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> "We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so." Sums up the case quite

by tzm 4y ago

> "We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so." Sums up the case quite well.

arcticbull 4y ago
Nah, the answer is all of them except Bitcoin. I think all parties to this Wells-based conversation know that and Coinbase is just posturing for the court of public opinion. [edit] I should say, Coinbase has been preparing for this forever. They acquired a broker-dealer license years ago, back in 2018. [1] [1] https://brokercheck.finra.org/firm/summary/151143 https://brokercheck.finra.org/firm/summary/151143
- meowkit 4y ago
  This begs the question of what differentiates Bitcoin? Besides being the first, there aren’t really any structural differences for the functionality or the development and marketing of BTC than other coins. The only sufficient argument I see is the naivety around the distribution method which implies a metric of decentralization. To me that implies other coins should not be considered securities if they pass some decentralized metric threshold. Now I’m also of the radical opinion that securities are actually a type of token (tokens being a general class of financial instruments like coins, securities, currency, or any asset) - not the other way around, and the law needs to be rewritten to accommodate this.
  - copumpkin 4y ago
    It's different in that nobody can control it. Everything since bitcoin has had some form of leadership, including Ethereum, that can reasonably consistently get the network to fork and cause things to happen. Bitcoin struggled for years to get a change adopted that most of the community thought was a good one, because nobody, not even Satoshi if they are still around, could change it.
    - idiotsecant 4y ago
      This is a silly argument. A community forks, not 'leadership'. The mechanism for forking the project is literally the same in both cases. Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. This is just typical crypto tribalism and not rooted in a technical basis in any way.
      - dragonwriter 4y ago
        > Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. On what legal basis do you insist that the differentiation must be by inclusion of a “mechanism”?
        idiotsecant 4y ago
        Ok...do you have some other proposal by which we can judge systems that use mechanisms to do things?
        dragonwriter 4y ago
        > Ok…do you have some other proposal by which we can judge systems that use mechanisms to do things? The way we tend to judge whether things fit into legal categories is by the criteria specified in the controlling law (including relevant statutes, administrative regulations, and case law.) While cryptocurrency enthusiasts are fond of an approach where the mechanism is all that is relevant, mechanisms may be all, part, or none of what is relevant in law. While only tangentially relevant here, an amusing example in securities law is what something is commonly called can be relevant, even decisive, because the definition of a ‘security’ in statute includes (but is not limited to) ‘any interest or instrument commonly known as a “security”’. 15 U.S. Code § 77b(a)(1)
        TylerE 4y ago
        As I understand it, it’s because for whatevwr reason, they (well, not THEY, the then leadership) said years ago that Bitcoin was not a security, so they’re kinda stuck with that exception even if the current SEC disagrees with it.
  - jMyles 4y ago
    > This begs the question of what differentiates Bitcoin? I don't agree with the thrust of the argument either, but I think it's a genuine assertion and not begging the question. > Now I’m also of the radical opinion that securities are actually a type of token (tokens being a general class of financial instruments like coins, securities, currency, or any asset) - not the other way around, and the law needs to be rewritten to accommodate this. I broadly agree with this view! However, I think the law is better suited to get out of the way and gracefully allow the inevitable separation of token and state.
- overthrow 4y ago
  Yep, Gensler has outright said that “everything else other than bitcoin is a security.”[1] There's no chance Coinbase isn't aware of this. I don't know what they hope to accomplish by pretending otherwise. [1]: https://cryptoslate.com/sec-chair-gensler-confirms-everything-other-than-bitcoin-is-a-security-implications-and-analysis/ https://cryptoslate.com/sec-chair-gensler-confirms-everythin...
  - onlyrealcuzzo 4y ago
    Why is Bitcoin not a security but if I fork Bitcoin it is a security?
    - bardworx 4y ago
      Predominantly, from my understanding, it’s because: 1. Bitcoin was classified as “currency” by Clayton. 2. It’s the closest to being decentralized so no “organization will benefit from the work of others”. 3. Growth of Bitcoin wasn’t initially speculative but as a use of currency, which is different from whatever token you fork as its goal would be for speculative trading, failing the Howey test.
      - nonethewiser 4y ago
        Does this address forking it making it a security? It doesn’t seem like it but I’m trying not to jump to conclusions.
      - codehalo 4y ago
        Nothing you said here makes a fork of the bitcoin code with a completely different genesis block (or ANY fork at ANY block of the bitcoin chain) a security.
        bardworx 4y ago
        Why would people buy it?
- yieldcrv 4y ago
  it goes much deeper than that, despite the parasocial relationships that crypto purchasers have with the founding teams, they are purchasing products. the product sales are booked as revenue, not capital-in like a primary market investment/security would have. a product can simultaneously be a security, and many organizations in the collectibles market go out of their way to avoid that, organizations that sell physical goods with perceived scarcity and a vibrant aftermarket. within the crypto space, creators of digital assets go out of their way to avoid it too, and in this regard, I've never been surprised at any specific SEC enforcement action against any crypto team. The ones that behave one way, so far have not been sanctioned, the ones that behave another way have been. Its not arbitrary, but it does still leave uncertainty. but where we are now, where the SEC pretends like "every digital asset is a security and we just haven't gotten to it yet", what we're left with are the behavior of the purchasers of digital assets. they buy tokens with the expectation of profit and rely on the issuing team to realize that. theoretically that logic could make anything a security, are sneakerheads trading nike-themed securities just because they're getting into it to make a profit? at this point, I would be inclined to agree only if nike has to register their artificial scarcity shoe lines as securities and can only sell them to accredited investors. otherwise, the logic fails and a different capital markets structure needs to be considered.
cududa 4y ago
No it doesn’t. They’ve literally told them in the past when they were creating financial products that they were securities. Their entire schtik is to say “We called it something different so it’s not a security.” SEC: “Yes it is.” Coinbase: “The SEC won’t engage with us and tell us what aspects of our business is a security.” SEC: “1) that’s not how securities law works, you’re the one that has to hire lawyers 2) we already told you you were offering a security” Coinbase: “We’re being persecuted!”
- yokem55 4y ago
  Well, it is something of a he said/she said between Coinbase and the SEC. But the Judge in the Voyager bankruptcy case had similar concerns about the clarity provided by the SEC - https://twitter.com/BillHughesDC/status/1636069735006699523 https://twitter.com/BillHughesDC/status/1636069735006699523
  - Alex3917 4y ago
    > Well, it is something of a he said/she said between Coinbase and the SEC. Not really. The law has been exactly the same since the 1940s. Apparently though Coinbase has decided to go all in on SBF's strategy of pretending to be too dumb to understand the law. Coinbase arguing that they should be allowed to sell illegal unregistered securities because the SEC said they could sell securities is like CVS arguing that should be allowed to sell cocaine because the government told them they could be a drug store.
    - cududa 4y ago
      Or Nasdaq claiming that moving orders from paper ledgers to computers means they’re no longer a securities exchange. Because reasons.
      - TylerE 4y ago
        Reminder: One of the founders, and longtime chairman of the NASDAQ was one Bernie L. Madoff.
kristopolous 4y ago
Their gdax/cbpro api originally called it securities and instruments (I started using it in 2017). It eventually got renamed to "products" but yeah, this is just theater.
- yieldcrv 4y ago
  just means they likely built it on top of some other existing algorithmic trading library or expertise that didn't account for anything aside from securities and derivatives existing
deleted 4y ago
[deleted]
TheAlchemist 4y ago
Yes it does ! The SEC told them already several times that their products are securities, it's just that Coinbase ignored it completely. As for the reason why usually the SEC (although I'm no expert here) don't provide a specific definition, I suppose it's similar to regulating financial markets - especially in trading. There are concepts like "spoofing", for which there is no exact definition provided by the regulator - for the simple reason that if they do provide it, the rational actors will push it to the limits, or try to find loopholes. Everybody knows what they can or cannot do - it's just common sense.
entelechy0 4y ago
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deleted 4y ago
[deleted]

by tzm 4y ago

> "We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so." Sums up the case quite well.

arcticbull 4y ago

Nah, the answer is all of them except Bitcoin. I think all parties to this Wells-based conversation know that and Coinbase is just posturing for the court of public opinion. [edit] I should say, Coinbase has been preparing for this forever. They acquired a broker-dealer license years ago, back in 2018. [1] [1] https://brokercheck.finra.org/firm/summary/151143 https://brokercheck.finra.org/firm/summary/151143

meowkit 4y ago
This begs the question of what differentiates Bitcoin? Besides being the first, there aren’t really any structural differences for the functionality or the development and marketing of BTC than other coins. The only sufficient argument I see is the naivety around the distribution method which implies a metric of decentralization. To me that implies other coins should not be considered securities if they pass some decentralized metric threshold. Now I’m also of the radical opinion that securities are actually a type of token (tokens being a general class of financial instruments like coins, securities, currency, or any asset) - not the other way around, and the law needs to be rewritten to accommodate this.
- copumpkin 4y ago
  It's different in that nobody can control it. Everything since bitcoin has had some form of leadership, including Ethereum, that can reasonably consistently get the network to fork and cause things to happen. Bitcoin struggled for years to get a change adopted that most of the community thought was a good one, because nobody, not even Satoshi if they are still around, could change it.
  - idiotsecant 4y ago
    This is a silly argument. A community forks, not 'leadership'. The mechanism for forking the project is literally the same in both cases. Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. This is just typical crypto tribalism and not rooted in a technical basis in any way.
    - dragonwriter 4y ago
      > Please describe what mechanism, ETH for example, includes that differentiates it from BTC in some way. On what legal basis do you insist that the differentiation must be by inclusion of a “mechanism”?
      - idiotsecant 4y ago
        Ok...do you have some other proposal by which we can judge systems that use mechanisms to do things?
        dragonwriter 4y ago
        > Ok…do you have some other proposal by which we can judge systems that use mechanisms to do things? The way we tend to judge whether things fit into legal categories is by the criteria specified in the controlling law (including relevant statutes, administrative regulations, and case law.) While cryptocurrency enthusiasts are fond of an approach where the mechanism is all that is relevant, mechanisms may be all, part, or none of what is relevant in law. While only tangentially relevant here, an amusing example in securities law is what something is commonly called can be relevant, even decisive, because the definition of a ‘security’ in statute includes (but is not limited to) ‘any interest or instrument commonly known as a “security”’. 15 U.S. Code § 77b(a)(1)
        TylerE 4y ago
        As I understand it, it’s because for whatevwr reason, they (well, not THEY, the then leadership) said years ago that Bitcoin was not a security, so they’re kinda stuck with that exception even if the current SEC disagrees with it.
- jMyles 4y ago
  > This begs the question of what differentiates Bitcoin? I don't agree with the thrust of the argument either, but I think it's a genuine assertion and not begging the question. > Now I’m also of the radical opinion that securities are actually a type of token (tokens being a general class of financial instruments like coins, securities, currency, or any asset) - not the other way around, and the law needs to be rewritten to accommodate this. I broadly agree with this view! However, I think the law is better suited to get out of the way and gracefully allow the inevitable separation of token and state.
overthrow 4y ago
Yep, Gensler has outright said that “everything else other than bitcoin is a security.”[1] There's no chance Coinbase isn't aware of this. I don't know what they hope to accomplish by pretending otherwise. [1]: https://cryptoslate.com/sec-chair-gensler-confirms-everything-other-than-bitcoin-is-a-security-implications-and-analysis/ https://cryptoslate.com/sec-chair-gensler-confirms-everythin...
- onlyrealcuzzo 4y ago
  Why is Bitcoin not a security but if I fork Bitcoin it is a security?
  - bardworx 4y ago
    Predominantly, from my understanding, it’s because: 1. Bitcoin was classified as “currency” by Clayton. 2. It’s the closest to being decentralized so no “organization will benefit from the work of others”. 3. Growth of Bitcoin wasn’t initially speculative but as a use of currency, which is different from whatever token you fork as its goal would be for speculative trading, failing the Howey test.
    - nonethewiser 4y ago
      Does this address forking it making it a security? It doesn’t seem like it but I’m trying not to jump to conclusions.
    - codehalo 4y ago
      Nothing you said here makes a fork of the bitcoin code with a completely different genesis block (or ANY fork at ANY block of the bitcoin chain) a security.
      - bardworx 4y ago
        Why would people buy it?
yieldcrv 4y ago
it goes much deeper than that, despite the parasocial relationships that crypto purchasers have with the founding teams, they are purchasing products. the product sales are booked as revenue, not capital-in like a primary market investment/security would have. a product can simultaneously be a security, and many organizations in the collectibles market go out of their way to avoid that, organizations that sell physical goods with perceived scarcity and a vibrant aftermarket. within the crypto space, creators of digital assets go out of their way to avoid it too, and in this regard, I've never been surprised at any specific SEC enforcement action against any crypto team. The ones that behave one way, so far have not been sanctioned, the ones that behave another way have been. Its not arbitrary, but it does still leave uncertainty. but where we are now, where the SEC pretends like "every digital asset is a security and we just haven't gotten to it yet", what we're left with are the behavior of the purchasers of digital assets. they buy tokens with the expectation of profit and rely on the issuing team to realize that. theoretically that logic could make anything a security, are sneakerheads trading nike-themed securities just because they're getting into it to make a profit? at this point, I would be inclined to agree only if nike has to register their artificial scarcity shoe lines as securities and can only sell them to accredited investors. otherwise, the logic fails and a different capital markets structure needs to be considered.

cududa 4y ago

No it doesn’t. They’ve literally told them in the past when they were creating financial products that they were securities. Their entire schtik is to say “We called it something different so it’s not a security.” SEC: “Yes it is.” Coinbase: “The SEC won’t engage with us and tell us what aspects of our business is a security.” SEC: “1) that’s not how securities law works, you’re the one that has to hire lawyers 2) we already told you you were offering a security” Coinbase: “We’re being persecuted!”

yokem55 4y ago
Well, it is something of a he said/she said between Coinbase and the SEC. But the Judge in the Voyager bankruptcy case had similar concerns about the clarity provided by the SEC - https://twitter.com/BillHughesDC/status/1636069735006699523 https://twitter.com/BillHughesDC/status/1636069735006699523
- Alex3917 4y ago
  > Well, it is something of a he said/she said between Coinbase and the SEC. Not really. The law has been exactly the same since the 1940s. Apparently though Coinbase has decided to go all in on SBF's strategy of pretending to be too dumb to understand the law. Coinbase arguing that they should be allowed to sell illegal unregistered securities because the SEC said they could sell securities is like CVS arguing that should be allowed to sell cocaine because the government told them they could be a drug store.
  - cududa 4y ago
    Or Nasdaq claiming that moving orders from paper ledgers to computers means they’re no longer a securities exchange. Because reasons.
    - TylerE 4y ago
      Reminder: One of the founders, and longtime chairman of the NASDAQ was one Bernie L. Madoff.

kristopolous 4y ago

Their gdax/cbpro api originally called it securities and instruments (I started using it in 2017). It eventually got renamed to "products" but yeah, this is just theater.

yieldcrv 4y ago
just means they likely built it on top of some other existing algorithmic trading library or expertise that didn't account for anything aside from securities and derivatives existing

deleted 4y ago

[deleted]

TheAlchemist 4y ago

Yes it does ! The SEC told them already several times that their products are securities, it's just that Coinbase ignored it completely. As for the reason why usually the SEC (although I'm no expert here) don't provide a specific definition, I suppose it's similar to regulating financial markets - especially in trading. There are concepts like "spoofing", for which there is no exact definition provided by the regulator - for the simple reason that if they do provide it, the rational actors will push it to the limits, or try to find loopholes. Everybody knows what they can or cannot do - it's just common sense.

entelechy0 4y ago

[dead]

deleted 4y ago

[deleted]