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I stopped reading the article when it started comparing cryptocurrency exchanges to the business of selling heroin. No matter your opinion on the issue, that's

I stopped reading the article when it started comparing cryptocurrency exchanges to the business of selling heroin. No matter your opinion on the issue, that's just alarmist nonsense. I agree that it's reasonable to apply existing securities laws to cryptocurrency, and I agree that "but they let us go public" is a bad argument, but Gensler's SEC has also been intentionally obtuse about how those securities laws should apply to cryptocurrency. It's not a company's job to go to court over ambiguous regulations, it's the SEC's job to actually research what they are regulating and put out a comprehensive framework for how they make their regulatory determinations, because the Howey Test is so subjective that it's leaving companies guessing on the cutting edge of public programmable assets. Look at the UK's upcoming crypto bills for an example of commonsense regulation that protects consumers and is in everyone's best interest. The contrast between it and the US's approach is striking.

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ceejayoz 3y ago
> Gensler's SEC has also been intentionally obtuse about how those securities laws should apply to cryptocurrency. No. Coinbase’s complaint is that the SEC has been clear, but that they don’t like the clear answer. https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpndWQm/78f95afa4f0ebaaefb303e1a4f172d03/Coinbase_petition_for_SEC_rulemaking.pdf https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpn... > Rather than initiate new rulemaking, Chair Gensler has repeatedly stated through speeches and testimony that the vast majority of digital tokens are securities, and has asked issuers and exchanges that offer, sell, and trade them to come in and register. We disagree that the majority of digital assets are securities. For those digital assets that are securities, registration under the current rules is, for many market participants, either not possible or not economically viable given the associated and unnecessary compliance burdens.
- nickff 3y ago
  Well, the SEC told everyone to register, but didn't actually tell them how they could. From what has been made public, it seems like the SEC strung Coinbase along for about two years, then said that their application was inadequate (without stating any criteria).
  - ceejayoz 3y ago
    I promise you, a procedure to become a registered securities exchange exists (demonstrably, as registered securities exchanges exist widely) and Coinbase has enough people and money to find it. (I’m not the expert to hire for this, but https://www.investopedia.com/terms/s/sec-form-8-a.asp https://www.investopedia.com/terms/s/sec-form-8-a.asp looks promising.)
    - everfree 3y ago
      The question is whether a procedure to become a registered exchange of crypto securities exists, and that promise seems to be a lot more dubious. Coinbase doesn't care if it can offer its customers shares of AAPL or TSLA. They care whether they can start brokering the types of securities that are found on public ledgers.
      - ceejayoz 3y ago
        The process is the same; securities are securities, crypto or otherwise. They don’t like that process, so they’re asking for a special one just for them. The SEC just said no.
        everfree 3y ago
        My understanding is that the corporate framework that securities licenses require is literally impossible to satisfy when trading current public blockchain assets. As in, to trade crypto as a security on your exchange, you would need to walk up to every dev team of every crypto you wanted to trade and kindly ask them to KYC/AML every single user of the blockchain so that you could be in compliance. In practice this just means it's de-facto impossible for any centralized exchange to carry crypto securities.
- everfree 3y ago
  "Vast majority" isn't clarity. "Here is how we interpret the Howey test in relation to cryptocurrencies, and here is a ten step process for how we determine whether each particular cryptocurrency is a security" is clarity. Can you imagine if, back when the SEC first formed in 1934, they put out a press release saying "the vast majority of stocks are securities and need to come register, but not The Bank Of New York, their stock is not a security". Imagine that the SEC didn't elaborate on why they didn't consider that one stock to not be a security, and they didn't elaborate on the reasoning process that led them to that decision. That's what's happening right now, but with cryptocurrencies. The 2023 SEC is very different from the 1934 SEC.
  - ceejayoz 3y ago
    > Can you imagine if, back when the SEC first formed in 1934, they put out a press release saying "the vast majority of stocks are securities and need to come register, but not The Bank Of New York, their stock is not a security". This is basically what happened. Mortgage loans and certificates of deposit, for example, aren’t securities by judicial clarification, not definition in the law. (See: Marine Bank v. Weaver) The Howey test isn’t that complicated, and Coinbase Earn ticked all four boxes.
    - everfree 3y ago
      (Removed, I had confused Coinbase Earn with Coinbase Lend.)
      - ceejayoz 3y ago
        Coinbase is being sued specifically for Earn. How is it not relevant?
        everfree 3y ago
        Sorry, I confused Coinbase Earn (staking services) with Coinbase Lend, which was a previous loan product of theirs that was targeted and shut down by the SEC in 2021. Still, Earn may well be a security, but that's a product that will fit very cleanly into current securities law when it reaches the court, and it concerns a company's product rather than an entire new asset class, so it's not so egregious that the SEC doesn't provide clarity on it. The big problem is with their lack of clarity on the cryptocurrencies themselves.
- mthoms 3y ago
  SEC: "The vast majority of digital tokens are securities!" Anyone: "Okay then, is [insert ANY crypto here other than BTC] a security?" SEC: "We decline to answer, or give a hint, but the vast majority of digital tokens are securities!" I really don't care what happens, or how it got to this point, but this state of affairs is absolutely and unequivocally ridiculous and absurd. https://www.youtube.com/watch?v=VhA1dZXeao0 https://www.youtube.com/watch?v=VhA1dZXeao0
  - ceejayoz 3y ago
    Coinbase: “We list dozens of coins, including all the big ones. Maybe they’re all in the tiny minority?” SEC: “No. Stop playing games. You have to register.”
    - everfree 3y ago
      > Maybe they’re all in the tiny minority? Coinbase lists less than 300 of the tens of thousands of cryptocurrencies out there - indeed a tiny minority of them, and they do have some kind of legal review process, so while that claim may well be untrue, it's not absurd on its face.
      - ceejayoz 3y ago
        And you think all the SEC’s “hint hint, time to register!” for years was understood by Coinbase as “you guys are fine, we’re not talking about you”?
        everfree 3y ago
        I don't agree that a regulatory agency saying "hint hint time to register" for years on end is an effective way to regulate. The first step of effective regulation is to state exactly what is out of compliance, which they finally did only a few days ago by listing which particular coins are the ones that put Coinbase out of compliance. The second step is to explain why those particular coins cause them to be non-compliant and why other coins (Bitcoin) are exempt, in such a way that Coinbase has rules they can apply to determine whether a particular new coin is compliant or not. That clarity is the part we're still waiting for.
- cypress66 3y ago
  A congressman asked gensler face to face if ethereum is a security and gensler declined to answer. So no, the SEC has not been clear.
  - 8note 3y ago
    For what definition of Ethereum? The one with staking?
    - mthoms 3y ago
      Doesn't matter. He refused to give any indication either way. https://www.youtube.com/watch?v=VhA1dZXeao0 https://www.youtube.com/watch?v=VhA1dZXeao0
      - growse 3y ago
        Why are people so desperate to seek legal advice from law enforcement?
        mmahut 3y ago
        It happens when the law is not clear and the law enforcement has to take a stand on it to enforce it.
        growse 3y ago
        There's lots of laws that aren't "clear", but people don't phone the police up and ask them what they're going to do. They talk to a lawyer and get advice.
        hef19898 3y ago
        The opinion only shows how little, read none what so ever, experience some people have in figuring out compliant business processes. Yet another rude awakening for the, let me be blunt, cluelessly naive and in some cases outright criminal tech crowd that seems to flok in huge numbers around crypto in general. That attitude started aroind the time Uber got big. Maybe even with AirBnB. In a sense, crypto is exactly the tech eco system we deserve. Good that there is finally some enforcement of rules that apply tp basically everyone else.
boc 3y ago
Yeah agreed; at least heroin sales don’t directly fund nuclear weapons programs in North Korea, enable gigantic ransomware attacks on innocent civilians, or generate massive carbon emissions+e-waste in order to continue existing.
- ZitchDog 3y ago
  Heroin sales fund all sorts of terrible things.
- civilitty 3y ago
  > at least heroin sales don’t directly fund nuclear weapons programs in North Korea Uhhh… about that… https://en.m.wikipedia.org/wiki/Illicit_activities_of_North_Korea#Drug_trade https://en.m.wikipedia.org/wiki/Illicit_activities_of_North_...
- deleted 3y ago
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crazygringo 3y ago
I was taken aback at first as well but then I realized I was misunderstanding the point. The article isn't saying crypto is harmful like heroin at all -- it's just using heroin as an arbitrary example of something illegal. It's clear to everyone that selling heroin is illegal, in a way that e.g. insider trading perhaps isn't. So it's not alarmist nonsense, it's just a vivid analogy.
- Ensorceled 3y ago
  > So it's not alarmist nonsense, it's just a vivid analogy. And, given this discussion, it vividly illustrates the point. The number of people who literally can't entertain even the vague possibility that Coinbase might be doing something illegal (as in illegal like heroin) and thus can ONLY interpret the analogy as Coinbase is bad (as in bad like heroin).
jcranmer 3y ago
Then you stopped reading right before you got to the part of the article that really highlights the central lie of Coinbase: > Coinbase, as with most crypto platforms, has decided it wants to simultaneously operate as an exchange, broker-dealer, and clearing agency. These three functions — bringing together securities orders for buyers and sellers, trading securities on behalf of others, and intermediating trades — are typically required to be separate due to conflicts of interest that emerge when one entity controls all of them. Coinbase would need to fundamentally change its business model in order to separate these functions, and thus far seems unwilling to do so. Coinbase's real complaint is that it wants regulation to change so that Coinbase is in compliance, rather than Coinbase changing so that it is in compliance. The lack of "clarity" isn't that it's unclear whether or not Coinbase is compliant, but that it's unclear how Coinbase can become compliant without changing foundational aspects of how it's structured. To honestly argue why regulation should change, you would need to explain why a currently-noncompliant policy should be compliant. In other words, why does an apparent conflict of interest in "traditional" finance not actually exist for the crypto industry (or at least why we should be okay with it existing).
- jbverschoor 3y ago
  No that’s not the case. Coinbase wants CLARITY. The SEC does not give any guidance, response, or anything related to this issue. At the same time it’s a laat struggle between the SEC and the CFTC. The SEC messed up for years but not protecting consumers against fraud. Now they’re trying to prove their reason existence / gov funding. In one of the (I think MIT lectures 2018) videos, btw? Gensler stated that [probably all crypto except Bitcoin, but including Ether, are moody moody most likely securities]. However, the SEC fails to to provide any guidance and doesn’t have any official position. The reason is that if they make a small mistake or missed sleeping, they might’ve given a free pass. Edit - MIT open courseware 2018
  - jcranmer 3y ago
    > Coinbase wants CLARITY. The SEC does not give any guidance, response, or anything related to this issue. Coinbase's PR machine wants you to believe they want clarity. Their actual legal documents instead indicate that they're aware that they're probably violating regulations. Take their petition to the SEC for example--it starts by asking not "are cryptocurrencies securities under the Howey test" but "should cryptocurrencies be considered securities". For a document that's supposedly Coinbase's grand we're-going-to-make-the-SEC-clarify-regulation strategy, it's very long on asking for changes to the regulatory regime and very short on asking for clarifications on the application of regulation to cryptocurrencies. Which strongly suggests that they in fact know how the regulations apply to cryptocurrencies, they just don't like it.
flangola7 3y ago
The heroin comparison is terrible. Heroin is actually good for something.
ajkjk 3y ago
Never understood posters who will claim they stopped reading an article as if that bolsters their point somehow. It, like, heavily undermines you... You don't even know what the rest of the article says, or if it qualifies or develops that idea. It doesn't score you any points at all.
bb88 3y ago
TIL to stop reading the top voted comment if it appears to be outrage and just read the article for myself instead. Just FYI here's the quote in context. She's posing a hypothetical here and not actually comparing Coinbase to a heroin dealer. This is very much in the style of Matt Levine at Bloomberg, btw. If a company went to the FDA and said “hello, we’d like to start selling heroin to the public for recreational use”, and the FDA said “no, you can’t do that”, the company could loudly complain that the FDA was not giving them a path to compliance. People would probably laugh at them. The company could decide the FDA was wrong, demand that they and/or Congress write new rules to allow for this innovative new heroin business that would bolster American capital markets, and decide that in the meantime they were going to sell heroin anyway. People might not be terribly sympathetic when it didn’t end well for them.
- remarkEon 3y ago
  Heroin is illegal, though? Still don't understand how the analogy applies to cryptocurrency. >The company could decide the FDA was wrong... But why would they decide this? Since Heroin is, again, illegal.
  - khuey 3y ago
    Unregistered securities offerings are also illegal.
    - shkkmo 3y ago
      No, selling unregistered securities to people who aren't accredited investors is illegal.
  - bb88 3y ago
    Would it have helped if she prefaced it with, "Here's a hypothetical about a company wanting to do illegal things..."? The style of argument is akin to Reductio ad Absurdum, taking an absurd position to it's logical conclusion. The "absurd position" here is a company wanting to sell heroin on the open market, and she takes that to the logical conclusion. She could have said "meth", "nuclear weapons", or "dead infants", or whatever instead of heroin to make her point. If you read that as a comparison to Coinbase being a heroin dealer than you're the one editorializing her effort. Here's another reductio ad absurdum argument: Let's assume the earth is flat. Either the surface of the earth must go to infinity or people must be walking off the edge of it somewhere.
Animats 3y ago
If you actually read the UK crypto bill[1] rather than what Coinbase says about it, you find that it's quite restrictive. "The government’s view is that cryptoassets and the activities underpinning their use should follow the standards expected of other similar financial services activities, commensurate to the risks they pose, while harnessing potential benefits of the technology behind them." ... "HM Treasury proposes to capture cryptoasset activities provided in or to the United Kingdom." ... "For cryptoasset issuance and disclosures, the government proposes to follow a similar approach to that for securities and apply regulation when the asset is admitted to trading on a regulated cryptoasset trading venue and therefore becomes exchangeable for fiat currency, or subject to a public offer." ... "The government considers public offers of cryptoassets – including ICOs where a fund raiser creates new tokens and sells them to investors – may meet the definition of a security offering" ... "In practice many cryptoasset exchanges play a central role in the cryptoasset ecosystem – conducting many more activities than solely operating a trading venue (e.g. custody, post-trade activities, proprietary trading, lending and admission of cryptoassets to a platform). Some venues may also issue their own native cryptoasset or act as intermediaries for the distribution of stablecoins. This is sometimes referred to as “vertical integration” or “agglomeration”. Accordingly, the government expects, as a minimum, that these entities follow rules covering all of these activities – not just those relevant for operating a trading venue. To illustrate, a major cryptoasset exchange would be required to comply with the issuance and disclosure rules for assets that they admit for trading (Chapter 5), the rules relating to the operation of a trading venue (Chapter 6) and certain surveillance and reporting requirements to detect and prevent market abuse (Chapter 9). Additionally, and depending on the sorts of activities they undertake, they would also need to comply with rules for market intermediaries (Chapter 7), cryptoasset custody rules for cryptoassets which they safeguard or safeguard and administer (Chapter 8) and rules for operating a cryptoasset lending platform (Chapter 10)." All this is close to what the SEC requires. If it works like a security, a broker, or an exchange, it's regulated like a security, a broker, or an exchange. This is probably more "clarity" than Coinbase wants. [1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1133404/TR_Privacy_edits_Future_financial_services_regulatory_regime_for_cryptoassets_vP.pdf https://assets.publishing.service.gov.uk/government/uploads/...
- 3y ago
Demmme 3y ago
All upcoming regulations are dimentrical. Crypto was advertised as decentralized and unregulated. Most arguments I had with cryptobros were some sudo arguments about this stuff instead of just omitting that it's all about speculations.
bushbaba 3y ago
Idk many crypto firms did assist in the sale of heroin. Heck some even assisted money being transferred to known terrorists. With those funds used to kill civilians globally.

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ceejayoz 3y ago

> Gensler's SEC has also been intentionally obtuse about how those securities laws should apply to cryptocurrency. No. Coinbase’s complaint is that the SEC has been clear, but that they don’t like the clear answer. https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpndWQm/78f95afa4f0ebaaefb303e1a4f172d03/Coinbase_petition_for_SEC_rulemaking.pdf https://assets.ctfassets.net/c5bd0wqjc7v0/5NRidtW8lvwVEfSHpn... > Rather than initiate new rulemaking, Chair Gensler has repeatedly stated through speeches and testimony that the vast majority of digital tokens are securities, and has asked issuers and exchanges that offer, sell, and trade them to come in and register. We disagree that the majority of digital assets are securities. For those digital assets that are securities, registration under the current rules is, for many market participants, either not possible or not economically viable given the associated and unnecessary compliance burdens.

nickff 3y ago
Well, the SEC told everyone to register, but didn't actually tell them how they could. From what has been made public, it seems like the SEC strung Coinbase along for about two years, then said that their application was inadequate (without stating any criteria).
- ceejayoz 3y ago
  I promise you, a procedure to become a registered securities exchange exists (demonstrably, as registered securities exchanges exist widely) and Coinbase has enough people and money to find it. (I’m not the expert to hire for this, but https://www.investopedia.com/terms/s/sec-form-8-a.asp https://www.investopedia.com/terms/s/sec-form-8-a.asp looks promising.)
  - everfree 3y ago
    The question is whether a procedure to become a registered exchange of crypto securities exists, and that promise seems to be a lot more dubious. Coinbase doesn't care if it can offer its customers shares of AAPL or TSLA. They care whether they can start brokering the types of securities that are found on public ledgers.
    - ceejayoz 3y ago
      The process is the same; securities are securities, crypto or otherwise. They don’t like that process, so they’re asking for a special one just for them. The SEC just said no.
      - everfree 3y ago
        My understanding is that the corporate framework that securities licenses require is literally impossible to satisfy when trading current public blockchain assets. As in, to trade crypto as a security on your exchange, you would need to walk up to every dev team of every crypto you wanted to trade and kindly ask them to KYC/AML every single user of the blockchain so that you could be in compliance. In practice this just means it's de-facto impossible for any centralized exchange to carry crypto securities.
everfree 3y ago
"Vast majority" isn't clarity. "Here is how we interpret the Howey test in relation to cryptocurrencies, and here is a ten step process for how we determine whether each particular cryptocurrency is a security" is clarity. Can you imagine if, back when the SEC first formed in 1934, they put out a press release saying "the vast majority of stocks are securities and need to come register, but not The Bank Of New York, their stock is not a security". Imagine that the SEC didn't elaborate on why they didn't consider that one stock to not be a security, and they didn't elaborate on the reasoning process that led them to that decision. That's what's happening right now, but with cryptocurrencies. The 2023 SEC is very different from the 1934 SEC.
- ceejayoz 3y ago
  > Can you imagine if, back when the SEC first formed in 1934, they put out a press release saying "the vast majority of stocks are securities and need to come register, but not The Bank Of New York, their stock is not a security". This is basically what happened. Mortgage loans and certificates of deposit, for example, aren’t securities by judicial clarification, not definition in the law. (See: Marine Bank v. Weaver) The Howey test isn’t that complicated, and Coinbase Earn ticked all four boxes.
  - everfree 3y ago
    (Removed, I had confused Coinbase Earn with Coinbase Lend.)
    - ceejayoz 3y ago
      Coinbase is being sued specifically for Earn. How is it not relevant?
      - everfree 3y ago
        Sorry, I confused Coinbase Earn (staking services) with Coinbase Lend, which was a previous loan product of theirs that was targeted and shut down by the SEC in 2021. Still, Earn may well be a security, but that's a product that will fit very cleanly into current securities law when it reaches the court, and it concerns a company's product rather than an entire new asset class, so it's not so egregious that the SEC doesn't provide clarity on it. The big problem is with their lack of clarity on the cryptocurrencies themselves.
mthoms 3y ago
SEC: "The vast majority of digital tokens are securities!" Anyone: "Okay then, is [insert ANY crypto here other than BTC] a security?" SEC: "We decline to answer, or give a hint, but the vast majority of digital tokens are securities!" I really don't care what happens, or how it got to this point, but this state of affairs is absolutely and unequivocally ridiculous and absurd. https://www.youtube.com/watch?v=VhA1dZXeao0 https://www.youtube.com/watch?v=VhA1dZXeao0
- ceejayoz 3y ago
  Coinbase: “We list dozens of coins, including all the big ones. Maybe they’re all in the tiny minority?” SEC: “No. Stop playing games. You have to register.”
  - everfree 3y ago
    > Maybe they’re all in the tiny minority? Coinbase lists less than 300 of the tens of thousands of cryptocurrencies out there - indeed a tiny minority of them, and they do have some kind of legal review process, so while that claim may well be untrue, it's not absurd on its face.
    - ceejayoz 3y ago
      And you think all the SEC’s “hint hint, time to register!” for years was understood by Coinbase as “you guys are fine, we’re not talking about you”?
      - everfree 3y ago
        I don't agree that a regulatory agency saying "hint hint time to register" for years on end is an effective way to regulate. The first step of effective regulation is to state exactly what is out of compliance, which they finally did only a few days ago by listing which particular coins are the ones that put Coinbase out of compliance. The second step is to explain why those particular coins cause them to be non-compliant and why other coins (Bitcoin) are exempt, in such a way that Coinbase has rules they can apply to determine whether a particular new coin is compliant or not. That clarity is the part we're still waiting for.
cypress66 3y ago
A congressman asked gensler face to face if ethereum is a security and gensler declined to answer. So no, the SEC has not been clear.
- 8note 3y ago
  For what definition of Ethereum? The one with staking?
  - mthoms 3y ago
    Doesn't matter. He refused to give any indication either way. https://www.youtube.com/watch?v=VhA1dZXeao0 https://www.youtube.com/watch?v=VhA1dZXeao0
    - growse 3y ago
      Why are people so desperate to seek legal advice from law enforcement?
      - mmahut 3y ago
        It happens when the law is not clear and the law enforcement has to take a stand on it to enforce it.
        growse 3y ago
        There's lots of laws that aren't "clear", but people don't phone the police up and ask them what they're going to do. They talk to a lawyer and get advice.
        hef19898 3y ago
        The opinion only shows how little, read none what so ever, experience some people have in figuring out compliant business processes. Yet another rude awakening for the, let me be blunt, cluelessly naive and in some cases outright criminal tech crowd that seems to flok in huge numbers around crypto in general. That attitude started aroind the time Uber got big. Maybe even with AirBnB. In a sense, crypto is exactly the tech eco system we deserve. Good that there is finally some enforcement of rules that apply tp basically everyone else.

boc 3y ago

Yeah agreed; at least heroin sales don’t directly fund nuclear weapons programs in North Korea, enable gigantic ransomware attacks on innocent civilians, or generate massive carbon emissions+e-waste in order to continue existing.

ZitchDog 3y ago
Heroin sales fund all sorts of terrible things.
civilitty 3y ago
> at least heroin sales don’t directly fund nuclear weapons programs in North Korea Uhhh… about that… https://en.m.wikipedia.org/wiki/Illicit_activities_of_North_Korea#Drug_trade https://en.m.wikipedia.org/wiki/Illicit_activities_of_North_...
deleted 3y ago
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crazygringo 3y ago

I was taken aback at first as well but then I realized I was misunderstanding the point. The article isn't saying crypto is harmful like heroin at all -- it's just using heroin as an arbitrary example of something illegal. It's clear to everyone that selling heroin is illegal, in a way that e.g. insider trading perhaps isn't. So it's not alarmist nonsense, it's just a vivid analogy.

Ensorceled 3y ago
> So it's not alarmist nonsense, it's just a vivid analogy. And, given this discussion, it vividly illustrates the point. The number of people who literally can't entertain even the vague possibility that Coinbase might be doing something illegal (as in illegal like heroin) and thus can ONLY interpret the analogy as Coinbase is bad (as in bad like heroin).

jcranmer 3y ago

Then you stopped reading right before you got to the part of the article that really highlights the central lie of Coinbase: > Coinbase, as with most crypto platforms, has decided it wants to simultaneously operate as an exchange, broker-dealer, and clearing agency. These three functions — bringing together securities orders for buyers and sellers, trading securities on behalf of others, and intermediating trades — are typically required to be separate due to conflicts of interest that emerge when one entity controls all of them. Coinbase would need to fundamentally change its business model in order to separate these functions, and thus far seems unwilling to do so. Coinbase's real complaint is that it wants regulation to change so that Coinbase is in compliance, rather than Coinbase changing so that it is in compliance. The lack of "clarity" isn't that it's unclear whether or not Coinbase is compliant, but that it's unclear how Coinbase can become compliant without changing foundational aspects of how it's structured. To honestly argue why regulation should change, you would need to explain why a currently-noncompliant policy should be compliant. In other words, why does an apparent conflict of interest in "traditional" finance not actually exist for the crypto industry (or at least why we should be okay with it existing).

jbverschoor 3y ago
No that’s not the case. Coinbase wants CLARITY. The SEC does not give any guidance, response, or anything related to this issue. At the same time it’s a laat struggle between the SEC and the CFTC. The SEC messed up for years but not protecting consumers against fraud. Now they’re trying to prove their reason existence / gov funding. In one of the (I think MIT lectures 2018) videos, btw? Gensler stated that [probably all crypto except Bitcoin, but including Ether, are moody moody most likely securities]. However, the SEC fails to to provide any guidance and doesn’t have any official position. The reason is that if they make a small mistake or missed sleeping, they might’ve given a free pass. Edit - MIT open courseware 2018
- jcranmer 3y ago
  > Coinbase wants CLARITY. The SEC does not give any guidance, response, or anything related to this issue. Coinbase's PR machine wants you to believe they want clarity. Their actual legal documents instead indicate that they're aware that they're probably violating regulations. Take their petition to the SEC for example--it starts by asking not "are cryptocurrencies securities under the Howey test" but "should cryptocurrencies be considered securities". For a document that's supposedly Coinbase's grand we're-going-to-make-the-SEC-clarify-regulation strategy, it's very long on asking for changes to the regulatory regime and very short on asking for clarifications on the application of regulation to cryptocurrencies. Which strongly suggests that they in fact know how the regulations apply to cryptocurrencies, they just don't like it.

flangola7 3y ago

The heroin comparison is terrible. Heroin is actually good for something.

ajkjk 3y ago

Never understood posters who will claim they stopped reading an article as if that bolsters their point somehow. It, like, heavily undermines you... You don't even know what the rest of the article says, or if it qualifies or develops that idea. It doesn't score you any points at all.

bb88 3y ago

TIL to stop reading the top voted comment if it appears to be outrage and just read the article for myself instead. Just FYI here's the quote in context. She's posing a hypothetical here and not actually comparing Coinbase to a heroin dealer. This is very much in the style of Matt Levine at Bloomberg, btw. If a company went to the FDA and said “hello, we’d like to start selling heroin to the public for recreational use”, and the FDA said “no, you can’t do that”, the company could loudly complain that the FDA was not giving them a path to compliance. People would probably laugh at them. The company could decide the FDA was wrong, demand that they and/or Congress write new rules to allow for this innovative new heroin business that would bolster American capital markets, and decide that in the meantime they were going to sell heroin anyway. People might not be terribly sympathetic when it didn’t end well for them.

remarkEon 3y ago
Heroin is illegal, though? Still don't understand how the analogy applies to cryptocurrency. >The company could decide the FDA was wrong... But why would they decide this? Since Heroin is, again, illegal.
- khuey 3y ago
  Unregistered securities offerings are also illegal.
  - shkkmo 3y ago
    No, selling unregistered securities to people who aren't accredited investors is illegal.
- bb88 3y ago
  Would it have helped if she prefaced it with, "Here's a hypothetical about a company wanting to do illegal things..."? The style of argument is akin to Reductio ad Absurdum, taking an absurd position to it's logical conclusion. The "absurd position" here is a company wanting to sell heroin on the open market, and she takes that to the logical conclusion. She could have said "meth", "nuclear weapons", or "dead infants", or whatever instead of heroin to make her point. If you read that as a comparison to Coinbase being a heroin dealer than you're the one editorializing her effort. Here's another reductio ad absurdum argument: Let's assume the earth is flat. Either the surface of the earth must go to infinity or people must be walking off the edge of it somewhere.

Animats 3y ago

If you actually read the UK crypto bill[1] rather than what Coinbase says about it, you find that it's quite restrictive. "The government’s view is that cryptoassets and the activities underpinning their use should follow the standards expected of other similar financial services activities, commensurate to the risks they pose, while harnessing potential benefits of the technology behind them." ... "HM Treasury proposes to capture cryptoasset activities provided in or to the United Kingdom." ... "For cryptoasset issuance and disclosures, the government proposes to follow a similar approach to that for securities and apply regulation when the asset is admitted to trading on a regulated cryptoasset trading venue and therefore becomes exchangeable for fiat currency, or subject to a public offer." ... "The government considers public offers of cryptoassets – including ICOs where a fund raiser creates new tokens and sells them to investors – may meet the definition of a security offering" ... "In practice many cryptoasset exchanges play a central role in the cryptoasset ecosystem – conducting many more activities than solely operating a trading venue (e.g. custody, post-trade activities, proprietary trading, lending and admission of cryptoassets to a platform). Some venues may also issue their own native cryptoasset or act as intermediaries for the distribution of stablecoins. This is sometimes referred to as “vertical integration” or “agglomeration”. Accordingly, the government expects, as a minimum, that these entities follow rules covering all of these activities – not just those relevant for operating a trading venue. To illustrate, a major cryptoasset exchange would be required to comply with the issuance and disclosure rules for assets that they admit for trading (Chapter 5), the rules relating to the operation of a trading venue (Chapter 6) and certain surveillance and reporting requirements to detect and prevent market abuse (Chapter 9). Additionally, and depending on the sorts of activities they undertake, they would also need to comply with rules for market intermediaries (Chapter 7), cryptoasset custody rules for cryptoassets which they safeguard or safeguard and administer (Chapter 8) and rules for operating a cryptoasset lending platform (Chapter 10)." All this is close to what the SEC requires. If it works like a security, a broker, or an exchange, it's regulated like a security, a broker, or an exchange. This is probably more "clarity" than Coinbase wants. [1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1133404/TR_Privacy_edits_Future_financial_services_regulatory_regime_for_cryptoassets_vP.pdf https://assets.publishing.service.gov.uk/government/uploads/...

3y ago

Demmme 3y ago

All upcoming regulations are dimentrical. Crypto was advertised as decentralized and unregulated. Most arguments I had with cryptobros were some sudo arguments about this stuff instead of just omitting that it's all about speculations.

bushbaba 3y ago

Idk many crypto firms did assist in the sale of heroin. Heck some even assisted money being transferred to known terrorists. With those funds used to kill civilians globally.