I know about it is what I learn from reading Matt Levine, but it's my understanding that for most finance companies, cooperation with regulators is important.
- vmception 5y ago
  Binance has Binance US a local subsidiary for that purpose. Everywhere else, it depends, as usual on any legal matter. I could talk all day about what happened in Malta. Every jurisdiction is different, and at that point in time.
  - latchkey 5y ago
    I'll bite, what happened in Malta?
    - vmception 5y ago
      Summary: Microstates within new monetary unions have higher masters. Eurozone’s masters are in Brussels and Frankfurt who are both skeptical of Malta and also into heavy regulation and not into crypto. So Malta would be down for whatever but they also have to try remain in the graces of their masters. Malta is also not a competent jurisdiction, its a pirate den with sovereignty, so whenever they bandwagon jump on an industry they try to attract they mess up the regulations because they dont know what a comprehensive approach looks like. Their crypto regulations fell into a mixture of incompetence and appeasing brussels. Other microstates like Leichtenstein, for example, are not Eurozone and also competent. They are in a monetary union with Switzerland who is also very crypto friendly at all public sector levels except the incumbent banking private sector. So Malta dropped the crystal ball and is in a less geopolitical circumstance to repair it.
Scoundreller 5y ago
The funny thing is that regulators pull the same stunts with lawyers. Not finance/crypto, but I’m battling a regulator to release the legal opinion they’re (suspectedly) using to deny a service that the law clearly (to me) requires them to provide.
- vmception 5y ago
  Yeah thats true I’ve seen that periodically too, in non finance/crypto contexts.

Zerverus 5y ago

Wasn’t enough to fool Singapore’s MAS, who are likely the most capable regulator in this space. It’s no surprise the vast majority of companies who applied for a license ended up silently withdrawing or having it rejected, even Binance.sg who have significant investment from Temasek (state linked investment arm)

arberx 5y ago

> So literally everyone is flying blind, while the well funded fiat-interfacing crypto service has the most comprehensive view of the law because of their expensive lawyers. This is literally the case with anything. Well funded tech monopolies have the most comprehensive view on...everything.

vmception 5y ago
Yep. A lot of crypto detractors levy standards at crypto things that they seem to not know apply to things they respect or ignore. So its just worthwhile spelling out whats happening and how its happening. Many people don't know that the crypto space is and has been so comprehensive already behind the scenes, since its more of an entertainment sector in front of the scenes, so people underestimate it.

salawat 5y ago

The solution to that conundrum is you tell the lawyer "come talk with us". It's Administrative Law. It is what the regulator says it is. And no, an attorney cannot with old that information. That is what they call, "bad faith". The tough part is actually sitting down, combing through the paperwork, and coming up with questions. Regulation is as much a descriptive as a prescriptive exercise.

djbebs 5y ago
So guilty whenever the bureaucrat wants you to be? Is this an actual stance that you hold?
- efdee 5y ago
  That's pretty much what a regulator does. Using the pejorative "bureaucrat" doesn't change that.
  - drdeca 5y ago
    Regardless of what you call the person, doesn’t that seem a bit on the “rule of man” side (as opposed to the “rule of law” side) ? I recognize that in the end decisions need to be made by people, but, under the principle of the rule of law, it should be feasible to understand the laws relating to your likely activities to a sufficient degree that one can determine what things won’t get one in legal trouble? (Of course, some things might be somewhat ambiguous, but, still.), right?
    - salawat 5y ago
      That is Administrative Law sadly. One of the saddest realizations of my life. Congress ceded fine-grained lawmaking to executive agencies established under statute for that purpose. It's just how it works. Regulators won't ruin your day during onboarding, unless you're not even trying to be legit. Even then, they'll evaluate where you are at, and help you develop a compliance roadmap consistent with best practices. Now if you fail to meet that or drag your feet...

omginternets 5y ago

Re #1: in theory, could we require companies like Binance to disclose how they are structured, and to declare a priori the legal rationale for why this is allowed? The idea here is that they would be bound to that particular legal theory in the event of regulatory investigations. Or does this run afoul of some constitutional issues?

vmception 5y ago
Its more of a business decision of the government, as well as risking the need for a complete overhaul of contract law. Jurisdictions are in competition with each other. While the business can always form a local subsidiary shielded from the rest while pooling most processes. Binance already has Binance US, for example. A lot of people dont like the idea of governments having overlapping conditions of a business, but it is something you can rely on. They can shoot themselves in the foot all they want. A no action letter from the SEC, for example, does limit a business to a specific unchanging structure and circumstances. But people arent going to risk going to the regulator to find out. I get that you are thinking of a requirement in advance. Bye bye businesses if you try that.
rosndo 5y ago
That would simply be ridiculous. It’s the governments job to explain why something you are doing is illegal, not the other way around.

skybrian 5y ago

Suppose the company needs to get regulators to approve something. Couldn't they just say "no" to anything new that they don't understand? All I know about it is what I learn from reading Matt Levine, but it's my understanding that for most finance companies, cooperation with regulators is important.

vmception 5y ago
Binance has Binance US a local subsidiary for that purpose. Everywhere else, it depends, as usual on any legal matter. I could talk all day about what happened in Malta. Every jurisdiction is different, and at that point in time.
- latchkey 5y ago
  I'll bite, what happened in Malta?
  - vmception 5y ago
    Summary: Microstates within new monetary unions have higher masters. Eurozone’s masters are in Brussels and Frankfurt who are both skeptical of Malta and also into heavy regulation and not into crypto. So Malta would be down for whatever but they also have to try remain in the graces of their masters. Malta is also not a competent jurisdiction, its a pirate den with sovereignty, so whenever they bandwagon jump on an industry they try to attract they mess up the regulations because they dont know what a comprehensive approach looks like. Their crypto regulations fell into a mixture of incompetence and appeasing brussels. Other microstates like Leichtenstein, for example, are not Eurozone and also competent. They are in a monetary union with Switzerland who is also very crypto friendly at all public sector levels except the incumbent banking private sector. So Malta dropped the crystal ball and is in a less geopolitical circumstance to repair it.

Scoundreller 5y ago

The funny thing is that regulators pull the same stunts with lawyers. Not finance/crypto, but I’m battling a regulator to release the legal opinion they’re (suspectedly) using to deny a service that the law clearly (to me) requires them to provide.

vmception 5y ago
Yeah thats true I’ve seen that periodically too, in non finance/crypto contexts.