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The 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 corpo

• deleted 4y ago
  [deleted]
• jfengel 4y ago
  Nobody trades lottery tickets. If they did, it might draw regulatory scrutiny too.
  • Aloha 4y ago
    As 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 ago
    Terrible 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
  > The 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. No it doesn't. Corporations are very obviously unphysical, as are debts. Securitizing e.g. music royalties is completely normal.
  • dataflow 4y ago
    > Corporations are very obviously unphysical I think that misses the parent's point. Corporations own physical assets (like buildings) and things with accepted intrinsic value (fiat currency). but they also indirectly own rights to other things that are indirectly backed by physical stuff in a similar manner (like shares of other corporations, etc.). That's in contrast to something like Bitcoin which doesn't come with a direct or indirect right to anything with intrinsic value.
    • lmm 4y ago
      > I think that misses the parent's point. Corporations own physical assets (like buildings) and things with accepted intrinsic value (fiat currency). but they also indirectly own rights to other things that are indirectly backed by physical stuff in a similar manner (like shares of other corporations, etc.). Not necessarily. Sometimes a corporation's value is based on something purely speculative, like a drug patent that may or may not work out, or even something that's widely thought to be worthless, like hot tips on the search for Bigfoot. That's completely normal.
      • dataflow 4y ago
        Do you have any examples of this? A corporation that owns literally nothing, whose entire value is based on something speculative (like a drug patent), and who has a traded security?
        • junofan 4y ago
          SPACs are just pieces of paper sitting in Delaware somewhere.
• fnordpiglet 4y ago
  No, you still are wrong. It has to be backed by an enterprise. Commodities are regulated by the CFTC. There’s no need for a security to be back by physical assets. A corporation can have no material asset backing (in fact some retailers have no assets at all, everything is rented or purchased on warehouse lines of credit with the expectation they can generate cash flow with minimal to zero capital investment; but their shares are still securities because they’re backed by an enterprise. I find it strange you learned of the Howey test but didn’t understand this, as it’s very clear in the description, a security must be: An investment of money In a common enterprise With the expectation of profit To be derived from the efforts of others