4 ms·

and crypto currencies are used as fuel for their networks

by pwb25 3y ago

FireBeyond 3y ago
This is a non-statement. What does that even mean? That's like saying "The USD is used as fuel for the US economy." Even talking about more crypto-concepts as gas fees doesn't negate this. It's not some "other purpose" and courts won't buy such disingenuous spins.
- EGreg 3y ago
  Ethereum is used to pay for transactions on its network. It is called “gas”. What level of detail do you want? People have a need to secure their transactions from double-spends and stealing etc. I personally think blockchains are a first-gen technology but the network requires ETH to pay for transactions. What is your point?
  - FireBeyond 3y ago
    "You can pay for transactions of a security with that same security, therefore it is not a security"? I don't think that's how it works.
    - EGreg 3y ago
      No, ETH is used to pay for transactions, the vast majority of which aren't "about Ethereum", but rather it is a general-purpose virtual machine that executes instructions in smart contracts, which can be for any general purpose, such as contests, or voting, or securing some assets, etc. So ETH has a lot of utility and is decentralized. That it's not a security has been a majority consensus of the SEC until Gary Gensler took over, and many commissioners including Hinman publicly said it: https://www.sec.gov/news/speech/speech-hinman-061418 https://www.sec.gov/news/speech/speech-hinman-061418 But about whether it can never be considered a security? In theory I agree with you. Just because something has utility, doesn't mean it's not a security by the Howey test. Today the SEC says one thing (ETH is not a security). Tomorrow under different leadership they can turn around and say it is. Good luck convincing a court, though. And Howey is just on the federal level! As I have already said -- most Kickstarter campaigns are actually unregistered securities offerings, according to the Risk Capital test of California and a dozen other states: https://www.cuttingedgecapital.com/what-is-a-security-and-why-does-it-matter/ https://www.cuttingedgecapital.com/what-is-a-security-and-wh... Proceed at your Peril: https://ir.law.utk.edu/cgi/viewcontent.cgi?article=1828&context=utklaw_facpubs https://ir.law.utk.edu/cgi/viewcontent.cgi?article=1828&cont... Silver Hills case established the Risk Capital test: https://www.jdsupra.com/legalnews/silver-hills-doesn-t-mute-howey-23601/ https://www.jdsupra.com/legalnews/silver-hills-doesn-t-mute-... And in fact, nearly everything can be a security if you try hard enough: https://www.linkedin.com/pulse/everything-security-chris-harvey/?trk=pulse-article https://www.linkedin.com/pulse/everything-security-chris-har... So "how it works" is whatever the system happens to come up with in court cases and precedents. The definitions vary from jurisdiction to jurisdiction and are vague as it is. After all, capital invested into anything is "put at risk", even if by the Howey test it's not. While in Singapore, the definition of security is a lot more narrow. And FINMA in Switzerland seems to have a much more sane system specifically for tokens: https://www.finma.ch/en/news/2018/02/20180216-mm-ico-wegleitung/ https://www.finma.ch/en/news/2018/02/20180216-mm-ico-wegleit... This is why blockchain and Web3 innovation is leaving the United States
- pwb25 3y ago
  It means you use ETH to do things on ETH, just like you use gas to run a car or tractor. So what is the security part of that?

and crypto currencies are used as fuel for their networks

by pwb25 3y ago

and crypto currencies are used as fuel for their networks

This is a non-statement. What does that even mean? That's like saying "The USD is used as fuel for the US economy." Even talking about more crypto-concepts as gas fees doesn't negate this. It's not some "other purpose" and courts won't buy such disingenuous spins.

EGreg 3y ago
Ethereum is used to pay for transactions on its network. It is called “gas”. What level of detail do you want? People have a need to secure their transactions from double-spends and stealing etc. I personally think blockchains are a first-gen technology but the network requires ETH to pay for transactions. What is your point?
- FireBeyond 3y ago
  "You can pay for transactions of a security with that same security, therefore it is not a security"? I don't think that's how it works.
  - EGreg 3y ago
    No, ETH is used to pay for transactions, the vast majority of which aren't "about Ethereum", but rather it is a general-purpose virtual machine that executes instructions in smart contracts, which can be for any general purpose, such as contests, or voting, or securing some assets, etc. So ETH has a lot of utility and is decentralized. That it's not a security has been a majority consensus of the SEC until Gary Gensler took over, and many commissioners including Hinman publicly said it: https://www.sec.gov/news/speech/speech-hinman-061418 https://www.sec.gov/news/speech/speech-hinman-061418 But about whether it can never be considered a security? In theory I agree with you. Just because something has utility, doesn't mean it's not a security by the Howey test. Today the SEC says one thing (ETH is not a security). Tomorrow under different leadership they can turn around and say it is. Good luck convincing a court, though. And Howey is just on the federal level! As I have already said -- most Kickstarter campaigns are actually unregistered securities offerings, according to the Risk Capital test of California and a dozen other states: https://www.cuttingedgecapital.com/what-is-a-security-and-why-does-it-matter/ https://www.cuttingedgecapital.com/what-is-a-security-and-wh... Proceed at your Peril: https://ir.law.utk.edu/cgi/viewcontent.cgi?article=1828&context=utklaw_facpubs https://ir.law.utk.edu/cgi/viewcontent.cgi?article=1828&cont... Silver Hills case established the Risk Capital test: https://www.jdsupra.com/legalnews/silver-hills-doesn-t-mute-howey-23601/ https://www.jdsupra.com/legalnews/silver-hills-doesn-t-mute-... And in fact, nearly everything can be a security if you try hard enough: https://www.linkedin.com/pulse/everything-security-chris-harvey/?trk=pulse-article https://www.linkedin.com/pulse/everything-security-chris-har... So "how it works" is whatever the system happens to come up with in court cases and precedents. The definitions vary from jurisdiction to jurisdiction and are vague as it is. After all, capital invested into anything is "put at risk", even if by the Howey test it's not. While in Singapore, the definition of security is a lot more narrow. And FINMA in Switzerland seems to have a much more sane system specifically for tokens: https://www.finma.ch/en/news/2018/02/20180216-mm-ico-wegleitung/ https://www.finma.ch/en/news/2018/02/20180216-mm-ico-wegleit... This is why blockchain and Web3 innovation is leaving the United States
pwb25 3y ago
It means you use ETH to do things on ETH, just like you use gas to run a car or tractor. So what is the security part of that?