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It is scary to me how much legislating is done by these government bodies inside the (executive ?) branch. I do sympathize with anyone trying to get clear requ

by pylua 3y ago

It is scary to me how much legislating is done by these government bodies inside the (executive ?) branch. I do sympathize with anyone trying to get clear requirements in black and white terms of what is and isn’t acceptable . I think this is more of a systemic failure.

gamblor956 3y ago
The entire point of Congress writing laws and delegating the specific rulemaking to agencies is so that informed experts can make the laws, with input from affected parties and the public, instead of uninformed legislators. And note: Congress has the opportunity to reject rules passed by an agency that it determines conflicts with the intent of the governing law(s).
JohnFen 3y ago
The SEC is not part of the executive branch. It is an independent agency. While it is also not part of the legislative branch, the legislative branch is the one that effectively controls it.
- pylua 3y ago
  Thanks for the insight. It does feel like the organizations ability to interpret the laws is more related to a political agency than the letter of the law. There should just be a letter of the law , analytical meaning branch of government.
  - JohnFen 3y ago
    It's also useful to know that Congress created the SEC in response to the 1929 stock market crash. Their primary purpose is to prevent the conditions that caused that. > There should just be a letter of the law , analytical meaning branch of government. I don't think that's a thing that is possible. You can't write laws to cover every possible case, and writing them to be "self-interpreting" would be an extraordinarily difficult thing. Interpretation will always be required.
    - pylua 3y ago
      That’s why it’s a systemic failure . Years of law study to interpret laws with context long dropped. The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently.
      - anonymouskimmer 3y ago
        It's a systemic failure of analytics, not a systemic failure of the law. > The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently. There are numerous other possible reasons it took this long for the SEC to take action, other than the system being overly complicated or inefficient (lack of workers, bigger fish to fry [prioritization], the evolution of Coinbase into less of a commodities trader and more of a securities trader). Complications and inefficiencies usually require additional time and effort, but additional time and effort is not an absolute indication that something is complicated or inefficient.
        rtkwe 3y ago
        Yeah for the longest time Coinbase was mainly hosting the relatively old coins that tended to be closer to commodities than securities. While they were doing that it's a very different regulatory environment.
      - JohnFen 3y ago
        > The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently. I disagree with this assessment, but reasonable people can hold differing opinions on this.
        knewter 3y ago
        "you can run a company for nearly a decade while spending a great deal on lawyers talking to the government the whole time and still have no clue if your business is legal"
    - 3y ago
  - ikiris 3y ago
    This is never how the law has worked
    - mrguyorama 3y ago
      It's so much worse than that. "Laws should be exhaustively comprehensive" is a completely unworkable system. You cannot predict every possible combination of context and law, and attempting to do so would be literal combinatorics explosion. People who push that kind of system know this, and want the system to be hamstrung by exactly that situation. They want a system that can only outlaw their new, explicitly harmful scheme after an entire game of politics in congress, such that they could prevent something becoming law by encouraging the already bad stonewalling in congress. They want government agencies to be so bound up by poorly written law that they cannot administrate at all.
      - pylua 3y ago
        I just want a system that is predictable , objective and that works quickly . Saying that there are flaws in the current system simply offends the gate keepers of the system.
        ikiris 3y ago
        I just want a billion dollars and a unicorn. We both have to work in reality.
  - pjc50 3y ago
    > There should just be a letter of the law , analytical meaning branch of government. This is called "a court". (There is a particular phrase for "the law is unclear so I'm going to sue the regulator in advance to determine if something is legal", but I've forgotten it. It's linked to judicial review)
- semiquaver 3y ago
  > The SEC is not part of the executive branch. You are mistaken. The SEC is very much a part of the executive branch. > It is an independent agency So is the CIA. This just is a term of art for a particular type of executive agency distinct from a cabinet department with additional insulation from political control. SEC commissioners are nominated by POTUS and confirmed by the senate, a characteristic unique to the leaders of executive branch departments. https://en.m.wikipedia.org/wiki/Independent_agencies_of_the_United_States_government https://en.m.wikipedia.org/wiki/Independent_agencies_of_the_...
  - JohnFen 3y ago
    > The SEC is very much a part of the executive branch. Not according to the government, and they're the horse's mouth on this. > SEC commissioners are nominated by POTUS and confirmed by the senate This is correct, but not really to the point.
    - semiquaver 3y ago
      > Not according to the government, and they're the horse's mouth on this. You seem to be referencing some specific statement that you didn't provide. I'm guessing that you are confused about the phrase "independent agency". Or possibly you're remembering cases like Lucia v. SEC where certain SEC staff were (unsuccessfully) challenged as not conforming with the Article II appointments clause. The insulation of these sort of agencies from direct presidential oversight continues to be a source of debate in conservative legal circles, but where these agencies sit in the constitutional order is not remotely controversial. They're not part of the judiciary and they're not part of Congress so they can only be part of the executive. > The executive branch also includes executive departments, independent agencies, and other boards, commissions, and committees. https://www.usa.gov/branches-of-government https://www.usa.gov/branches-of-government > The SEC is an independent federal agency https://www.sec.gov/strategic-plan/about https://www.sec.gov/strategic-plan/about QED. More to the point, congress lacks the ability under the constitution to create government structures outside the three branches. The language establishing the SEC makes very clear that its structure conforms with how Article II defines the executive branch: > There is hereby established a Securities and Exchange Commission (hereinafter referred to as the ‘Commission’) to be composed of five commissioners to be appointed by the President by and with the advice and consent of the Senate. https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-1885.pdf https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-188... > he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: https://constitution.congress.gov/constitution/article-2/ https://constitution.congress.gov/constitution/article-2/ The SEC is established and appropriated by congress, staffed by people who receive government paychecks, led by presidential appointees, etc etc. I'd be interested to know whether you think it's either - not part of the US government - part of a different branch - part of the US government outside a branch that the constitution specifies
burnte 3y ago
> It is scary to me how much legislating is done by these government bodies inside the (executive ?) branch. Congress explicitly delegated these authorities to these agencies as part of the administrative state overhaul in the beginning of the 20th century. The reason was to help become more responsive, and less beholden to daily politics by putting neutral experts in charge, and by and large it works. Safety and security shouldn't be party politics.
- pylua 3y ago
  That is good history to know , thank you. It does feel like to me in this case, this is a failure due the government being slow to respond and unable to produce an interpretation of the law consistent with a completely analytical meaning letter of the law, in my opinion.
  - deleted 3y ago
    [deleted]
  - toast0 3y ago
    Delegate to agencies is a way for government to be less slow. In the case where congress is faster, they can pass new laws with more specifics and less left to the executive branch, but that's often not very fast.
  - Hermitian909 3y ago
    > unable to produce an interpretation of the law consistent with a completely analytical meaning letter of the law The legal profession writ large (including legislators) consider this a feature, not a bug. The reason this is the legal profession's opinion essentially three points: 1. You can't write "bug free" laws and regulations 2. Fixing mistakes in laws and regulations is slow 3. The amount of damage someone can do with unintended legal cover can be catastrophic (imagine if I found a legal loophole to take possession of your home!) So this has been chosen as the "least bad" solution. My personal opinion is that the SEC is acting within the spirit of the law which is what we should expect and if congress wanted to change things they should pass a new law.
deleted 3y ago
[deleted]
meepmorp 3y ago
Why? I think it makes sense to delegate rule making to specialized agencies that are specifically staffed for handling the kind of regulation they're meant to apply. I don't doubt that the process could be improved, but insulating decisions about how to protect investors from political interference sounds like a fine idea.
- pylua 3y ago
  Originally well intentioned , I think we are seeing it break down here. I am not a lawyer, but as a layman I am not convinced by the sec and their interpretation of things. I am inclined to think that they will bow to political pressure and what is expedient for the current legislature instead of looking at things in a completely objective analytical manner.
GartzenDeHaes 3y ago
It's called regulating. For areas that require complex administration, Congress passes laws that express its intent and directs the administrating agency to make rules that implement their intent. Congress can amend these laws to expand, contract, or direct the regulations made by these agencies.
- pylua 3y ago
  Vague laws that take years of law to interpret then passed to an agency that does not have the same context of laws passed 100 years ago. If the system worked and the sec felt this way Coinbase should have never existed . This is proof that it is not working.
  - GartzenDeHaes 3y ago
    There were plenty of scams and scammers 100 years ago. Doing it with a computer doesn't change anything.
  - mrguyorama 3y ago
    There's nothing about a crypto token that make the economics different though. That's the whole point. That's why law from 1930 is relevant. Crypto isn't economic innovation.
mort96 3y ago
I may be confused here. But to my understanding, the role of the executive branch is to enforce laws. In this situation, there exists a law that was passed by Congress. Coinbase is breaking that law. Is it not the executive branch's role to enforce that law?
semiquaver 3y ago
> clear requirements in black and white terms of what is and isn’t acceptable. I’ll give you the benefit of the doubt and assume you have been misled by this frequently made claim. It’s just not true. The requirements have been clearly stated for a long time, they’re just not what people in the crypto space want to hear, so they pretend the guidance and law doesn’t exist. This document dates from 2019 and lays out in detail what constitutes a security wrt cryptocurrency from the SEC’s perspective. They’ve been quite clear about this for a long time. The relevant case law has been settled for 70 years. https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an... The SEC has repeatedly and publicly stated in no uncertain terms, what the definition of a security is and also identified specific coins traded on coinbase that they believe to be securities. Here’s an example from last year from an insider trading case. https://www.sec.gov/litigation/complaints/2022/comp-pr2022-127.pdf https://www.sec.gov/litigation/complaints/2022/comp-pr2022-1... > For example, on November 12, 2021, Ishan learned that Coinbase would soon announce the listing of the crypto asset POWR. As alleged further below, POWR was a crypto asset security > A digital token or crypto asset is a crypto asset security if it meets the definition of a security, which the Securities Act defines to include “investment contract,” i.e., if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others. > Coinbase planned to announce the listing of crypto asset AMP on its platform. As alleged further below, AMP was a crypto asset security. > Coinbase intended to announce on July 14 that the RLY token would be listed on its platform. As alleged further below, RLY was a crypto asset security. Rather than accept those statements and obey the law coinbase chose to ramp up the PR offensive instead. The real issue is that cryptocurrency companies hoped they had found a loophole —they wish the law and SEC guidance weren’t what it is, and they keep dishonestly claiming a lack of clarity exists in the hope that doing so will change things.
- kjs3 3y ago
  I wish I could upvote this a couple of dozen times, because it's really the core of the issue. All this "the SEC won't give us guidance" is theater.
  - 3y ago

by pylua 3y ago

gamblor956 3y ago

The entire point of Congress writing laws and delegating the specific rulemaking to agencies is so that informed experts can make the laws, with input from affected parties and the public, instead of uninformed legislators. And note: Congress has the opportunity to reject rules passed by an agency that it determines conflicts with the intent of the governing law(s).

JohnFen 3y ago

The SEC is not part of the executive branch. It is an independent agency. While it is also not part of the legislative branch, the legislative branch is the one that effectively controls it.

pylua 3y ago
Thanks for the insight. It does feel like the organizations ability to interpret the laws is more related to a political agency than the letter of the law. There should just be a letter of the law , analytical meaning branch of government.
- JohnFen 3y ago
  It's also useful to know that Congress created the SEC in response to the 1929 stock market crash. Their primary purpose is to prevent the conditions that caused that. > There should just be a letter of the law , analytical meaning branch of government. I don't think that's a thing that is possible. You can't write laws to cover every possible case, and writing them to be "self-interpreting" would be an extraordinarily difficult thing. Interpretation will always be required.
  - pylua 3y ago
    That’s why it’s a systemic failure . Years of law study to interpret laws with context long dropped. The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently.
    - anonymouskimmer 3y ago
      It's a systemic failure of analytics, not a systemic failure of the law. > The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently. There are numerous other possible reasons it took this long for the SEC to take action, other than the system being overly complicated or inefficient (lack of workers, bigger fish to fry [prioritization], the evolution of Coinbase into less of a commodities trader and more of a securities trader). Complications and inefficiencies usually require additional time and effort, but additional time and effort is not an absolute indication that something is complicated or inefficient.
      - rtkwe 3y ago
        Yeah for the longest time Coinbase was mainly hosting the relatively old coins that tended to be closer to commodities than securities. While they were doing that it's a very different regulatory environment.
    - JohnFen 3y ago
      > The fact that the sec let Coinbase last this long is proof the system is over complicated and cannot be maintained efficiently. I disagree with this assessment, but reasonable people can hold differing opinions on this.
      - knewter 3y ago
        "you can run a company for nearly a decade while spending a great deal on lawyers talking to the government the whole time and still have no clue if your business is legal"
  - 3y ago
- ikiris 3y ago
  This is never how the law has worked
  - mrguyorama 3y ago
    It's so much worse than that. "Laws should be exhaustively comprehensive" is a completely unworkable system. You cannot predict every possible combination of context and law, and attempting to do so would be literal combinatorics explosion. People who push that kind of system know this, and want the system to be hamstrung by exactly that situation. They want a system that can only outlaw their new, explicitly harmful scheme after an entire game of politics in congress, such that they could prevent something becoming law by encouraging the already bad stonewalling in congress. They want government agencies to be so bound up by poorly written law that they cannot administrate at all.
    - pylua 3y ago
      I just want a system that is predictable , objective and that works quickly . Saying that there are flaws in the current system simply offends the gate keepers of the system.
      - ikiris 3y ago
        I just want a billion dollars and a unicorn. We both have to work in reality.
- pjc50 3y ago
  > There should just be a letter of the law , analytical meaning branch of government. This is called "a court". (There is a particular phrase for "the law is unclear so I'm going to sue the regulator in advance to determine if something is legal", but I've forgotten it. It's linked to judicial review)
semiquaver 3y ago
> The SEC is not part of the executive branch. You are mistaken. The SEC is very much a part of the executive branch. > It is an independent agency So is the CIA. This just is a term of art for a particular type of executive agency distinct from a cabinet department with additional insulation from political control. SEC commissioners are nominated by POTUS and confirmed by the senate, a characteristic unique to the leaders of executive branch departments. https://en.m.wikipedia.org/wiki/Independent_agencies_of_the_United_States_government https://en.m.wikipedia.org/wiki/Independent_agencies_of_the_...
- JohnFen 3y ago
  > The SEC is very much a part of the executive branch. Not according to the government, and they're the horse's mouth on this. > SEC commissioners are nominated by POTUS and confirmed by the senate This is correct, but not really to the point.
  - semiquaver 3y ago
    > Not according to the government, and they're the horse's mouth on this. You seem to be referencing some specific statement that you didn't provide. I'm guessing that you are confused about the phrase "independent agency". Or possibly you're remembering cases like Lucia v. SEC where certain SEC staff were (unsuccessfully) challenged as not conforming with the Article II appointments clause. The insulation of these sort of agencies from direct presidential oversight continues to be a source of debate in conservative legal circles, but where these agencies sit in the constitutional order is not remotely controversial. They're not part of the judiciary and they're not part of Congress so they can only be part of the executive. > The executive branch also includes executive departments, independent agencies, and other boards, commissions, and committees. https://www.usa.gov/branches-of-government https://www.usa.gov/branches-of-government > The SEC is an independent federal agency https://www.sec.gov/strategic-plan/about https://www.sec.gov/strategic-plan/about QED. More to the point, congress lacks the ability under the constitution to create government structures outside the three branches. The language establishing the SEC makes very clear that its structure conforms with how Article II defines the executive branch: > There is hereby established a Securities and Exchange Commission (hereinafter referred to as the ‘Commission’) to be composed of five commissioners to be appointed by the President by and with the advice and consent of the Senate. https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-1885.pdf https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-188... > he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: https://constitution.congress.gov/constitution/article-2/ https://constitution.congress.gov/constitution/article-2/ The SEC is established and appropriated by congress, staffed by people who receive government paychecks, led by presidential appointees, etc etc. I'd be interested to know whether you think it's either - not part of the US government - part of a different branch - part of the US government outside a branch that the constitution specifies

burnte 3y ago

> It is scary to me how much legislating is done by these government bodies inside the (executive ?) branch. Congress explicitly delegated these authorities to these agencies as part of the administrative state overhaul in the beginning of the 20th century. The reason was to help become more responsive, and less beholden to daily politics by putting neutral experts in charge, and by and large it works. Safety and security shouldn't be party politics.

pylua 3y ago
That is good history to know , thank you. It does feel like to me in this case, this is a failure due the government being slow to respond and unable to produce an interpretation of the law consistent with a completely analytical meaning letter of the law, in my opinion.
- deleted 3y ago
  [deleted]
- toast0 3y ago
  Delegate to agencies is a way for government to be less slow. In the case where congress is faster, they can pass new laws with more specifics and less left to the executive branch, but that's often not very fast.
- Hermitian909 3y ago
  > unable to produce an interpretation of the law consistent with a completely analytical meaning letter of the law The legal profession writ large (including legislators) consider this a feature, not a bug. The reason this is the legal profession's opinion essentially three points: 1. You can't write "bug free" laws and regulations 2. Fixing mistakes in laws and regulations is slow 3. The amount of damage someone can do with unintended legal cover can be catastrophic (imagine if I found a legal loophole to take possession of your home!) So this has been chosen as the "least bad" solution. My personal opinion is that the SEC is acting within the spirit of the law which is what we should expect and if congress wanted to change things they should pass a new law.

deleted 3y ago

[deleted]

meepmorp 3y ago

Why? I think it makes sense to delegate rule making to specialized agencies that are specifically staffed for handling the kind of regulation they're meant to apply. I don't doubt that the process could be improved, but insulating decisions about how to protect investors from political interference sounds like a fine idea.

pylua 3y ago
Originally well intentioned , I think we are seeing it break down here. I am not a lawyer, but as a layman I am not convinced by the sec and their interpretation of things. I am inclined to think that they will bow to political pressure and what is expedient for the current legislature instead of looking at things in a completely objective analytical manner.

GartzenDeHaes 3y ago

It's called regulating. For areas that require complex administration, Congress passes laws that express its intent and directs the administrating agency to make rules that implement their intent. Congress can amend these laws to expand, contract, or direct the regulations made by these agencies.

pylua 3y ago
Vague laws that take years of law to interpret then passed to an agency that does not have the same context of laws passed 100 years ago. If the system worked and the sec felt this way Coinbase should have never existed . This is proof that it is not working.
- GartzenDeHaes 3y ago
  There were plenty of scams and scammers 100 years ago. Doing it with a computer doesn't change anything.
- mrguyorama 3y ago
  There's nothing about a crypto token that make the economics different though. That's the whole point. That's why law from 1930 is relevant. Crypto isn't economic innovation.

mort96 3y ago

I may be confused here. But to my understanding, the role of the executive branch is to enforce laws. In this situation, there exists a law that was passed by Congress. Coinbase is breaking that law. Is it not the executive branch's role to enforce that law?

semiquaver 3y ago

> clear requirements in black and white terms of what is and isn’t acceptable. I’ll give you the benefit of the doubt and assume you have been misled by this frequently made claim. It’s just not true. The requirements have been clearly stated for a long time, they’re just not what people in the crypto space want to hear, so they pretend the guidance and law doesn’t exist. This document dates from 2019 and lays out in detail what constitutes a security wrt cryptocurrency from the SEC’s perspective. They’ve been quite clear about this for a long time. The relevant case law has been settled for 70 years. https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an... The SEC has repeatedly and publicly stated in no uncertain terms, what the definition of a security is and also identified specific coins traded on coinbase that they believe to be securities. Here’s an example from last year from an insider trading case. https://www.sec.gov/litigation/complaints/2022/comp-pr2022-127.pdf https://www.sec.gov/litigation/complaints/2022/comp-pr2022-1... > For example, on November 12, 2021, Ishan learned that Coinbase would soon announce the listing of the crypto asset POWR. As alleged further below, POWR was a crypto asset security > A digital token or crypto asset is a crypto asset security if it meets the definition of a security, which the Securities Act defines to include “investment contract,” i.e., if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others. > Coinbase planned to announce the listing of crypto asset AMP on its platform. As alleged further below, AMP was a crypto asset security. > Coinbase intended to announce on July 14 that the RLY token would be listed on its platform. As alleged further below, RLY was a crypto asset security. Rather than accept those statements and obey the law coinbase chose to ramp up the PR offensive instead. The real issue is that cryptocurrency companies hoped they had found a loophole —they wish the law and SEC guidance weren’t what it is, and they keep dishonestly claiming a lack of clarity exists in the hope that doing so will change things.

kjs3 3y ago
I wish I could upvote this a couple of dozen times, because it's really the core of the issue. All this "the SEC won't give us guidance" is theater.
- 3y ago