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The issue is that if most coins are securities, then that means in order to operate, Coinbase has to become a registered securities exchange in order for it to
by habitue 3y ago
The issue is that if most coins are securities, then that means in order to operate, Coinbase has to become a registered securities exchange in order for it to do what it does. The regulations for securities exchanges are onerous, but also many of them aren't possible to comply with for crypto because of how it works.
So the SEC is saying "You are an unregistered securities exchange"
And coinbase is saying "Please give some kind of route by which we could possibly be compliant given the nature of cryptocurrencies"
And the SEC is saying "We have no obligation to give you such a route, just as we have no obligation to provide such a route for criminal black markets"
Who you interpret as being unreasonable here depends on if you think crypto is closer to the black market example, or if it's closer to being like regular securities but with a few tweaks to the rules to make it work.
- triceratops 3y ago> aren't possible to comply with for crypto because of how it works Why is this? Thanks for the other detail you provided.
- nickff 3y agoThe SEC expects the disclosure of various types of information which are impossible to create/state in the case of a decentralized security/commodity/currency like crypto.
- lokar 3y agoI think that is mostly about offering a new security, not acting as a broker.
- Nursie 3y agoSure, but presumably registered brokers can only deal in registered securities?
- H8crilA 3y agoNo one is allowed to deal in unregistered securities.
- Nursie 3y agoWell true!
- JumpCrisscross 3y ago> No one is allowed to deal in unregistered securities All of VC happens with unregistered securities.
- H8crilA 3y agoYou got me :) Accredited investors make an exception.
- habitue 3y agoYeah, I'm not an expert here, but I believe it might be the reporting rules. This is the law that governs it, though it delegates a lot to the SEC and the particular requirements could be in the rules that the SEC puts out itself https://www.sec.gov/about/about-securities-laws#secexact1934 https://www.sec.gov/about/about-securities-laws#secexact1934
- cmcaleer 3y agoHere is only one such brutal squeeze: registered security brokers must maintain control of all securities [0]. In practice, this means brokers use custodians[1]. Regulators have been working on making holding crypto harder for custodians [2]. [0]: Securities Exchange Act of 1934, Rule 15c3-3 [1]: https://www.sec.gov/news/public-statement/joint-staff-statement-broker-dealer-custody-digital-asset-securities#_ftnref14 https://www.sec.gov/news/public-statement/joint-staff-statem... [2]: https://www.risk.net/investing/7956492/crypto-custody-faces-regulatory-death-roll https://www.risk.net/investing/7956492/crypto-custody-faces-...
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- adsfgiodsnrio 3y agoAnd the SEC is also saying "you don't get to ignore the rules just because you don't like them". Whatever the rules should be, it's clear Coinbase is on the wrong side of what they are now.