6 ms·

It's important to note that event for the projects creating new tokens, there is NO WAY to register. It exists, in theory. Many people have tried, nothing has

It's important to note that event for the projects creating new tokens, there is NO WAY to register. It exists, in theory. Many people have tried, nothing has progressed even an inch. It's not even a matter of the SEC putting out a list of clear conditions that people deem unacceptable. Instead, the applications just seem to be mired in bureaucracy. As I understand, there is deliberate gaslighting from the SEC and Gary Gensler. Gary keeps telling the media "the law is clear" and "companies should come and register", but then never answer's even congress' own questions on what constitutes a security, and makes it impossible for crypto projects to register.

cr__ 3y ago
If there’s no way to register, why did they proceed?
- gigatexal 3y ago
  Getting rich off of shit-coins in this wild west of digital currencies, that's why.
  - agentgumshoe 3y ago
    Not sure why this is downvoted, it's absolutely true.
- criddell 3y ago
  Maybe they expected to still be profitable after paying the fines?
- danpalmer 3y ago
  Because in the US a lack of explicit laws against something is typically interpreted as legal support. See pretty much any disruptive business mired in legal controversy. It's a cultural difference to many other countries where just because there isn't a law against something doesn't mean people will jump at the chance to exploit it at scale.
- jongjong 3y ago
  Someone once told me it costs like $60K to register a crypto as a security... A chicken and egg problem. How will you get $60K without an ITO? Yet if you have an ITO in order to raise the $60K that you need to register your ITO legally, you're already in breach. It has similar vibes as the US law which only allows accredited investors to invest in fast growing startups... 'To protect mom and pop investors' yeah right. Is there even a single person in the entire country who actually believes that?
  - amluto 3y ago
    Suppose you want to turn your business into a publicly traded company. If you don’t already have enough cash to pay for the process, you raise money from accredited investors (VC funds, angels, whatever). Then you do the paperwork. Then, when everything is approved, you get to sell shares to the general public. The overall process has been well established for a long time. For some reason, people seem to think an ITO should change all the rules, and that first you sell to the general public, and then you figure everything else out (assuming you don’t just take the money and run). This is IMO nonsense.
  - pjc50 3y ago
    The basic filing fee is extremely reasonable: https://www.sec.gov/ofm/filing-fee-rate https://www.sec.gov/ofm/filing-fee-rate : about 0.1% of the value of the IPO. It's the legal advice and accounting specialists required to produce an adequate prospectus that's the big cost. But again: if you're raising millions, it seems not unreasonable to front some of that, even as personal debt, in order to prove "skin in the game" and that it's not a scam. EOS raised $4.2 billion dollars. You're telling me they can't front 60k?
    - martin8412 3y ago
      The issue is of course that most of the IPOs are pumps and dumps. If they register as securities, then they are liable for said scheme.
  - unusualmonkey 3y ago
    Given how the crypto market avoids regulations to scam mum and pop... it's not so hard to believe. Keep in mind certain crowd-funding is legal in US.
- CoastalCoder 3y ago
  I'm not sure if this is an appropriate parallel, but it reminds me of Uber. Uber seems to be successful despite clearly (IIUC) breaking laws that regulate taxi services. If it worked for Uber, I can see why other businesses might have similar hopes.
  - martin8412 3y ago
    Uber is perfectly legal here in Spain, but they're regulated as regular VTC vehicles. Uber can't arbitrarily lower the price. It has to be within some percentage of regular taxis for same level of service. Taxis have an advantage though because they have exclusive access to certain areas.
jongjong 3y ago
The veneer of a working system really started coming off over the past few years. Everything feels like a massive psyop. At times it even feels like a significant portion of the population is in on it... I mean, most people are probably just brainwashed into compliance but their level of commitment to the whole charade makes it seem like they're actually in on it.
- mrguyorama 3y ago
  Ah yes, avoiding a digital version of the great depression is a "psyop" that most people are "in on".
lolinder 3y ago
I'd love more details and a source about how all these people have tried and the applications get mired in bureaucracy. Does the process takes too long? Does the SEC demand information they don't have? Bureaucracy takes lots of forms, so something ending up mired in bureaucracy sounds like a bad thing but could also just be the bureaucracy working as designed. A drug manufacturer could describe a drug as "mired in bureaucracy" when what they really mean is "the FDA didn't like the results of our trials". If it's the speed of it, I can agree that the government is slow, but it's generally accepted as the cost of doing business in a regulated sector that you wait for regulatory approval before proceeding. There's work to be done making things more efficient, but in the meantime everyone still needs to play by the rules. If it's missing information that the SEC is demanding, that information is required for a reason. If it doesn't apply to your token, maybe your token is broken by design?
- incogitor 3y ago
  You reach out to an agency (generally CFTC and/or SEC). An attorney from that agency eventually contacts your attorney. You have a conversation. You hear nothing back, so you reach out again. A different attorney reaches back out again months later and you rehash the same conversation again. Repeat for years. Best case scenario it goes nowhere and you do voluntary third party audit/compliance/monitoring to demonstrate good faith. Worst case scenario despite any good faith you get a notice because you were already on their radar and the newest attorney smelled blood instead of just wanting to talk again.
adsfgiodsnrio 3y ago
There is nothing in the law that explicitly prevents the registration of a cryptocurrency. The problem is that the people making them are not able to answer the kinds of questions the SEC asks. How many cryptocurrency companies do you know of that could pass an audit? Even when ICOs aren't out-and-out scams I have never encountered one transparent enough for me to want to touch it with a ten foot pole. Why should the SEC bend over backwards to create new rules that allow exactly the sort of opaque, unaccountable offerings it is their job to prevent? Everything about this screams "system working as designed to protect the public". Would you kindly point out a company that tried and failed to register an ICO? I have done a little research and been unable to find any that even went through the motions. Perhaps the specifics matter.
- incogitor 3y ago
  > How many cryptocurrency companies do you know of that could pass an audit? This is, quite simply, zeitgeisty prejudice. Most well-funded cryptocurrency companies have passed audits. I've worked for or with four crypto companies and three of them were audited (also all of them still exist). You aren't allowed to count "fraud cryptobros from miami creating an ICO" if you don't count "fraud fratbros from harvard/yale creating a hedge fund". And if you do count both, then you'll notice that the proportion of fraud is roughly the same everywhere, we just allow ourselves to notice it in some places more than others. > Why should the SEC bend over backwards to create new rules Because you don't apply old rules to new contexts if you're a responsible government, especially if you're claiming jurisdiction over those new contexts. Registration and filing processes created for the paper era simply don't cut it for regulating self-executing financial instruments. Why doesn't the SEC have a registration smart contract? It is the SEC's responsibility to adapt to the times. > Would you kindly point out a company that tried and failed to register an ICO What do you not understand about "there is not process"? I've been a part of two companies who have tried. We have had "conversations", aka we try to reach out and a different attorney occasionally gets back in touch with us and rehashes the same conversation every six months. The longest effort went nowhere in four years. There is no registration, there is no process, there are no boxes we can check on the existing forms which govern what we do.
pjc50 3y ago
Did anyone actually try? https://www.sec.gov/education/smallbusiness/goingpublic/registrationstatement https://www.sec.gov/education/smallbusiness/goingpublic/regi... Is there a blog somewhere put out by one of these companies with their back-and-forth? It would be informative reasoning.
- jude- 3y ago
  Yes. See the Reg A token sale filing docs on the SEC Edgar system for the STX token [1]. Disclaimer: I work on STX and its blockchain [1] https://www.sec.gov/Archives/edgar/data/1693656/000110465919039476/0001104659-19-039476-index.htm https://www.sec.gov/Archives/edgar/data/1693656/000110465919...
  - pjc50 3y ago
    Very interesting! What's the conclusion? The last document appears to be dated 2019: https://www.sec.gov/Archives/edgar/data/1693656/000110465919039476/a18-15736_1partiiandiii.htm https://www.sec.gov/Archives/edgar/data/1693656/000110465919... So they did make token sales, and complied with the "accredited investor" rule.
jude- 3y ago
> It's important to note that event for the projects creating new tokens, there is NO WAY to register. Yes there is. You register them as securities. STX[1] did this. Other projects need to suck it up and do it legally. [1] disclaimer: I work on the Stacks blockchain (STX)

cr__ 3y ago

If there’s no way to register, why did they proceed?

gigatexal 3y ago
Getting rich off of shit-coins in this wild west of digital currencies, that's why.
- agentgumshoe 3y ago
  Not sure why this is downvoted, it's absolutely true.
criddell 3y ago
Maybe they expected to still be profitable after paying the fines?
danpalmer 3y ago
Because in the US a lack of explicit laws against something is typically interpreted as legal support. See pretty much any disruptive business mired in legal controversy. It's a cultural difference to many other countries where just because there isn't a law against something doesn't mean people will jump at the chance to exploit it at scale.
jongjong 3y ago
Someone once told me it costs like $60K to register a crypto as a security... A chicken and egg problem. How will you get $60K without an ITO? Yet if you have an ITO in order to raise the $60K that you need to register your ITO legally, you're already in breach. It has similar vibes as the US law which only allows accredited investors to invest in fast growing startups... 'To protect mom and pop investors' yeah right. Is there even a single person in the entire country who actually believes that?
- amluto 3y ago
  Suppose you want to turn your business into a publicly traded company. If you don’t already have enough cash to pay for the process, you raise money from accredited investors (VC funds, angels, whatever). Then you do the paperwork. Then, when everything is approved, you get to sell shares to the general public. The overall process has been well established for a long time. For some reason, people seem to think an ITO should change all the rules, and that first you sell to the general public, and then you figure everything else out (assuming you don’t just take the money and run). This is IMO nonsense.
- pjc50 3y ago
  The basic filing fee is extremely reasonable: https://www.sec.gov/ofm/filing-fee-rate https://www.sec.gov/ofm/filing-fee-rate : about 0.1% of the value of the IPO. It's the legal advice and accounting specialists required to produce an adequate prospectus that's the big cost. But again: if you're raising millions, it seems not unreasonable to front some of that, even as personal debt, in order to prove "skin in the game" and that it's not a scam. EOS raised $4.2 billion dollars. You're telling me they can't front 60k?
  - martin8412 3y ago
    The issue is of course that most of the IPOs are pumps and dumps. If they register as securities, then they are liable for said scheme.
- unusualmonkey 3y ago
  Given how the crypto market avoids regulations to scam mum and pop... it's not so hard to believe. Keep in mind certain crowd-funding is legal in US.
CoastalCoder 3y ago
I'm not sure if this is an appropriate parallel, but it reminds me of Uber. Uber seems to be successful despite clearly (IIUC) breaking laws that regulate taxi services. If it worked for Uber, I can see why other businesses might have similar hopes.
- martin8412 3y ago
  Uber is perfectly legal here in Spain, but they're regulated as regular VTC vehicles. Uber can't arbitrarily lower the price. It has to be within some percentage of regular taxis for same level of service. Taxis have an advantage though because they have exclusive access to certain areas.

jongjong 3y ago

The veneer of a working system really started coming off over the past few years. Everything feels like a massive psyop. At times it even feels like a significant portion of the population is in on it... I mean, most people are probably just brainwashed into compliance but their level of commitment to the whole charade makes it seem like they're actually in on it.

mrguyorama 3y ago
Ah yes, avoiding a digital version of the great depression is a "psyop" that most people are "in on".

lolinder 3y ago

I'd love more details and a source about how all these people have tried and the applications get mired in bureaucracy. Does the process takes too long? Does the SEC demand information they don't have? Bureaucracy takes lots of forms, so something ending up mired in bureaucracy sounds like a bad thing but could also just be the bureaucracy working as designed. A drug manufacturer could describe a drug as "mired in bureaucracy" when what they really mean is "the FDA didn't like the results of our trials". If it's the speed of it, I can agree that the government is slow, but it's generally accepted as the cost of doing business in a regulated sector that you wait for regulatory approval before proceeding. There's work to be done making things more efficient, but in the meantime everyone still needs to play by the rules. If it's missing information that the SEC is demanding, that information is required for a reason. If it doesn't apply to your token, maybe your token is broken by design?

incogitor 3y ago
You reach out to an agency (generally CFTC and/or SEC). An attorney from that agency eventually contacts your attorney. You have a conversation. You hear nothing back, so you reach out again. A different attorney reaches back out again months later and you rehash the same conversation again. Repeat for years. Best case scenario it goes nowhere and you do voluntary third party audit/compliance/monitoring to demonstrate good faith. Worst case scenario despite any good faith you get a notice because you were already on their radar and the newest attorney smelled blood instead of just wanting to talk again.

adsfgiodsnrio 3y ago

There is nothing in the law that explicitly prevents the registration of a cryptocurrency. The problem is that the people making them are not able to answer the kinds of questions the SEC asks. How many cryptocurrency companies do you know of that could pass an audit? Even when ICOs aren't out-and-out scams I have never encountered one transparent enough for me to want to touch it with a ten foot pole. Why should the SEC bend over backwards to create new rules that allow exactly the sort of opaque, unaccountable offerings it is their job to prevent? Everything about this screams "system working as designed to protect the public". Would you kindly point out a company that tried and failed to register an ICO? I have done a little research and been unable to find any that even went through the motions. Perhaps the specifics matter.

incogitor 3y ago
> How many cryptocurrency companies do you know of that could pass an audit? This is, quite simply, zeitgeisty prejudice. Most well-funded cryptocurrency companies have passed audits. I've worked for or with four crypto companies and three of them were audited (also all of them still exist). You aren't allowed to count "fraud cryptobros from miami creating an ICO" if you don't count "fraud fratbros from harvard/yale creating a hedge fund". And if you do count both, then you'll notice that the proportion of fraud is roughly the same everywhere, we just allow ourselves to notice it in some places more than others. > Why should the SEC bend over backwards to create new rules Because you don't apply old rules to new contexts if you're a responsible government, especially if you're claiming jurisdiction over those new contexts. Registration and filing processes created for the paper era simply don't cut it for regulating self-executing financial instruments. Why doesn't the SEC have a registration smart contract? It is the SEC's responsibility to adapt to the times. > Would you kindly point out a company that tried and failed to register an ICO What do you not understand about "there is not process"? I've been a part of two companies who have tried. We have had "conversations", aka we try to reach out and a different attorney occasionally gets back in touch with us and rehashes the same conversation every six months. The longest effort went nowhere in four years. There is no registration, there is no process, there are no boxes we can check on the existing forms which govern what we do.

pjc50 3y ago

Did anyone actually try? https://www.sec.gov/education/smallbusiness/goingpublic/registrationstatement https://www.sec.gov/education/smallbusiness/goingpublic/regi... Is there a blog somewhere put out by one of these companies with their back-and-forth? It would be informative reasoning.

jude- 3y ago
Yes. See the Reg A token sale filing docs on the SEC Edgar system for the STX token [1]. Disclaimer: I work on STX and its blockchain [1] https://www.sec.gov/Archives/edgar/data/1693656/000110465919039476/0001104659-19-039476-index.htm https://www.sec.gov/Archives/edgar/data/1693656/000110465919...
- pjc50 3y ago
  Very interesting! What's the conclusion? The last document appears to be dated 2019: https://www.sec.gov/Archives/edgar/data/1693656/000110465919039476/a18-15736_1partiiandiii.htm https://www.sec.gov/Archives/edgar/data/1693656/000110465919... So they did make token sales, and complied with the "accredited investor" rule.

jude- 3y ago

> It's important to note that event for the projects creating new tokens, there is NO WAY to register. Yes there is. You register them as securities. STX[1] did this. Other projects need to suck it up and do it legally. [1] disclaimer: I work on the Stacks blockchain (STX)