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I suspect that Gensler was obfuscating intentionally when asked about cryptocurrency. Modern regulators seem to prefer retrospective punishment over prospective

by nickff 3y ago

I suspect that Gensler was obfuscating intentionally when asked about cryptocurrency. Modern regulators seem to prefer retrospective punishment over prospective advice and regulation.

pseudo0 3y ago
It seems like a massive regulatory failure to let Coinbase IPO if there are the sort of glaring issues they claim. Coinbase has a market cap of around $10 billion, and is owned by retail investors as part of standard index funds. If it goes to zero tomorrow because of the SEC, that is billions of dollars in losses that could have been avoided by more responsible regulatory behavior. Meanwhile insiders will have cashed in through salary, stock sales, etc.
- shagie 3y ago
  Here is Coinbase's S1 - https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/699359de-d974-4ad9-b7f6-5031f2f432d3.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/699359d... And the S1A https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/c9475761-bae4-4556-b8f3-b6d74e47b5f0.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/c947576... In particular: > Bitcoin sparked a revolution by proving the ability to create digital scarcity: a unique and finite digital asset whose ownership could be proven with certainty. This innovation laid the foundation for an open financial system. Today, all forms of value – from those natively created online such as in-game digital goods to traditional securities like equities and bonds – can be represented digitally, as crypto assets. Like the bits of data that power the internet, these crypto assets can be dynamically transmitted, stored, and programmed to serve the needs of an increasingly digital and globally interconnected economy. > Today, we enable customers around the world to store their savings in a wide range of crypto assets, including Bitcoin and USD Coin, and to instantly transfer value globally with the tap of a finger on a smartphone. We provide companies with new ways to transact, incentivize, and reward their users, from offering compounding rewards on savings that pay out by the second to compensating users for virtually completing tasks through global micropayments. The claim is that they're selling assets and traditional securities that are represented digitally. And they acknowledge the risks of future regulation: > • We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition. > ... > • A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, and our business, operating results, and financial condition may be adversely affected. The 'i's are dotted and the 't's are crossed. Is the SEC to evaluate those future possibilities that the assets they claim (in addition to Bitcoin) may be considered securities? Coinbase said its a risk and, well, yep - it is.
- rodgerd 3y ago
  > It seems like a massive regulatory failure to let Coinbase IPO if there are the sort of glaring issues they claim Did you read the article? Specifically the part where it explains why the SEC does not evaluate the business models of companies?
  - friend_and_foe 3y ago
    I did... the article lists several examples with the claim that the SEC cannot be expected to understand every business under the sun before approving a public sale, completely ignoring the fact that in this case, knowing if a company is operating as an unregistered securities exchange is their supposed expertise and reason to exist. Did you read it?
    - growse 3y ago
      Do you think that if the SEC thinks that Coinbase is operating some sort of unregulated securities exchange, that they should bring some sort of enforcement action?
      - bb88 3y ago
        Also do you think that if Coinbase admitted that the SEC might take adverse regulatory action in the S1, should anyone be surprised when the SEC actually does?
      - friend_and_foe 3y ago
        Yes, but I think first, they ought to tell us what their criteria is in no uncertain terms.
        Eisenstein 3y ago
        Sorry but law enforcement entities do not have a mandate for, nor are they required to, tell you specifically whether an act is expressly legal or illegal if you ask them. Call a police department and ask them if you are allowed to bury your recently deceased relative on your property. They will tell you to get a lawyer. If they feel like arresting you for illegal disposal of human remains you can't use the defense 'but I asked them and they wouldn't tell me'.
AbrahamParangi 3y ago
It seems to me that regulators who are power motivated have more to gain by not saying what can and cannot be done and instead implying that you're breaking the law and using that as leverage over you.
az226 3y ago
I mean he was chumming up FTX before it imploded. He seems personally butthurt about crypto for some reason. He’s contradicting himself on statements just a few years ago. He has the maturity of a child, playing games.
- hef19898 3y ago
  What does SBF have to do with any of that?
gumby 3y ago
> Modern regulators seem to prefer retrospective punishment over prospective advice and regulation. In most cases that’s what you want. The Communications Decency Act was written way too early and most of it was struck down, except the important section 230. When the Food, Drug and Cosmetic Act was revised in 1962 a huge swath of previously approved drugs of longstanding experience (e.g. aspirin) were grandparented. Most cases. Nuclear reactors are a good counter example. I consider cryptocurrency mathematically interesting but otherwise arrant nonsense. Nevertheless I think the “wait and see” regulatory approach, while frustrating, was the right one: don’t stop it (so people can innovate) but don’t provide the protection of widow-and-orphan rules until it has had time to develop. After all, perhaps there is a pony in there, and early regulation could have strangled it.
- PretzelPirate 3y ago
  I think there's a reasonableiddle ground and that the SEC waited far too long to take a stance. Allowing companies like Block One, Solana, and IOHK to start up and offer highly-centralized "crypto" assets to US consumers put those consumers at risk of "highly volatile crypto" + centralized control. The SEC did the right thing when suing Ripple, but they've missed opportunities to go after bad actors who were misrepresenting their product as a decentralized network, and now retail investors will be the one who lose. In my opinion, they've failed to act in a reasonable time frame and their inability to do their job will end up hurting common people in the US. I'd like to see Gary Genslar held accountable for his mistake. It's not like he is ignorant around crypto assets and he even evangelised his friends blockchain network to his students when he was teaching at MIT.
FabHK 3y ago
> Modern regulators seem to prefer retrospective punishment over prospective advice and regulation. The pertinent laws have been in force since 1933 and 1934, and the Howey Test since 1946. I'd call that regulation prospective enough. Not the SEC's fault that Coinbase preferred wishful thinking (I mean, it sort of worked for Uber).

by nickff 3y ago

I suspect that Gensler was obfuscating intentionally when asked about cryptocurrency. Modern regulators seem to prefer retrospective punishment over prospective advice and regulation.

pseudo0 3y ago

It seems like a massive regulatory failure to let Coinbase IPO if there are the sort of glaring issues they claim. Coinbase has a market cap of around $10 billion, and is owned by retail investors as part of standard index funds. If it goes to zero tomorrow because of the SEC, that is billions of dollars in losses that could have been avoided by more responsible regulatory behavior. Meanwhile insiders will have cashed in through salary, stock sales, etc.

shagie 3y ago
Here is Coinbase's S1 - https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/699359de-d974-4ad9-b7f6-5031f2f432d3.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/699359d... And the S1A https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/c9475761-bae4-4556-b8f3-b6d74e47b5f0.pdf https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/c947576... In particular: > Bitcoin sparked a revolution by proving the ability to create digital scarcity: a unique and finite digital asset whose ownership could be proven with certainty. This innovation laid the foundation for an open financial system. Today, all forms of value – from those natively created online such as in-game digital goods to traditional securities like equities and bonds – can be represented digitally, as crypto assets. Like the bits of data that power the internet, these crypto assets can be dynamically transmitted, stored, and programmed to serve the needs of an increasingly digital and globally interconnected economy. > Today, we enable customers around the world to store their savings in a wide range of crypto assets, including Bitcoin and USD Coin, and to instantly transfer value globally with the tap of a finger on a smartphone. We provide companies with new ways to transact, incentivize, and reward their users, from offering compounding rewards on savings that pay out by the second to compensating users for virtually completing tasks through global micropayments. The claim is that they're selling assets and traditional securities that are represented digitally. And they acknowledge the risks of future regulation: > • We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition. > ... > • A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, and our business, operating results, and financial condition may be adversely affected. The 'i's are dotted and the 't's are crossed. Is the SEC to evaluate those future possibilities that the assets they claim (in addition to Bitcoin) may be considered securities? Coinbase said its a risk and, well, yep - it is.
rodgerd 3y ago
> It seems like a massive regulatory failure to let Coinbase IPO if there are the sort of glaring issues they claim Did you read the article? Specifically the part where it explains why the SEC does not evaluate the business models of companies?
- friend_and_foe 3y ago
  I did... the article lists several examples with the claim that the SEC cannot be expected to understand every business under the sun before approving a public sale, completely ignoring the fact that in this case, knowing if a company is operating as an unregistered securities exchange is their supposed expertise and reason to exist. Did you read it?
  - growse 3y ago
    Do you think that if the SEC thinks that Coinbase is operating some sort of unregulated securities exchange, that they should bring some sort of enforcement action?
    - bb88 3y ago
      Also do you think that if Coinbase admitted that the SEC might take adverse regulatory action in the S1, should anyone be surprised when the SEC actually does?
    - friend_and_foe 3y ago
      Yes, but I think first, they ought to tell us what their criteria is in no uncertain terms.
      - Eisenstein 3y ago
        Sorry but law enforcement entities do not have a mandate for, nor are they required to, tell you specifically whether an act is expressly legal or illegal if you ask them. Call a police department and ask them if you are allowed to bury your recently deceased relative on your property. They will tell you to get a lawyer. If they feel like arresting you for illegal disposal of human remains you can't use the defense 'but I asked them and they wouldn't tell me'.

AbrahamParangi 3y ago

It seems to me that regulators who are power motivated have more to gain by not saying what can and cannot be done and instead implying that you're breaking the law and using that as leverage over you.

az226 3y ago

I mean he was chumming up FTX before it imploded. He seems personally butthurt about crypto for some reason. He’s contradicting himself on statements just a few years ago. He has the maturity of a child, playing games.

hef19898 3y ago
What does SBF have to do with any of that?

gumby 3y ago

> Modern regulators seem to prefer retrospective punishment over prospective advice and regulation. In most cases that’s what you want. The Communications Decency Act was written way too early and most of it was struck down, except the important section 230. When the Food, Drug and Cosmetic Act was revised in 1962 a huge swath of previously approved drugs of longstanding experience (e.g. aspirin) were grandparented. Most cases. Nuclear reactors are a good counter example. I consider cryptocurrency mathematically interesting but otherwise arrant nonsense. Nevertheless I think the “wait and see” regulatory approach, while frustrating, was the right one: don’t stop it (so people can innovate) but don’t provide the protection of widow-and-orphan rules until it has had time to develop. After all, perhaps there is a pony in there, and early regulation could have strangled it.

PretzelPirate 3y ago
I think there's a reasonableiddle ground and that the SEC waited far too long to take a stance. Allowing companies like Block One, Solana, and IOHK to start up and offer highly-centralized "crypto" assets to US consumers put those consumers at risk of "highly volatile crypto" + centralized control. The SEC did the right thing when suing Ripple, but they've missed opportunities to go after bad actors who were misrepresenting their product as a decentralized network, and now retail investors will be the one who lose. In my opinion, they've failed to act in a reasonable time frame and their inability to do their job will end up hurting common people in the US. I'd like to see Gary Genslar held accountable for his mistake. It's not like he is ignorant around crypto assets and he even evangelised his friends blockchain network to his students when he was teaching at MIT.

FabHK 3y ago

> Modern regulators seem to prefer retrospective punishment over prospective advice and regulation. The pertinent laws have been in force since 1933 and 1934, and the Howey Test since 1946. I'd call that regulation prospective enough. Not the SEC's fault that Coinbase preferred wishful thinking (I mean, it sort of worked for Uber).