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Can I pay for a Starbucks Double Frap Latte with Apple stock? Probably not, Apple stock is a security, not a currency... I'm sure someone has tried. But can I u

Can I pay for a Starbucks Double Frap Latte with Apple stock? Probably not, Apple stock is a security, not a currency... I'm sure someone has tried. But can I use Apple Stock as an investment vehicle? Yes. Conversely, can I pay for said surgary drink in DodgeCoin? Well no, you can't, but not for the same reasons. Starbucks doesn't have the facilities to accept DodgeCoin. Can you use it as an investment vehicle? Yes. And that is crux the problem. Because the answer is {"No", "Yes"}, the SEC has determined that these things (crypto) are regulated as Securities. The problem is it's far more nuanced than that. Just because everyone is using them as securities instead of currencies, does that make them securities?

traveler01 4y ago
That's what I get. If people are investing into crypto, would that make it securities? For example, if I exchange some EURO for some US Dollar in Europe to avoid the EURO devaluation am I investing? That's basically what you do with cryptocurrencies.
jcranmer 4y ago
The definition of securities in the US is governed by the Howey test, which is over 75 years old. It's a test which is very well-established in case law, with ample precedent that can be relied on to help fine-tune aspects like how "other" someone has to be in the "derived from the efforts of others" prong of the test. This isn't some vague unknowable thing.
bogwog 4y ago
I'm sure Starbucks would trade you a Double Frappe Latte for Apple Stock, if they had the facilities to accept it.
Sohcahtoa82 4y ago
Cryptocurrencies are a currency that people are using as an investment. > Conversely, can I pay for said surgary drink in DodgeCoin? Well no, you can't, but not for the same reasons. Starbucks doesn't have the facilities to accept DodgeCoin I can't pay for my Starbucks in the USA using Euros, but that doesn't make the Euro not a currency. IMO, anybody trying to call a cryptocurrency a security is arguing in bad faith. A security has to represent something of value. A stock gives you a tiny fraction of ownership of a company. Cryptocurrencies give you nothing. They have no underlying value.
- cheeze 4y ago
  This turns into a philosophical argument too quickly though. Some would argue that because of fractional reserve banking, money has no underlying value either. I disagree with you here, I think a _vast_ majority of people actually purchasing cryptocurrency are doing it as an "investment vehicle", regardless of whether it has inherent value or not. They are treating it very much like a security.
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traveler01 4y ago

That's what I get. If people are investing into crypto, would that make it securities? For example, if I exchange some EURO for some US Dollar in Europe to avoid the EURO devaluation am I investing? That's basically what you do with cryptocurrencies.

jcranmer 4y ago

The definition of securities in the US is governed by the Howey test, which is over 75 years old. It's a test which is very well-established in case law, with ample precedent that can be relied on to help fine-tune aspects like how "other" someone has to be in the "derived from the efforts of others" prong of the test. This isn't some vague unknowable thing.

bogwog 4y ago

I'm sure Starbucks would trade you a Double Frappe Latte for Apple Stock, if they had the facilities to accept it.

Sohcahtoa82 4y ago

Cryptocurrencies are a currency that people are using as an investment. > Conversely, can I pay for said surgary drink in DodgeCoin? Well no, you can't, but not for the same reasons. Starbucks doesn't have the facilities to accept DodgeCoin I can't pay for my Starbucks in the USA using Euros, but that doesn't make the Euro not a currency. IMO, anybody trying to call a cryptocurrency a security is arguing in bad faith. A security has to represent something of value. A stock gives you a tiny fraction of ownership of a company. Cryptocurrencies give you nothing. They have no underlying value.

cheeze 4y ago
This turns into a philosophical argument too quickly though. Some would argue that because of fractional reserve banking, money has no underlying value either. I disagree with you here, I think a _vast_ majority of people actually purchasing cryptocurrency are doing it as an "investment vehicle", regardless of whether it has inherent value or not. They are treating it very much like a security.

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