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There's a few people picking sides here in the comments. Just reminding everybody that it's possible for two sides to be at issue; the SEC can be trying its bes

by chomp 3y ago

There's a few people picking sides here in the comments. Just reminding everybody that it's possible for two sides to be at issue; the SEC can be trying its best to apply its mandate in a world where technology has surpassed the law, and in a void of congressional action, and as a result giving very vague guidance so that it can squeeze its mandate into the crypto realm. And Coinbase can be purposely threading the needle in an area they know could probably be interpreted as being SEC regulated. In my opinion, Congress is the problem here, and their inaction is going to cause this to get duked out in the court, when it didn't have to be so.

vkou 3y ago
Why would the SEC need congressional action to regulate securities (which is what some of the crypto tokens traded on exchanges are)? Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC? Just because you've added '... But on the internet' to your business model does not require additional legislature to determine whether or not you are trading securities.
- linuxftw 3y ago
  You're getting downvoted, but you're 100% correct.
  - latchkey 3y ago
    > Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC? Coinbase is a public company on NASDAQ. They are about as registered with the SEC, as possible. Update: cause I'm getting downvotes. See below. The point that I'm making is that if this company is acting illegally, then why is it still trading?
    - twic 3y ago
      The registration under discussion here is registration as a broker-dealer, or an exchange, or whatever, not as a listed company.
      - latchkey 3y ago
        Tom Anderson, of myspace? Wow. Hi! Let me direct you to this: https://finance.yahoo.com/news/coinbase-says-just-no-way-to-register-with-sec-amid-calls-for-compliance-161129587.html https://finance.yahoo.com/news/coinbase-says-just-no-way-to-... The whole point here is that Coinbase is acting in good faith by trying to do things "the right way"... including becoming a public company and trying to register in whatever compliance ways they can. All the way to announcing that they will go to court over all of this. All because their existing efforts haven't worked. Update: the discussion is happening right now around how coinbase is a public company that is being declared that it is doing illegal things. If so, then why is it still trading? https://www.youtube.com/live/DSsp8Rvh5n0?feature=share https://www.youtube.com/live/DSsp8Rvh5n0?feature=share -4:15
        Volundr 3y ago
        > If so, then why is it still trading? Because breaking the law does not cause your stock to be delisted? I'm not informed enough of the SEC complaint to have much of an opinion on how valid the SEC's or Coinbase's respective cases are, but "I can still by stock" is no evidence that Coinbase isn't breaking the law or violating regulations. Companies do illegal things all the time, delisting the stock and shuttering the company is a resolution of last resort, not first resort.
        linuxftw 3y ago
        No, coinbase is trying to trade unregulated securities and asking the SEC to give them the OK before hand so they don't end up in court. Predictably, the SEC's not going to do that.
        latchkey 3y ago
        > No, coinbase is trying to trade unregulated securities And why are those securities (if they are actually securities, which Gensler and the SEC can't even agree on), available to purchase and not regulated? Someone else in this thread just compared this to buying fentanyl. It isn't like there is the FDA giving out spec sheets on drugs.
    - rchaud 3y ago
      > Coinbase is a public company on NASDAQ. They are about as registered with the SEC, as possible. That is not even close to correct. NASDAQ itself is a publicly traded company (quote: NDAQ), that nonetheless has to register separately as a securities exchange.
    - ac29 3y ago
      > cause I'm getting downvotes. See below. The point that I'm making is that if this company is acting illegally, then why is it still trading? Is your position that no publicly traded company has ever done anything illegal?
      - latchkey 3y ago
        Not what I'm saying at all. I'm saying that a publicly traded company went through all of the due diligence that it takes to become a publicly traded company (if you've ever been through that, it is pretty intense) and then asked for further clarification on their existing practices, couldn't get that, then got served a wells notice and is now having to go to court to get further clarification. All because the SEC can't or won't give clear guidance on things that they are supposed to be in charge of.
        ahahahahah 3y ago
        > asked for further clarification on their existing practices, couldn't get that, That's not right. They got clarification they just didn't like the answer.
        latchkey 3y ago
        https://finance.yahoo.com/news/coinbase-says-just-no-way-to-register-with-sec-amid-calls-for-compliance-161129587.html https://finance.yahoo.com/news/coinbase-says-just-no-way-to-... "When we ask specific questions: How do we get to a path to registration? There's never an answer," Shirzad said.
        ahahahahah 3y ago
        I asked the DEA how to get a path to register to be able to sell fentanyl to anyone, they didn't have any answer so I just opened up shop.
        latchkey 3y ago
- rchaud 3y ago
  > Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC? They saw Uber and Airbnb steamroll through taxi and hotel regulations successfully. But that was local, and SEC is federal.
- paulddraper 3y ago
  Back in 2018, the SEC considered decentralization as an excluding criterion. https://corpgov.law.harvard.edu/2022/12/06/why-cryptoassets-are-not-securities/ https://corpgov.law.harvard.edu/2022/12/06/why-cryptoassets-...
  - vkou 3y ago
    Why not link to the actual SEC guidance, instead of an op-ed by a crypto CEO that is reading what she wants[1] to read from it? https://www.sec.gov/files/dlt-framework.pdf https://www.sec.gov/files/dlt-framework.pdf It's only a few pages, and nothing in it indicates that decentralization is sufficient as an excluding criterion. > Although no one of the following characteristics of use or consumption is necessarily determinative, the stronger their presence, the less likely the Howey test is met: You can't just cherrypick the words that you want to hear in a sentence, exclude all the other words, and claim that the SEC gave the green-light to decentralized crypto! In fact, nearly all of the exculpatory characteristics listed just below that paragraph focus on the utility value of a crypto token, as opposed to its speculative value! The real versus speculative value (Storing data on filecoin, versus trading filecoin around) is what's most important to the SEC, not how decentralized the network is! ... Also, most crypto is ridiculously centralized, and if Coinbase listed even one of the problem tokens, they are... Running an illegal securities exchange. --- [1] Read the actual SEC guidance, and try to square it with this quote by Jai Massari, the author of that op-ed: > First set out in a 2018 speech by SEC Corporation Finance Division Director William Hinman, and then described in more detail in 2019 staff guidance,[6] the core idea is that where a blockchain project is sufficiently decentralized, the cryptoasset associated with the project will not be or represent an “investment contract” under the so-called Howey test, If that's what she gets out of the SEC document (linked above), Jai doesn't have the reading comprehension of a high-schooler[2], let alone one that's appropriate for a 'visiting lecturer' at Berkeley! [2] What she seems to have is an incredibly motivated reading comprehension. The same kind of motivated reading comprehension that's currently landing Coinbase into hot water.
    - paulddraper 3y ago
      > most crypto is ridiculously centralized That is true. IMO Bitcoin is the only crypto is that is legitimately decentralized; no single governing organization.
legitster 3y ago
I think part of the issue here is that the SEC is being decidedly coy. The remedy they are seeking is for the industry to essentially end itself. I think it's fine to say that the SEC is trying it's best to apply a mandate and them seeking guidance from congress are all good ideas, but them beating around the bush and attempting some subterfuge is not a good look for a regulatory agency.
- SpicyLemonZest 3y ago
  The SEC isn't being coy at all. The current SEC chair has said repeatedly ever since he was appointed that most crypto assets are clearly securities under the existing law, and therefore crypto exchanges must register as securities exchanges. Crypto industry execs would just prefer to be unregulated, and are pretending to be confused about what the SEC wants to trick you into taking their side.
  - vkou 3y ago
    > Crypto industry execs would just prefer to be unregulated, and are pretending to be confused about what the SEC wants to trick you into taking their side. It's also why they are loudly calling for Congress to weigh in. They know that their business will be nuked from orbit the second the laws on the books will be applied to them, so they are hoping that Congress carves out an exemption for them.
    - dingusdew 3y ago
      [dead]
    - legitster 3y ago
      Well, it's not just their business. The SEC is telegraphing that they want to label all cryptocurrencies as securities. Without action from congress the entire technology is practically dead. No one is going to contribute to Ethereum if they have to log into a Schwab account to buy Ether.
- rchaud 3y ago
emptysongglass 3y ago
I've only seen bad behavior from the SEC since I started following their crypto-crusade. Both Coinbase and Telegram came to the SEC voluntarily and asked for guidance. The SEC did not consult in good faith, instead springing the trap when either company announced their crypto product. For Telegram, it was TON, for Coinbase, it was Lend. [1] Whatever your feelings on crypto, these are bad actions and if embodied in a person, I would tell the world far and wide of this person's poor character and total lack of ethics. [1] 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...

by chomp 3y ago

vkou 3y ago

Why would the SEC need congressional action to regulate securities (which is what some of the crypto tokens traded on exchanges are)? Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC? Just because you've added '... But on the internet' to your business model does not require additional legislature to determine whether or not you are trading securities.

linuxftw 3y ago
You're getting downvoted, but you're 100% correct.
- latchkey 3y ago
  > Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC? Coinbase is a public company on NASDAQ. They are about as registered with the SEC, as possible. Update: cause I'm getting downvotes. See below. The point that I'm making is that if this company is acting illegally, then why is it still trading?
  - twic 3y ago
    The registration under discussion here is registration as a broker-dealer, or an exchange, or whatever, not as a listed company.
    - latchkey 3y ago
      Tom Anderson, of myspace? Wow. Hi! Let me direct you to this: https://finance.yahoo.com/news/coinbase-says-just-no-way-to-register-with-sec-amid-calls-for-compliance-161129587.html https://finance.yahoo.com/news/coinbase-says-just-no-way-to-... The whole point here is that Coinbase is acting in good faith by trying to do things "the right way"... including becoming a public company and trying to register in whatever compliance ways they can. All the way to announcing that they will go to court over all of this. All because their existing efforts haven't worked. Update: the discussion is happening right now around how coinbase is a public company that is being declared that it is doing illegal things. If so, then why is it still trading? https://www.youtube.com/live/DSsp8Rvh5n0?feature=share https://www.youtube.com/live/DSsp8Rvh5n0?feature=share -4:15
      - Volundr 3y ago
        > If so, then why is it still trading? Because breaking the law does not cause your stock to be delisted? I'm not informed enough of the SEC complaint to have much of an opinion on how valid the SEC's or Coinbase's respective cases are, but "I can still by stock" is no evidence that Coinbase isn't breaking the law or violating regulations. Companies do illegal things all the time, delisting the stock and shuttering the company is a resolution of last resort, not first resort.
      - linuxftw 3y ago
        No, coinbase is trying to trade unregulated securities and asking the SEC to give them the OK before hand so they don't end up in court. Predictably, the SEC's not going to do that.
        latchkey 3y ago
        > No, coinbase is trying to trade unregulated securities And why are those securities (if they are actually securities, which Gensler and the SEC can't even agree on), available to purchase and not regulated? Someone else in this thread just compared this to buying fentanyl. It isn't like there is the FDA giving out spec sheets on drugs.
  - rchaud 3y ago
    > Coinbase is a public company on NASDAQ. They are about as registered with the SEC, as possible. That is not even close to correct. NASDAQ itself is a publicly traded company (quote: NDAQ), that nonetheless has to register separately as a securities exchange.
  - ac29 3y ago
    > cause I'm getting downvotes. See below. The point that I'm making is that if this company is acting illegally, then why is it still trading? Is your position that no publicly traded company has ever done anything illegal?
    - latchkey 3y ago
      Not what I'm saying at all. I'm saying that a publicly traded company went through all of the due diligence that it takes to become a publicly traded company (if you've ever been through that, it is pretty intense) and then asked for further clarification on their existing practices, couldn't get that, then got served a wells notice and is now having to go to court to get further clarification. All because the SEC can't or won't give clear guidance on things that they are supposed to be in charge of.
      - ahahahahah 3y ago
        > asked for further clarification on their existing practices, couldn't get that, That's not right. They got clarification they just didn't like the answer.
        latchkey 3y ago
        https://finance.yahoo.com/news/coinbase-says-just-no-way-to-register-with-sec-amid-calls-for-compliance-161129587.html https://finance.yahoo.com/news/coinbase-says-just-no-way-to-... "When we ask specific questions: How do we get to a path to registration? There's never an answer," Shirzad said.
        ahahahahah 3y ago
        I asked the DEA how to get a path to register to be able to sell fentanyl to anyone, they didn't have any answer so I just opened up shop.
        latchkey 3y ago
rchaud 3y ago
> Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC? They saw Uber and Airbnb steamroll through taxi and hotel regulations successfully. But that was local, and SEC is federal.
paulddraper 3y ago
Back in 2018, the SEC considered decentralization as an excluding criterion. https://corpgov.law.harvard.edu/2022/12/06/why-cryptoassets-are-not-securities/ https://corpgov.law.harvard.edu/2022/12/06/why-cryptoassets-...
- vkou 3y ago
  Why not link to the actual SEC guidance, instead of an op-ed by a crypto CEO that is reading what she wants[1] to read from it? https://www.sec.gov/files/dlt-framework.pdf https://www.sec.gov/files/dlt-framework.pdf It's only a few pages, and nothing in it indicates that decentralization is sufficient as an excluding criterion. > Although no one of the following characteristics of use or consumption is necessarily determinative, the stronger their presence, the less likely the Howey test is met: You can't just cherrypick the words that you want to hear in a sentence, exclude all the other words, and claim that the SEC gave the green-light to decentralized crypto! In fact, nearly all of the exculpatory characteristics listed just below that paragraph focus on the utility value of a crypto token, as opposed to its speculative value! The real versus speculative value (Storing data on filecoin, versus trading filecoin around) is what's most important to the SEC, not how decentralized the network is! ... Also, most crypto is ridiculously centralized, and if Coinbase listed even one of the problem tokens, they are... Running an illegal securities exchange. --- [1] Read the actual SEC guidance, and try to square it with this quote by Jai Massari, the author of that op-ed: > First set out in a 2018 speech by SEC Corporation Finance Division Director William Hinman, and then described in more detail in 2019 staff guidance,[6] the core idea is that where a blockchain project is sufficiently decentralized, the cryptoasset associated with the project will not be or represent an “investment contract” under the so-called Howey test, If that's what she gets out of the SEC document (linked above), Jai doesn't have the reading comprehension of a high-schooler[2], let alone one that's appropriate for a 'visiting lecturer' at Berkeley! [2] What she seems to have is an incredibly motivated reading comprehension. The same kind of motivated reading comprehension that's currently landing Coinbase into hot water.
  - paulddraper 3y ago
    > most crypto is ridiculously centralized That is true. IMO Bitcoin is the only crypto is that is legitimately decentralized; no single governing organization.

legitster 3y ago

I think part of the issue here is that the SEC is being decidedly coy. The remedy they are seeking is for the industry to essentially end itself. I think it's fine to say that the SEC is trying it's best to apply a mandate and them seeking guidance from congress are all good ideas, but them beating around the bush and attempting some subterfuge is not a good look for a regulatory agency.

SpicyLemonZest 3y ago
The SEC isn't being coy at all. The current SEC chair has said repeatedly ever since he was appointed that most crypto assets are clearly securities under the existing law, and therefore crypto exchanges must register as securities exchanges. Crypto industry execs would just prefer to be unregulated, and are pretending to be confused about what the SEC wants to trick you into taking their side.
- vkou 3y ago
  > Crypto industry execs would just prefer to be unregulated, and are pretending to be confused about what the SEC wants to trick you into taking their side. It's also why they are loudly calling for Congress to weigh in. They know that their business will be nuked from orbit the second the laws on the books will be applied to them, so they are hoping that Congress carves out an exemption for them.
  - dingusdew 3y ago
    [dead]
  - legitster 3y ago
    Well, it's not just their business. The SEC is telegraphing that they want to label all cryptocurrencies as securities. Without action from congress the entire technology is practically dead. No one is going to contribute to Ethereum if they have to log into a Schwab account to buy Ether.
rchaud 3y ago

emptysongglass 3y ago

I've only seen bad behavior from the SEC since I started following their crypto-crusade. Both Coinbase and Telegram came to the SEC voluntarily and asked for guidance. The SEC did not consult in good faith, instead springing the trap when either company announced their crypto product. For Telegram, it was TON, for Coinbase, it was Lend. [1] Whatever your feelings on crypto, these are bad actions and if embodied in a person, I would tell the world far and wide of this person's poor character and total lack of ethics. [1] 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...