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I don’t think the “crypto isn’t a security” argument is going very far. The SEC has a very loose definition of a security - vaguely, something you buy with the
by nirushiv 4y ago
I don’t think the “crypto isn’t a security” argument is going very far. The SEC has a very loose definition of a security - vaguely, something you buy with the expectation to make money from it appreciating - that is meant to capture unforeseen cases exactly like crypto.
A single quote from someone isn’t changing years and millions of pieces of evidence of people using and promoting crypto almost entirely as a security by this definition.
- p0pcult 4y agoIs my house a security?
- TylerE 4y agoNo, because there’s no agreement, no other party, no expectation of bearing interest…
- p0pcult 4y agoWho is the other party in staked crypto?
- TylerE 4y agoCoin base? The other stakers?
- toolz 4y agoI don't need to consult coinbase or any other stakers to stake crypto. That would be a very broad definition for an agreement, one that's broad enough to maybe include housing, in reference to the GP comment.
- p0pcult 4y agoNo, neither of those groups do things to impact the value of the crypto in a way akin to managing or directing a company.
- doyouevensunbro 4y agoTIL that I can live in a Bitcoin
- yieldcrv 4y agoa product having utility does not preclude it from also being a security its just that the SEC isnt applying that logic anywhere aside from crypto. so its either apply it everywhere or make a clear path to exemption that crypto assets can predictably comply with, where nothing has to be filed at all
- deleted 4y ago[deleted]
- verdverm 4y agoREITs exist, the devil is in the detail
- deleted 4y ago[deleted]
- cycomanic 4y agoAre you proposing we regulate crypto like realty? That's the thing about all these arguments, crypto proponents want all the advantages of one system, but when it comes to the "disadvantages" suddenly crypto is something completely different.
- polygamous_bat 4y agoDifferent incarnations of "privatize the gain, socialize the losses". Coinbase became the company it is today because they have the first mover's advantage in an unclear regulatory landscape, and it pulled in profits only because of that regulatory arbitrage. Now they are turning around and playing victim of the same regulatory landscape that made them what they are today.
- s1artibartfast 4y agoI think the more, appropriate analogy is whether a gold bar sitting in my sock drawer is a security. There are gold bars and there are gold securities.
- erik_seaberg 4y agoIt doesn’t have to make sense; hoarding gold was illegal for forty years.
- s1artibartfast 4y agoHonest question, what are you talking about when you say hoarding gold is or was illegal?
- erik_seaberg 4y agohttps://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102
- extheat 4y agoIs the SEC going to start regulating gold now?
- 8note 4y agoWho does work on your gold to make it worth more?
- rnk 4y agoStaking your crypto to make it grow - somehow? Isn't that just them taking your crypto and putting it in some unexplainable leveraged trade like ftx was doing.
- humanizersequel 4y agoNo: https://ethereum.org/en/staking/ https://ethereum.org/en/staking/
- rnk 4y agoAh, that kind of staking. Thanks.
- dreadlordbone 4y agoJerome Powell
- mdorazio 4y agoThey regulate the gold ETF shares I own, so yes.
- pdq 4y agoGold and silver are recognized as legal tender.
- ricktdotorg 4y agonot in all US states. according to [1] the US states that have passed laws making gold and silver legal tender are, as of early 2023: AZ, IN, KS, LA, MO (pending), OK, SC, TN, TX, UT, WV, WY. the main reason for these recent law changes appears to be so that tax can not be levied on the sale of gold and/or silver. [1] https://worldpopulationreview.com/state-rankings/gold-and-silver-legal-tender-states https://worldpopulationreview.com/state-rankings/gold-and-si...
- checkcircuits 4y ago[flagged]
- TylerE 4y agoAnd again we have someone asserting this is about vanilla crypto and not staking.
- checkcircuits 4y ago[flagged]
- nirushiv 4y agoI believe the Howey Test is the more general definition that is used : https://www.businessinsider.com/personal-finance/howey-test https://www.businessinsider.com/personal-finance/howey-test - so yes, maybe Bitcoin passes the Howey Test when traded on an exchange, but not so much 12 years ago
- eyelidlessness 4y agoI don’t think either the IRS or SEC can raise taxes. They can enforce regulations within their purview, and they can be corrected if they step out of that. But neither organization sets tax rates or even tax policy. If they move to enforce regulations within their purview in a way you don’t like, by all means complain about that. But making up magical powers they don’t have is a bridge too far. I didn’t downvote you, but that’s my critical take.
- distantsounds 4y agoif you don't want to be down voted, don't say "I'm not a crypto guy" and then proceed to write an essay on a news article about crypto
- schrectacular 4y agoYou have to report any foreign holdings over $10k to Department of Treasury yearly. See FBAR.
- TylerE 4y agoThey aren’t even saying crypto is a security, just staking crypto.
- xiphias2 4y agoStaking is definately a promise of higher return with risk factors, so of course it is security.
- deleted 4y ago[deleted]
- 22c 4y agoThere's not necessarily an expectation of profit when staking crypto.
- yosame 4y agoWhy would you bother staking if you didn't expect a profit?
- 22c 4y agoIn many projects, staking allows you to participate in governance. You might also want to stake in order to keep up with inflation. If you make 10% in token interest, but the supply has increased by 20% in the same time period market cap decreased, you've probably lost money overall. You're still better off staking than holding in your wallet. Point is that staking is not necessarily done as an expectation of profit (regardless of how crypto exchanges might advertise it).
- hbbio 4y agoThat doesn't mean securities must be never traded ever, especially given your broad definition. Problem is Coinbase wants to be regulated, but the regulators are *not accepting* any regulated venue nor even willing to open discussions. Quite a strange attitude. "We believe a large number of crypto securities also exist, and should be available to register and trade on SEC registered brokerages and exchanges, a point we've made repeatedly in our discussions. 9/15" https://twitter.com/iampaulgrewal/status/1638660032324829184 https://twitter.com/iampaulgrewal/status/1638660032324829184
- polygamous_bat 4y agoSEC is an enforcement agency, their job is not to be buddies with startups to figure out what is crime and what is not. Coinbase can hire lawyers for that until they are certain they can defend themselves in court. We live in a rule of law, after all. It's like the cartel asking "clear guidance" from the DEA about what exactly is and is not an illegal drug that can be pushed on the street, and then complaining that they won't sit at the table and discuss the legality of fentanyl. If you want to be in this business, lawyers should be your _primary_ expense, and make sure you hire enough to be confident that you can defend your practices.
- coldtea 4y ago>It's like the cartel asking "clear guidance" from the DEA about what exactly is and is not an illegal drug that can be pushed on the street, and then complaining that they won't sit at the table and discuss the legality of fentanyl. Fentanyl is clearly illegal to sell in the street, and this information is available and codified into law. So this is a bad example to use to argue that Coinbase don't have a point. DEA and the law in general should (and indeed does) provide clear guidance as to what substances are illegal and which are not, and even whether a particular novel substance is legal or not.
- polygamous_bat 4y ago> Fentanyl is clearly illegal to sell in the street, and this information is available and codified into law. Fentanyl was invented sometimes around the 1960s, and cocaine at some point was prescribed liberally by doctors. Lot of new inventions are immediately not "clearly legal or illegal" from the get go. And from where I stand (and very likely, SEC stands), it is also quite clear that unregistered token sales should be illegal. If Coinbase wants to build a business on top of it, they better have lawyers ready to argue why it should be legal. Or, they can wait until there is clear laws and regulations, which necessarily evolves slower than start-ups. Coinbase can't profit from regulatory arbitrage and then turn around and complain that there are no clear regulations. If there were, Coinbase would have much thinner margins because there would be many more exchanges doing exactly what they do but better. What is happening right now is Coinbase mistaking themselves for an "innovative tech" company when they were primarily an "innovative legal interpretation" company, and crying about the government when they got caught with their pants down.
- CalChris 4y agoDoes Coinbase traded crypto pass the Howey Test? https://www.jdsupra.com/legalnews/cryptocurrencies-and-the-securities-and-6989064/ https://www.jdsupra.com/legalnews/cryptocurrencies-and-the-s... a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party
- grensley 4y agoSomebody's basically got to go through and sort them all.
- crystaln 4y agoSome likely do, others likely don't. Bitcoin is not a security, Ethereum likely is.
- robocat 4y agoHere’s the Coinbase argument that staking is not a security: https://www.coinbase.com/blog/coinbases-staking-services-are-not-securities-and-heres-why https://www.coinbase.com/blog/coinbases-staking-services-are... And I find it odd that your referenced article mentions three tests, when it seems to be normally listed as four prongs: https://duckduckgo.com/?q=howey+test+prongs https://duckduckgo.com/?q=howey+test+prongs
- tootie 4y agoI think cryptos bull market was fueled almost entirely by the regulatory vacuum in which the markets operated. We already have regulatory regimes for every type of financial instrument and transaction. Crypto shouldn't need special rules. If it's a currency, then great it's illegal to mint currency in the US so you're banned forever. It's definitely not a commodity, so that means you live life as a security or else. A security with no interest payments, dividends or equity stake. But definitely capital gains tax.
- unyttigfjelltol 4y agoThe problem is you get caught in a lot of red tape if you want to issue securities with no intrinsic value whatever. For good reason-- the SEC's mission is to stop scams and a valueless offering is the archetype of a scam. Isn't crypto more like a service, rather than any of those things? You deposit some, withdraw some, and in between you get an account. Like a banking service. Which is when the banking regulators properly should shut it down.
- HWR_14 4y agoYou can mint currency in the US, as long as you cannot be confused for USD (or probably other currencies). And capital gains isn't tied to it being a security at all.
- jjk166 4y agoWhatever regulatory regime arcade tickets fall under would be the appropriate set.
- Aloha 4y agoThe whole regulatory infrastructure from the SEC expects a security to be backed by or representative of a physical asset of some sort - be it shares of a corporation with tangible assets, gold, or in the case of futures, a commodity. Even bonds are, they're securitized debts. Crypto has no physical manifestation or nexus, there is no fungible good backing it, nor another which it can be directly (and implicitly) exchanged for, treating it as a security makes about as much sense to me as treating lottery tickets as one. Edit - I just learned of the Howey test, but I got the fundamentals of it correct.
- deleted 4y ago[deleted]
- jfengel 4y agoNobody trades lottery tickets. If they did, it might draw regulatory scrutiny too.
- Aloha 4y agoAs it rightly should! I think crypto is somewhere script and private fiat currencies but traded like a security, and probably not legal to be openly traded as they are, a legal terra nullius. Until there are court decisions or congressional action to firm up this situation, it will persist as a gray area.
- TylerE 4y agoTerrible examples. Lottery syndicates are absolutely a thing. I remember reading a syndicate that calculated a particular state lottery jackpot (I want to Virginia.) had grown to a point where it was well into th profitable zone so they sent hundreds of people to virtually every gas station in the state. They literally bought every single possible combination (this was pre powerball, so this was merely millions of tickets and not billions.) Obviously they won. This particular drawing was so rich that the only way they could lose was if 2 or more others bought the winning number also. Even if they had split it 50/50 it would still have been profitable.
- lmm 4y ago
- klooney 4y agoWouldn't that cover market makers in commodities markets too though?
- deleted 4y ago[deleted]
- charcircuit 4y ago>vaguely, something you buy with the expectation to make money from it appreciating This isn't remotely true. A grocery store isn't selling you a security when you go buy an apple even though the store bought the apple for cheaper than it it thought it could sell to you in the future. Anything you are able to resell can fall under this.
- cmeacham98 4y agoYou may want to look up the definition of the word "appreciating"
- charcircuit 4y agoYou may want to realize that if the value of apples depreciated, the store could lose money. The store has an expectation that the product they buy will be worth around the same or appreciate. Buying appreciating products means that you will profit more which is in a store's interest. If you want a better example of something normal that appreciates take for example holiday themed products. They are worth much less before the holiday, there is a pump in value around the avenue and then a dump. Stores have to careful plan how much to buy to not lose money.
- deleted 4y ago[deleted]
- deleted 4y ago[deleted]
- digitaltrees 4y agoWhat a silly definition that is. So are Pokémon cards securities then?
- batiudrami 4y agoNo because there is a game and the game is the main reason to own them; appreciation of value of rare cards is a by product and not the designed intent or the main reason to buy cards. If Pokémon was marketed as “hey buy these cards they will be worth more tomorrow” (actual or implied marketing) then you could make that argument, which has gotten those NFT “games” into trouble with the SEC.
- chrismarlow9 4y agoWhat about beanie babies?
- enra 4y agoIsn’t most crypto marketed this way as well? To buy coins or tokens, buying in into some kind of ecosystem. You don’t necessarily make any money, 1 etc is worth 1 eth tomorrow. You only realize any gains or losses if you sell that 1 eth and eth to usd/some other currency value has fluctuated.
- Lutzb 4y agoWhat about baseball cards
- brasic 4y agoIt’s not the SEC’s definition, it’s the supreme court’s: If: - It is an investment of money - There is an expectation of profits from the investment - The investment of money is in a common enterprise - Any profit comes from the efforts of a promoter or third party Then it’s a security. https://en.m.wikipedia.org/wiki/SEC_v._W._J._Howey_Co https://en.m.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.
- petesergeant 4y agoNot disputing this, but does that mean buying forex is a security, and if not, what stops it being? My guess is that foreign governments aren’t counted as 3rd parties / promoters?
- fnordpiglet 4y agoForex is not a security because it’s not an investment in an enterprise but an exchange of like for like of legal tender. Otherwise the money changers at airports would be regulated by the SEC and they would have to register their currency exchange, and any international transaction would have to be disclosed and regulated by the sec in literally every single case. Plus the SEC has no authority either of the treasury of the US nor any other governments treasury.
- cdiddy2 4y agoso having another country declare a crypto as legal tender makes it no longer a security in the US?
- klodolph 4y agoFeels like the answer to these questions is just gonna be “maybe such a case in the future will make it to the courts, and the courts will have to come up with an interpretation here.” We can make guesses about what the courts will decide but how confident are we in our guesses?
- fnordpiglet 4y agoNo, that’s not correct. They have to be tested against the Howey test specifically that there’s an enterprise of some sort backing it. This is why securities are distinct from commodities, foreign exchange transactions, or buying baseball cards. Crypto currencies can easily be viewed as securities if they meet certain criteria and some have been declared as such. But it’s far from settled that the SEC broadly has domain over crypto currencies, or if they’re commodities, or more neutrally currencies. They trade and behave much more like currencies or commodities, but some things like staking services behave more like securities. But most definitely “whatever the SEC wants” isn’t the criteria. https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/terms/h/howey-test.asp
- 1vuio0pswjnm7 4y agoThey already got a Wells notice last year about their proposed "Coinbase Lend" program. They cancelled the launch. https://www.coinbase.com/blog/the-sec-has-told-us-it-wants-to-sue-us-over-lend-we-have-no-idea-why https://www.coinbase.com/blog/the-sec-has-told-us-it-wants-t... Coinbase's General Counsel used to work at Facebook. Just a random factoid. No doubt he's telling us the truth when he claims he had "no idea" why his employer might be sued.
- yucky 4y ago> The SEC has a very loose definition of a security - vaguely... Vaguely written laws are an awful idea and anybody who supports the idea that this is normal should rethink that position. From a regulatory standpoint, crypto is a new thing and the regulations need to be clear and concise and widely understood. Making the argument "Because the government said so" will elicit no sympathy from logically minded folks.