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This is only true if you trade in crypto that is a security. Notably, Bitcoin is not a security. But every stablecoin, or any other more complex system that is

This is only true if you trade in crypto that is a security. Notably, Bitcoin is not a security. But every stablecoin, or any other more complex system that is in some way related to something that exists in the real world is. So you could run a Bitcoin exchange, but if you add any of the new, complex stuff you will end up getting shut down by SEC.

alexb_ 3y ago
If Bitcoin looks like a security, acts like a security, trades like a security, is used by almost everyone as a security, then why are we pretending that it shouldn't be regulated like a security?
- Tuna-Fish 3y ago
  See my reply to your sibling comment. Bitcoin is not a security, because there is a legally well established definition of security and bitcoin does not meet it.
prottog 3y ago
> Bitcoin is not a security What makes you say that?
- Tuna-Fish 3y ago
  Security in the US is defined by the Howey test, and other jurisprudence. Bitcoin does not meet the definition any more than collectible trading cards do. Any crypto that imply some kind of stake or ownership of something that exists outside of that instrument are securities. This includes all stablecoins, all defi, and probably plenty of other things I don't even know about. But pure currencies that are backed by nothing other than scarcity and other people's expectation about their value are not securities. They are either commodities or currencies. Which of the two they are is still unclear and will probably have to be litigated at some point, as this distinction has other tax and regulatory significance, but neither option gets SEC on your ass the way unregistered securities does. This is in fact an argument against the usefulness of crypto/blockchains in general -- unlike some proponents claim, you really can't actually use tradable crypto to do anything interesting, like name resolution or whatever, because if you can freely buy and sell the tokens, as soon as you can do anything more interesting with them they probably become securities.
  - prottog 3y ago
    Got it, that makes sense. I suppose the CFTC may come knocking on your ass instead ;-)
  - nullc 3y ago
    What the rational on stablecoins? The Howey test requires an expectation of profit which I think isn't even debatable there (also an "investment" which seems dubious, but at least debatable if you don't define an investment as also requiring an expectation of profit). Not to suggest that I'm speaking in favor of them, due to bad security properties, I wouldn't... and not to say that they don't run afoul of non-SEC rules... I'm just not aware of the rationale that they're securities.

alexb_ 3y ago

If Bitcoin looks like a security, acts like a security, trades like a security, is used by almost everyone as a security, then why are we pretending that it shouldn't be regulated like a security?

Tuna-Fish 3y ago
See my reply to your sibling comment. Bitcoin is not a security, because there is a legally well established definition of security and bitcoin does not meet it.

prottog 3y ago

> Bitcoin is not a security What makes you say that?

Tuna-Fish 3y ago
Security in the US is defined by the Howey test, and other jurisprudence. Bitcoin does not meet the definition any more than collectible trading cards do. Any crypto that imply some kind of stake or ownership of something that exists outside of that instrument are securities. This includes all stablecoins, all defi, and probably plenty of other things I don't even know about. But pure currencies that are backed by nothing other than scarcity and other people's expectation about their value are not securities. They are either commodities or currencies. Which of the two they are is still unclear and will probably have to be litigated at some point, as this distinction has other tax and regulatory significance, but neither option gets SEC on your ass the way unregistered securities does. This is in fact an argument against the usefulness of crypto/blockchains in general -- unlike some proponents claim, you really can't actually use tradable crypto to do anything interesting, like name resolution or whatever, because if you can freely buy and sell the tokens, as soon as you can do anything more interesting with them they probably become securities.
- prottog 3y ago
  Got it, that makes sense. I suppose the CFTC may come knocking on your ass instead ;-)
- nullc 3y ago
  What the rational on stablecoins? The Howey test requires an expectation of profit which I think isn't even debatable there (also an "investment" which seems dubious, but at least debatable if you don't define an investment as also requiring an expectation of profit). Not to suggest that I'm speaking in favor of them, due to bad security properties, I wouldn't... and not to say that they don't run afoul of non-SEC rules... I'm just not aware of the rationale that they're securities.