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Coinbase secures Bermuda licence
- gitfan86 3y ago[flagged]
- 1vuio0pswjnm7 3y ago"U.S. SEC Chair Gary Gensler told lawmakers on Tuesday that he had "never seen a field that's so non-complying with laws". Crypto firms say they need clarity about regulations, but Gensler has said that crypto markets "suffer from a lack of regulatory compliance, not a lack of regulatory clarity"." Maybe calling it a "field" is being too generous. Crime is crime.
- koolba 3y agoThat’s rich coming from the guy who couldn’t even answer a basic yes/no question by Congress, “Is ethereum a commodity?”. His congressional testimony was a joke. How that man still has the job of SEC chief is quite the mystery. Being CFO of Hillary Clinton’s 2016 campaign is probably a factor.
- duxup 3y agoIs not giving a yes or no bad? Maybe it isn’t clear?
- hbbio 3y agoIt's really bad. In the press, he says that "actors are not complying" but not being able to answer the most simple question (there are others more complex) is *not* playing in SEC favour. Comply with what? Ethereum is the most used "crypto"-currency and the ecosystem players like Coinbase (a YC company) are right by saying they *can't* comply... they don't know what they are supposed to do despite asking repeatedly for years.
- duxup 3y agoYou didn’t answer my other question.
- latchkey 3y ago"the rules are clear" "great! how would they apply to this simple example?" "lol, no I can't tell you that!"
- thisgoesnowhere 3y agoThat's not how regulation works with the SEC. The rules are broad and are specificly designed to not be strict so that they can be applied to new technologies and businesses. You can say you don't like these rules or how they are applied but that's how they have been applied since their inception. This isn't new.
- latchkey 3y agoSadly, the existing rules are clearly not being applied well to these "new" (10+ year old) technologies. After, whatever decades of "the rules", new technologies have come along that have stumped "the rules". Now, the SEC has to deal with that. Instead of being an adult and having a good conversation, they are just kicking and screaming. What's happening is that SEC is saying that you're breaking "the rules" (ie: Wells Notice to coinbase). So, coinbase says... "ok, cool... what rules am i breaking?" The response is: "lol, no I can't tell you that!" So now Brian is in DC this week talking to regulators trying to get some clarity. He's posting all sorts of pictures of this on Twitter. Let's see what happens.
- tiahura 3y agoThe Securities and Exchange act of 1934 doesn’t give the SEC authority to regulate bitcoin and thus the SEC doesn’t have authority to it.
- ghayes 3y agoThe Securities Act and the Exchange Act give the SEC broad latitude in regulating securities. The fundamental question is: is Bitcoin a security? The situation now is a bit like if the SEC tomorrow said Harry Potter books were securities, would bookstores suddenly become unlicensed securities exchanges?
- latchkey 3y ago> The fundamental question is: is Bitcoin a security? https://www.coindesk.com/layer2/2022/06/28/secs-gensler-reiterates-bitcoin-alone-is-a-commodity-is-he-right/ https://www.coindesk.com/layer2/2022/06/28/secs-gensler-reit...
- Quindecillion 3y agoIt's not a security. It's not a commodity either. It's money. You may not agree with that and you may not like Bitcoin, but that doesn't change what it is.
- illiarian 3y agoBasically all of crypto passes Howey test for securities: --- start quite --- an instrument qualifies as an "investment contract" for the purposes of the Securities Act: "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." --- end quote ---
- Quindecillion 3y agoI agree. All of crypto passes the Howey test for securities. Bitcoin doesn't match that definition though. Who or what entity is the 'promoter' or 'third party' for Bitcoin? There's no registered entity, no (legitimate) foundation, no company, no CEO, no board, no chair. It's just a protocol.
- jrm4 3y agoYeah, he really doth protest too much. Regardless of how you feel about crypto, if you're at all familiar with law you'd understand that we're simply in uncharted territory here; saying that crypto is super dirty and non-compliant is quite literally as inaccurate as saying that it's super clean and fully in-line. The law simply isn't there yet.
- iudqnolq 3y agoThe law isn't there yet if you want crypto to work. But Gensler wants to kill crypto, and for that simply applying the existing rules fairly will do. Crypto doesn't have an inherent right to have the laws rewritten to enable it, it needs to make the case for why that would be good for the public. So far it hasn't.
- csomar 3y agoCrypto as in crypto-currencies is simply two (or multiple) peers exchanging information between them. They do not need a law to permit that, a case for the "good for the public", or anyone authorization for that matter.
- spaceman_2020 3y agoI’ve never seen a field with lower adoption than crypto despite billions in marketing. The actual users on-chain is abysmal and frankly, embarrassing. Current users onchain is in the thousands. Even when the market was raging, the biggest memecoin in the world could only manage about 1M+ wallets - probably about 80-100k real users. NFT trading volume is down to under 6-7k active users. At peak bull market, Tornado Cash, despite its notoriety, had about 125 daily transactions. Arbitrum, an Ethereum scaling solution, gave out literally free money in the form of an airdrop (I got $15k worth). The airdrop went out to about 650k wallets - under 100k real users. If crypto were to disappear tomorrow, it would affect a population no bigger than a small Indian town. An absolute mess. No correlation between adoption and hype/valuation at all.
- SparkyMcUnicorn 3y agoWhat's the source for your data? I agree with you on the overhype, but if roughly 16% of active addresses are real users, then active users within the past 24 hours would be around the population of the largest city in Indiana rather than a small town. Source: DefiLlama
- spaceman_2020 3y agoI said small Indian town, not Indiana town :) Regardless, NFT platform unique daily users down to ~10-12k across platforms: https://dune.com/queries/1622348/2688962?utm_source=mintorskip.beehiiv.com&utm_medium=newsletter&utm_campaign=nfts-are-in-free-fall https://dune.com/queries/1622348/2688962?utm_source=mintorsk... Total unique daily wallets for Tether (USDT) down to about 80k unique wallets. This is just unique addresses - doesn't filter out bots and users with multiple wallets. You can't go more mainstream than this coin. https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c13d831ec7#tokenAnalytics https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c... There are not more than 20-30k active users on chain at any given point.
- jeremyjh 3y agoAren’t most actual users just in exchange accounts ?
- 1vuio0pswjnm7 3y ago1. Genseler cannot say whether ETH is a security or a commodity as such statements could have adverse conssequences for the Commission in currrent/future litigation, e.g., SEC v Ripple Labs. 2. Even if the SEC were to issue guidance that a certain type of crypto operation is exempt from regulation, instead of proceeding on a case-by-case basis, it lacks the resources to carry out the requisite enforcement against all the crypto operations that are not exempt. From what I have read and heard, the likely reason why Genseler will not go after Bitcoin is because he believes the SEC lacks the resources. BTC has too much of a foothold. IMO, Genseler's SEC is taking on the amount of enforcement it believes it can successfully manage, maybe more. Time will tell. IMO, just because some crypto operations manage to evade SEC enforcement does not mean crypto is a legal grey area. It means the SEC has a limited enforcement budget and is pursuing actions that it believes have the best chances of success. There is an extraordinary amount of fraud on the internet. One can argue that lack of enforcement against crypto operations is because "the law has not caught up", but perhaps the more likely explanation is that the authorities have not caught up.
- chrismorgan 3y ago> It means the SEC has a limited enforcement budget and is pursuing actions that it believes have the best chances of success. I’d have expected enforcement to practically print money due to fines. (That one of the deliberate design aspects of fines would be that they would cover all the agency’s investigations, successful and unsuccessful.) Is this not the case?
- 1vuio0pswjnm7 3y ago"Over at the SEC, a spokesperson said the agency can allocate civil penalties to one of three places: the general fund at the U.S. Treasury, the Treasury's Investor Protection Fund (which is used to help fund awards granted to whistleblowers), or another separate fund used to repay harmed investors." According to this, fines are not allocated to the Commission to finance further enforcement activity except that funding awards to whistleblowers might lead to more enforcement actions. Keyword: might https://www.marketplace.org/2022/08/12/where-does-money-collected-from-corporate-fines-go/ https://www.marketplace.org/2022/08/12/where-does-money-coll... "What Does the SEC Do With Money It Collects From Fines? This will depend on the nature of the penalty. If investors or others were harmed financially due to a transgression, the penalties collected will be used to recover those losses and make those investors whole. Until the passage of the Sarbanes-Oxley Act of 2002, all penalties the SEC obtained were paid to the United States Treasury. Section 308 of the Sarbanes-Oxley Act, the so-called "Fair Funds provision," permits the SEC to request that certain penalties be added to any disgorgement fund established as part of an SEC enforcement action to return money to shareholders, investors, whistleblowers, or other victims of the defendant's securities law violations." https://www.investopedia.com/ask/answers/05/secfines.asp https://www.investopedia.com/ask/answers/05/secfines.asp HN commenters seem to pay particular attention to Matt Levine's ramblings. Here he is dispelling the myth: "It is not literally the case that the US Securities and Exchange Commission is a for-profit business whose goal is to maximize its revenue, and whose most important source of revenue is fining financial services companies for their misdeeds. But that is sometimes a tempting way to think about things." https://www.bloomberg.com/opinion/articles/2023-02-02/the-sec-wants-to-see-more-phones https://www.bloomberg.com/opinion/articles/2023-02-02/the-se...
- favflam 3y agoAre there other financial markets where a single entity is custodian, trading exchange, market maker, and Kyc/Aml all under on roof? It seems like a fundamental conflict of interest.
- tornato7 3y agoCoinbase is not a market maker. Only FTX had that going, through Alameda.
- andirk 3y agoAny large player can move markets albeit not like the Alameda scam. In Coinbase's case, listing a coin can be a big deal. However, I've tried to time those new listings and it doesn't seem to do too much re: value.
- chemmail 3y agoThe only reason Bitcoin and hence crypto actually worked is because the creator all but disappeared. This removes any and all conflict of interest for the rules of bitcoin. Unfortunately no other coin has this, and Satoshi can actually come back at any time.
- olalonde 3y agoIt's great for customers but not so great for "brokers". Securities exchanges in the US are not allowed to let retail customers trade directly and have to go through "brokers" (basically middlemen who take a cut on transactions).
- Mistletoe 3y agoHN hates crypto so they won't recognize it, but there is a massive brain drain and innovation drain leaving the USA right now. Cryptocurrencies are the future of money, whether you want to believe it or not. For the first time, humans can have money free from the whims of a government and the whirr of their money printer. That's a revolutionary idea. This won't be stopped by any government, you can only put your country at a disadvantage by ignoring it or trying to impede it.
- malthaus 3y agothe US should be happy that a bunch of "get rich quick schemers" & snake-oil salesmen are leaving and losing their shirts in the process
- Escapado 3y agoI don’t have a horse in the race but I’m curious why you think that?
- bushbaba 3y agoDisagree on the brain drain. Curious as to where you believe the talent is going?
- deleted 3y ago[deleted]
- e63f67dd-065b 3y ago> This won't be stopped by any government, you can only put your country at a disadvantage by ignoring it or trying to impede it. Countries have tried and were pretty successful? China banned it, and now it's pretty difficult to trade crypto in China. The US can pass legislation tomorrow saying no crypto no more, and it will be effectively banned from the US. How are you going to trade crypto when nobody wants to touch it? If you don't comply, your bank will shut down your accounts, the people running the exchanges will get arrested, their websites will get seized, etc. The US financial system is pretty good at keeping track of where USD goes after all, it'll get pushed into the shadow financial sector where all the other crime lives, and that seems pretty much the end for all the new crypto projects.
- olliej 3y agoThey’ve been given plenty of clarity: crypto is very clearly a security and they’ve repeatedly been told it is such. What they want is for new “clarity” in which they are magically no longer subject to the same financial regulations that every other security is.
- devoutsalsa 3y agoI briefly worked for a crypto company. This is my personal observation. The SEC regulates understood things. If you create something new, they’re not going to give guidance for it because they don’t have to give. They’re not in the business of helping people create new markets.
- DennisP 3y agoBut they also shouldn't be in the business of preventing people from creating new markets, unless we want our society to stagnate.
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- hnbad 3y agoDisruption for disruption's sake doesn't seem desirable. Stagnation is bad, but not as bad as going in the wrong direction instead of staying still.
- DennisP 3y agoHistorically, top-down control of economies hasn't worked out that well. The whole point of free markets is to let everyone decide on the directions they want to take.
- hnbad 3y agoThat fully centralized command economies have had severe issues historically doesn't mean completely deregulated markets would fare better. I don't think anyone is seriously hoping for a comeback of privateers. Arguing that one extreme is bad is not an argument for the other extreme, especially when every economy on Earth currently exists somewhere in between those two extremes rather than on either end (except maybe the DPRK if you squint really hard and tilt your head). Incidentally the current scarecrow of unfree markets, the PRC, is doing economically pretty well and "top-down control" within large parts of the industries is pretty popular except we call it "vertical integration". But that's a tangent, I agree. "Stagnation bad, disruption good" is 101 level analysis. The important question remains the direction. Disruption is movement. Movement is good if it takes you to a better place. But if you just move for movement's sake you might as well end up hurling everyone down a cliff. Letting go of all the reins is fun and exciting in a simulation, not so much in the real world where failure can mean death, suffering and permanent harm.
- faangiq 3y agoSo game over on Monday?
- ajhurliman 3y agoJust moved my last few bucks out, let’s hope it makes it. I was so bullish on crypto, anything with that much money and brilliance thrown at it must produce some fruit right? I guess not.
- ChainOfFools 3y agoThere's a relative handful of people for whom it has indeed produced fruit, several dozen to several hundred lifetimes worth. Centralize the profits, decentralize the losses. Nothing new here.
- jejeyyy77 3y agoThey’re launching an exchange that will offer additional services that won’t be available to Americans. This will allow them to take share and compete with Binance. This seems bullish for Coinbase as Binance is sitting on a huge pie. Seems like a loss for the US.
- thisgoesnowhere 3y agoLoss of what?
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- nothrowaways 3y ago`
- rohith2506 3y agoI can say the same about literally every security apart from crypto. Heck, even money is just an useless paper that we put too much value on. Proving my point that anyone can be a cynic
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- frank_bb 3y ago[dead]
- schleck8 3y agoSomething something BVI, Panama, Belize... True disruption to the existing system
- etothepii 3y agoBermuda is nothing like these places. Bermuda is the third largest insurance market in the world, with pretty much every Fortune 2000 company having insurance that comes through here. The ultimate court (though technically a different body) contains the same people as the UK's Supreme Court, the legal system is accountable to London (through a UK appointed, UK career civil servant called the Governor) as are the police. The laws and taxes are all made and raised locally. There is a high level of infrastructure, safe etc. and best of all (unlike SF) I've never seen anyone defecating in the streets.
- varjag 3y agoIf street defecation is your metric than about any place in semi-developed world is equally great. Why all these Fortune 9000 companies run their business via Bermuda rather than home jurisdictions again?
- sclarisse 3y agoWhy does everyone incorporate in Delaware? Stable, predictable law, commonly used and understood by others in the industry, and — I say the following as a top tier cryptohater — somewhere the regulatory authorities aren’t out to get you as part of their personal or populist vendettas.
- varjag 3y agoDelaware specifically for the lack of corporate tax.
- etothepii 3y agoI am not aware of "Fortune 9000 companies" that "run their business via Bermuda". However, large chunks of the worlds insurance comes through here.
- jshaqaw 3y agoA Bermuda offshore crypto exchange. What could possibly go wrong?
- I_am_tiberius 3y agoI would be interested why hackernews is so strong against cryptocurrencies. I am not sure but I assume most readers are from the US where the benefits are limited. Personally, for some time already I'm supporting a friend in Colombia financially and last year I switched to sending him Bitcoin. It's so much easier, cheaper and faster for both of us.
- lbwtaylor 3y agoI understand it's better than traditional remittance services, but did you try (transfer)wise? I use it monthly and it's so good - fast/cheap/easy - that I haven't felt any draw to crypto. Doesn't bitcoin's volatility affect your use case?
- I_am_tiberius 3y agoI actually used it in the past (when it was still called transfer wise) because of predictable FX rate transfers. However, I didn't think of it when we were looking for a better solution for this purpose. I guess, it would have worked as good as Bitcoin, you're right. In regards to volatility: It was not a problem so far as he usually sells some months of runway immediately and for the remaining part he waits until the rate is to his advantage. Sure, there is no guarantee that the price will increase but you have to consider that there is at least 15 percent inflation a year in Colombia. That makes COB/BTC price pairs more attractive than USD/BTC.
- armatav 3y agoHonestly, because it’s not used much in the US, and because the majority of tech people missed the wealth creation wave of Bitcoin.
- gitfan86 3y agoNo one on HN is suggesting that sending money to Boliva, Columbia, Venezuala via Western Union with local currencies is a great solution to your desire to send money to your friend. Most people would say what you re doing is totally reasonable. We do suggest that 99%+ of crypto value is not being spent like that. Most of crypto valuations is built on a vague promise of some future useful use cases when the underlying technology is just a slow database with no root password.