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Former US SEC attorney: 'Get out of crypto platforms now'

364 points by legrande 3y ago

simmerup 3y ago
Good advice regardless. Every month we get more evidence that exchanges don't adequately protect their users interests.
- wolverine876 3y ago
  Did you need more evidence? It seemed clear from the start - these were not trustworthy businesses.
eterm 3y ago
Finbold is not a reliable news source / site. Even r/cryptocurrency flags finbold as unreliable.
- capableweb 3y ago
  Even? Like biased subreddits are the bastion of what's reliable or not
  - eterm 3y ago
    It's a news source which only posts (pro-) crypto news yet gets automatically flagged in the one place it should thrive because it is so unreliable. A moot point because the URL has been changed regardless.
- tedivm 3y ago
  In this case they're pretty much just quoting the dude, with links back to his tweets.
- dang 3y ago
  We've changed the URL to the original source, as the HN guidelines request. More at https://news.ycombinator.com/item?id=36408638 https://news.ycombinator.com/item?id=36408638
- waboremo 3y ago
  Finbold's reliability doesn't matter much here since this is just a shell article about a tweet https://twitter.com/johnreedstark/status/1666780985189433347 https://twitter.com/johnreedstark/status/1666780985189433347
- Jason676 3y ago
  Nop. I noticed r/cryptocurrency flags enormous amount of articles from many recognized websites. And this article is based on a quote from former SEC official.
ramesh31 3y ago
Turns out the answer to "How is this not a regulated security?" is "It is."
- officialchicken 3y ago
  Turns out that he isn't attacking the mechanics or underlying offerings (security vs commodity) as you seem to imply. He does not like the lack of regulation around the (decentralized, unregulated) distribution and prefers the broker-dealers regulation and clearinghouse oversight.
paxys 3y ago
If you don't hold your own keys privately and offline then you don't really own any crypto. At best you own a share in a dicey exchange that may go under at any time (due to regulation, fraud or whatever else).
- roarcher 3y ago
  An exchange is basically a bank without the regulations and consumer protections of real banks. It also defeats the purpose of crypto. It's the worst of both worlds.
  - babypuncher 3y ago
    And then they wonder why regular consumers aren't fleeing banks to start using crypto for everything. I've yet to see cryptocurrencies actually solve a problem that your everyday average person has when buying groceries or going out to eat. They just make things more difficult and confusing, and all these attempts to alleviate that just lead us straight to "banks, but worse".
    - roarcher 3y ago
      The volatility alone must be a dealbreaker for most people. Shockingly, the average consumer does not enjoy the rollercoaster thrill of having no idea how much buying power they'll have tomorrow.
      - BasedAnon 3y ago
        The increasing volatility of fiat is making this less of a problem.
        roarcher 3y ago
        Maybe, but the world's major currencies have a long way to go before they're anywhere near Bitcoin levels of volatility. At the moment crypto is suitable for speculation and not much else. As a currency it's only superior in a couple of use cases, namely if a government has frozen your accounts or you're doing something illegal.
dang 3y ago
Url changed from https://finbold.com/former-us-sec-attorney-get-out-of-crypto-platforms-now/ https://finbold.com/former-us-sec-attorney-get-out-of-crypto..., which points to this. Submitters: "Please submit the original source. If a post reports on something found on another site, submit the latter." - https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- cinntaile 3y ago
  This is irrelevant for the thread at hand but I submitted something recently from the original source. The problem was that it's a banned domain on HN.
uLogMicheal 3y ago
John Reed Stark is their expert? https://twitter.com/JohnReedStark/status/1670457201943511040 https://twitter.com/JohnReedStark/status/1670457201943511040 "The only killer app for crypto that seems tangible is its excellent use to orchestrate global crimes." The bias is abundant, it's well known this guy hates crypto.
- _jab 3y ago
  I mean, is he wrong? Genuinely the only other application I’ve seen which seems plausible is for use in places like Venezuela where the official currency is worthless.
  - uLogMicheal 3y ago
    Yep, the only use cases for decentralized, programmable monetary systems are criminal. /s
    - thatguy0900 3y ago
      Well you don't seem to have any other examples of things that can't be done with fiat
      - uLogMicheal 3y ago
        You comment this as many major central banks are conducting trial / rollout plans for CBDC. I prefer the decentralized side of cryptocurrency where the rules, censorship, and supply is transparent and limited.
        FormerBandmate 3y ago
        Banks work fine now for payments. The only real advantage of crypto over CBDC is that you can more easily sell drugs and guns. No one is losing their bank account for donating to Donald Trump
zhvihti 3y ago
It's strange to me how people keep comparing cryptocurrencies to equity, but don't compare them to their closest counterpart - fiat currencies. Are fiat currencies treated like securities? No. Are there "best execution requirements" when I exchange my USD for EUR. No. Did somebody have to register the Brazilian Real with the SEC for it to be exchangeable in the US? No.
- vladd 3y ago
  People cannot create fiat currencies out of thin air. When done it's a crime (currency forgery).
  - Marsymars 3y ago
    That doesn't sound right. e.g. https://en.wikipedia.org/wiki/Canadian_Tire_money https://en.wikipedia.org/wiki/Canadian_Tire_money
    - alephnerd 3y ago
      Have you ever been to a Canadian Tires? CTM is used the same way you'd use Airline Miles or Credit Card Points.
      - Marsymars 3y ago
        Yes, I’m familiar with how it’s used. And its usage seems pretty clearly at odds with “People cannot create fiat currencies out of thin air without it being a crime”. (I could have used any number of other examples - WoW gold, Disney Dollars, etc.)
  - carlosjobim 3y ago
    It's a crime if you or I do it. It's a blessing of quantitative easing when the rulers - our lords and saviors - do it.
    - wolverine876 3y ago
waboremo 3y ago
There will never be a better representation of what's wrong with crypto platforms than this tweet[1] here demonstrating the sheer ignorance at every level (tech, finance, regulation, etc) from its biggest proponents. Also very hilarious. [1] https://twitter.com/Legendary_NFT/status/1667106949840748545 https://twitter.com/Legendary_NFT/status/1667106949840748545
csomar 3y ago
This was posted in 8 June. With big name brokers in the US making a move into the crypto market today, is it fair to say this guy has no idea what he is talking about? + https://www.bloomberg.com/news/articles/2023-06-20/crypto-exchange-backed-by-citadel-securities-fidelity-goes-live#xj4y7vzkg https://www.bloomberg.com/news/articles/2023-06-20/crypto-ex...
- alephnerd 3y ago
  EDX is non-custodial and open ONLY to institutional investors. The SEC's enforcement on Crypto Platforms is specifically aimed at separating the Broker Function from Exchanges.
- adventured 3y ago
  Not if the intention is to drive crypto into the ground first and destroy the initial sector players (eg Coinbase), so the establishment banking / finance system can recapture all of it in one swift regulatory move. It would then be ideal to be entirely out of crypto until the destruction is largely over, and the establishment gets its lock on the market. There were only ever two possibilities. They control & own it, or it doesn't get to exist legally. Everything else was naive fantasy and ignorance about how the world actually works and will always work (power, politics, guns).
waynecochran 3y ago
With crypto trading platforms, the SEC lacks any sort of oversight and access — and has scant ability to detect, investigate and deter fraudulent conduct. As a result, the crypto marketplace operates without much supervision Isn't that the main idea of a decentralized currency? No doubt this has/does/will harbor criminal activity, but it will also foster the ability to exchange goods and services without third parties. This has huge benefits when the third parties are rogue and overextend their surveillance. Freedom is what we should be after. This has a cost in terms of criminal activity -- even to the extreme.
- paxys 3y ago
  This entire conversation is about centralized exchanges.
  - waynecochran 3y ago
    Trying to force centralization onto something that was fundamentally designed to be decentralized.
- uLogMicheal 3y ago
  I wonder if the SEC knows how to use a blockchain explorer? That claim is made false from a simple glance at one.
  - alephnerd 3y ago
    They do. The SEC pays competitively and there are a lot of crypto adept people who feel there is also a case for regulation in the space.
    - uLogMicheal 3y ago
      People need to justify the battle they are paid to fight so they find reasons to do so? I hope they realize at some point that they are playing for the wrong team. The increased surveillance they want means privileged access for few versus everyone needing to play under the same rules of transparency.
deleted 3y ago
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cs702 3y ago
Three highly speculative predictions: 1. The courts are more likely than not to rule that many crypto-assets -- but not all -- should be regulated as investments. It won't be fun for a lot of crypto traders. 2. Over time, the usual giant financial institutions are bound to become the dominant market makers in crypto-assets. In all likelihood, one of them will end up buying Coinbase. Those giant financial institutions already know how to comply with regulatory bureaucracies worldwide, efficiently, at scale. Rinky-dink exchanges lacking the machinery for large-scale efficient compliance will not be able to compete and go out of business. 3. Bitcoin, which the SEC considers a commodity (it's explicitly excluded from the lawsuits), is bound to become even more dominant in terms of market capitalization. The longer Bitcoin survives, the more it will get adopted and integrated into the world's financial fabric, e.g., as a store of value. If this sounds far-fetched, consider that many smart and smart-sounding people have predicted Bitcoin's demise, and so far their arguments have been proven wrong: https://99bitcoins.com/bitcoin-obituaries/ https://99bitcoins.com/bitcoin-obituaries/ . We sure live in interesting times!
- misnome 3y ago
  3 - The “value” is higher, but can you actually do more with it now than you could five years ago? Hasn’t the entire community given up on buying things such that they know pretend that was never the goal? Without any real way to convert back and forth into real money, what reassurance is there that the price even means anything when every single holder is incentivised to lie and transact with themselves just to keep the numbers up? How can a global system capable of five transactions a second ever be integrated into “the world’s financial fabric”? Side-chains seem to just be a great way to centralise around more unknown entities who may or may not run off with your cash.
  - cs702 3y ago
    > ...can you actually do more with it [I assume you mean Bitcoin] now than you could five years ago? Not really. To date, Bitcoin has been used successfully only as an alternate store of value -- one which, like gold, doesn't depend on the financial credibility of a particular government or country. Bitcoin's continued existence depends only on the integrity of its distributed consensus algorithm, which so far has withstood all attempts at hacking it. The "alternate store of value" opportunity is not small. Gold alone has a current market capitalization of $12.9 trillion.[a] --- [a] https://companiesmarketcap.com/gold/marketcap/ https://companiesmarketcap.com/gold/marketcap/
BasedAnon 3y ago
that's cool and all but look man i'm just not selling idk how else to tell you man it's just i'm not selling hahahaha
- paul_grisham 3y ago
  Glowies SEETHING
burnished 3y ago
Woof, lots of emotional and nigh incoherent responses to a pretty thoughtful little statement. Doesn't inspire confidence when the average response seems to boil down to a form of religious fervor. Which is too bad, seems like it would have been the perfect place for a thorough rebuttal.
- EA-3167 3y ago
  I think there's a lot of sunk cost in those comments, along with a lot of frustrated ideology. For people who thought they had finally gotten a way to bring their ideology into the real world, or imagined all sorts of riches, the state of crypto and the burgeoning regulatory environment may be too much to emotionally process and accept. As for why there isn't much in the way of thorough rebuttals, I suspect anyone trying to formulate one would pretty rapidly run into the wall of reality not agreeing with their existing stance.
  - Joeboy 3y ago
    "Get out of crypto trading platforms" is entirely aligned with the "idealogical" crypto people, isn't it? "Not your keys, not your coins" and that.
    - ethanbond 3y ago
      Maybe the truly ideological (an-cap types), sure, but many of the “most ideological” are just religiously greedy and want the best of all worlds — basic logic be damned. Regulated exchanges and coins in cold storage you can’t do much with is the worst of both worlds for those people.
    - TX81Z 3y ago
      The “not your keys set” is fine, most of them got their BTC at $1 and if BTC falls to $3 they still tripled initial investment. The people who got in later don’t understand “owning” a bitcoin on an exchange and having the key in your possession are VERY different. Those people are idiots.
- apercu 3y ago
rohith2506 3y ago
I am absolutely baffled by how much negative criticism the whole blockchain industry gets here and I would like to understand the reasoning behind it. Most of the arguments fall into these following buckets concluding to "IT MUST DIE" 1. The whole crypto is a get rich quick scheme with predatory practices everywhere. It's a wild wild west with no sort of regulations. Well, guess what, regulated industry is no different either. If people wants to commit crime, they will commit crime. The whole pyramid and MLM schemes have originated from traditional routes. it's nothing new. And regarding fraud, Did everyone actually forgot about Enron, Bernie Madoff and of course 2008 financial crisis where the almight SEC played a key role handing over billions and billions to these investment banks who knowingly committed fraud and pushed some of the pension funds into bankruptcy and pushed the whole world into recession. What's this fascination towards the old methods even though they repeatedly showed us that they are inadequate 2. I haven't seen a single use case of blockchain in the world yet. This is a valid critic and I do understand. Any decent distributed system engineer will understand that decentralisation is hard. consensus is hard. You know what was hard for almost 25 - 30 years and everyone's losing their shit right now and drinking the cool-aid? The good old AI. No one cared about neural networks until the compute caught upto speed. Like it or not, we are entering a new phase in the technology where two things will definitely rise to prominence 1. Data is / will become the most essential commodity and I am terrified by the idea that few monopolies with their "don't be evil" facade will control them and become trillion dollar firms. We need to switch the model and reimagine how the internet should work. If anyone calls this paranoid,I am happy to place a bet that in ten years, if nothing is done, we will be living through orwellian future 2. A massive decoupling from US economy. I wonder what people call US economy if they call crypto pyramid scheme. Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy When you think hard about 1&2 and come up with solutions, congratulations, you just reinvented the blockchain. If not, I am happy to hear how would you solve. In a nutshell, for god's sake , try to understand the reasoning and motivation behind why new ideas originate, gather a community and attract smart people to work on them
- toomuchtodo 3y ago
  Blockchains are unnecessary in a world with trusted entities and functional legal frameworks. In places that require a blockchain, you're still going to be at the whim of whomever has a monopoly on force. Sure, your key passphrase may be in your head. You'll end up getting beat with a rubber hose. It was never your crypto so long as someone has the guns (wrt "Not your keys, not your crypto"). https://xkcd.com/538/ https://xkcd.com/538/ > A massive decoupling from US economy. I wonder what people call US economy if they call crypto pyramid scheme. Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy US Treasuries would like a word (they are the safest financial asset in the world, "full faith and credit"). There is no safer capital market than the US. Sure, there will be some de-dollarization, but that won't fix a rapidly aging China, a "teetering near the cliff" Russia, a Central and South America that is slow steady state, etc. And Africa? Very young still but a hard sell for investing. > Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy Debt backed by future productivity, but also debt that can also always take a haircut during legal proceedings. Laws and courts > smart contracts, broadly speaking.
krrishd 3y ago
Would be curious to see HN crypto critics mount their arguments against: 1. Physical cash / gold (ie. bearer instrument moneys that are non-trivial to seize or control at scale) 2. The digitization of the above, retaining the same "non-trivial to seize or control at scale" property in a digital medium
deleted 3y ago
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tlogan 3y ago
Why do you need crypto platforms? Isn’t the whole point of crypto that you do need “platforms” to use it or store it?
yazaddaruvala 3y ago
I'm not pro crypto exchanges, but does the SEC really live up to this guy's promises? > SEC registration establishes critical requirements that protect investors from individual risk and protect capital markets from global systemic risk. The requirements also make U.S. markets among the safest, most robust, most vibrant and most desirable marketplaces in the world. Does he mean the requirements that continue to allow dark pools[0]? or the ones that allow arbitrage (theft?) through low-latency order flow[1], prior to high-latency trade execution? [0] https://en.wikipedia.org/wiki/Dark_pool https://en.wikipedia.org/wiki/Dark_pool [1] https://en.wikipedia.org/wiki/Payment_for_order_flow https://en.wikipedia.org/wiki/Payment_for_order_flow
- Eisenstein 3y ago
  > The requirements also make U.S. markets among the safest, most robust, most vibrant and most desirable marketplaces in the world. ... > Does he mean the requirements that continue to allow dark pools[0]? > or the ones that allow arbitrage (theft?) through low-latency order flow[1], prior to high-latency trade execution? Which markets don't have those?
  - yazaddaruvala 3y ago
    > In Canada, PFOF is not allowed on Canadian listed securities,[5] so Canadian brokers charge commissions,[8] however, according to the current Canadian securities regulations, brokers can accept PFOF on non-Canadian listed securities.[9] It is also banned in the United Kingdom.[5][10] According to Euronext, European authorities have regulated payment for order flow, and the practice is allowed in a number of national jurisdictions across Europe.[11] On the wiki page for PFOF
- jfghi 3y ago
  To me this reads as an off topic whataboutism. Perhaps [0] and [1] deserve their own articles, but neither detract from the overall point of what the tweet is saying and provide any demonstration as to why crypto platforms should continue breaking the law.
- erredois 3y ago
lordfrito 3y ago
[flagged]
- nkuttler 3y ago
  Dunno, it seems like you started a thread with name calling.
  - lordfrito 3y ago
    Fair enough. Was trying to make a constructive point, but clearly my bias leaked through. Point is that it seems any discussion here is fruitless, just both sides digging in. I usually appreciate the discussions here. These are just frustrating. Sure I don't have to click, but I still do. Anyhow my 2c.
    - tasuki 3y ago
      Actually what I see near the top is a good discussion with reasonable comments from both sides.
- scottiebarnes 3y ago
  > Armchair finance experts Just wondering what you think a "real world" finance expert looks like. Venture capitalist? Fund manager? Nobel prize winner in economics? Money is made up, a human social construct. A room of of the best experts can't tell you with any accuracy what will happen next, unless they're the central bank.
- deecewan 3y ago
  > This site is usually much classier and intelligent we must be on different sites
- __MatrixMan__ 3y ago
  > I feel like we should consider whether crypto related posts should be allowed moving forward Censoring crypto as a topic would be an ironic move
pazimzadeh 3y ago
> I am 100% objective, independent and neutral Show, don't tell
fwungy 3y ago
There are $5T of foreign exchange transactions per day. Btc is already getting traction in the developing world as a reliable currency and that is likely to grow under de-dollarization. The entire crypto market is about $1T right now of which btc is about half. There is so much space for Btc to grow as an option for international settlement, it's already working and trusted as much or more than many sovereign currencies. As it becomes more trusted it will increase in price which will decrease its volatility. If Btc just takes a little slice of the FX market it's an easy 5-10x. I wouldn't bet everything on it, but it does seem rational to have a corner of your portfolio in it. The Feds and the bankers hate it because it's a direct threat to their business model. There's no room for a middle man to fugazi in btc.
- jayd16 3y ago
  Do you think crypto will remain dominant over a more traditional digital banking solution once established players recognize there's a market? If so, why?
  - johngladtj 3y ago
    The established players already know there's a market. The reasons they don't service it are regulatory, not technological, and so an unregulatable Option will eat their lunch.
  - jbverschoor 3y ago
    You obviously haven’t dealt with banks in the eu lately.
  - fwungy 3y ago
    It doesn't need to be dominant. It's such a small sliver right now that it could go 10x and still not be anywhere near dominant. There are a lot of places where the government is not strong enough to maintain a reliable currency on its own. The USA was the global currency up till now because it was universally trusted, but that's changing. The people who have profited from the international dollar are maneuvering to keep their monopoly.
stainablesteel 3y ago
that list of concerns read like selling points to me i suppose its just a religious difference
- vore 3y ago
  It's all well and good until you're unlucky enough to find yourself at the wrong end of it all.
jbverschoor 3y ago
Meanwhile, https://edxmarkets.com/about/ https://edxmarkets.com/about/ just launched
softbt 3y ago
The comments are so funny, made my day
raydiatian 3y ago
People who defend crypto on Twitter make my skin crawl.
pwndByDeath 3y ago
I'm waiting for Putin to put a BTC price for oil. BTC isn't optimal for small transactions, but it is useful for exchange among peers who have no trust in a 3rd party to fairly regulate trade (e.g. Sanctions) If two nations bypassed banks with a system like BTC, then we would see what the point of BTC is.
- StopHammoTime 3y ago
  A large economy would never do that because it devalues their own currency. He’s currently making people buy Rubles with Euros AND there’s no transaction fee. Europe might be working toward energy independence from Russia but that’s still a while away. Plus, what point does BTC have to Russia? They can’t exchange it for Fiat and no one accepts it for anything of useful value. At best It’s just an extra step between them getting their Fiat currency. He could convince other nations to use BTC, but he would be better off convincing them to use the Ruble. Nation States don’t want un-sanctionable assets - they just don’t want to be victims of those sanctions. Even if Putin did do any of that, it just proves the SECs point. The US Government does not want people transacting with sanctioned nations and individuals. They would rather make it illegal than lose the financial power they currently have. For better or worse, governments don’t want crime (or more specifically their definition of it) to be supported by their citizens. This is why the SEC (and soon, Congress too, I’m sure) won’t stop. The existence of Cryptocurrencies are antithetical to their own existences.
TX81Z 3y ago
I’m Torn: his credentials are impressive so I should listen to what he has to say, but he also paid for Twitter Blue so I assume he’s an utter moron.
olalonde 3y ago
If all that is true and SEC registration is so great for investors, why isn't any exchange satisfying that market demand and registering with the SEC? Seems like a no-brainer.
- oxley 3y ago
  There are two problems: 1. It's not clear whether exchanges like Coinbase could technically comply with the rules for running a securities exchange, because the fine print of "what to do" doesn't fit well at all with the technical reality of "what does it mean to hold a cryptoasset" [1] 2. The SEC want token "creators" to register them as securities. Which they could do, but they would then be subject to SEC oversight, which is precisely what they're trying to avoid. ICOs are really a way of raising money from retail investors like a public company, without following any of the regulation around public companies. So even if we solved 1., there might not be many tokens left to legally trade on a registered securities exchange. [1] From a nonpartisan research organization: https://capmktsreg.org/wp-content/uploads/2023/06/CCMR-Crypto-Exchanges-Cannot-Register-With-the-SEC-06-06-23.pdf https://capmktsreg.org/wp-content/uploads/2023/06/CCMR-Crypt...
dontupvoteme 3y ago
Wouldn't surprise me in the slightest if we find out decades from now this was part of a response to the threat of dedollarisation.
slavboj 3y ago
"With traditional SEC-registered financial firms, the SEC has unlimited and instantaneous visibility into every aspect of operations." That is obvious horseshit.
- lukeasrodgers 3y ago
  Yes, this claim along with "I am 100% objective, independent and neutral" are bombastic and serve only to undermine his argument. He seems like a smart and reasonable person, and some of his other writing that I've just come across, e.g. https://www.linkedin.com/pulse/why-sec-regulation-enforcement-bogus-big-crypto-john-reed-stark/ https://www.linkedin.com/pulse/why-sec-regulation-enforcemen..., is free of that type of extravagance, so it's unclear why he would make the claim you cite. Perhaps just the "Twitter tends to lower the quality of all discourse" factor.
mavu 3y ago
Ahh, always a nice pass time to go to those tweets and block the first 30 accounts that reply. feels good man.
glerk 3y ago
This is hilarious. So crypto exchanges selling “securities” will be driven out of the US. Ok. US users will have to first buy “approved” cryptocurrencies like Bitcoin, transfer them to a non-US exchange or p2p exchange like Bisq and use a VPN to buy whatever they want. The real winners here are these lawyers and apparatchiks who have never created anything of value in their entire life.
- mehlmao 3y ago
  As opposed to all the valuable things being crated with cryptocurrencies?
  - deleted 3y ago
    [deleted]
  - glerk 3y ago
    Correct. And if you personally don't see anything of value being created by cryptocurrencies, nobody is forcing you to invest or work in this field. It's the beauty of free markets when they're allowed to operate properly. Btw ever wondered why in the year of our lord 2023 you can't trade stocks on the NASDAQ after 4pm EST, and why an ACH transfer takes 3 days to settle? I guess it's easier to piss away billions in lawyers and lobbyists to gatekeep the competition instead of R&D to improve your products.
jsdeveloper 3y ago
yes its all that, but people invest in crypto as they don't want to be regulated any more. government control people using money, all these people are more worried about loosing this control , rather than securing financial security of people.
simple-thoughts 3y ago
It doesn’t really matter to actual blockchains what the sec does or doesn’t do. It does matter to the centralized bandits like coinbase who tell people they are “buying crypto” when in fact they are buying a liability that may or may not be worth anything in bankruptcy court. I’ve never held any crypto in a exchange since mt gox, and a new cohort has learned the same lesson from ftx and the fake “defi” platforms.
- schoen 3y ago
  Sure, but it's still a tough scenario if the vast majority of people don't have a reliable way to convert fiat currency to or from cryptocurrencies (or to or from cryptocurrencies that regulators don't approve of). That would likely mean less liquidity, less broad appeal and application of applications using cryptocurrency, and potentially more stigma.
  - simple-thoughts 3y ago
    Less liquidity between the fiat and crypto ecosystem cuts both ways - it makes fiat less valuable since low liquidity creates a class of products and services that cannot be purchased with fiat. If people still want those services, they will barter for them instead using p2p platforms. Examples that already exist include - sending Amazon packages for crypto, providing free or discounted rent for crypto, food delivery services for crypto, etc. This creates a situation where more goods and services can be purchased with crypto than without it, meaning crypto is better money than fiat. Liquidity between fiat and crypto privileges centralized insiders who have the connections to fit into regulators molds and thus leak compliance into the wider crypto ecosystem. Thankfully regulators are too dumb to understand this and are shutting down the main threat to crypto, which is coinbase and it’s kind.
    - schoen 3y ago
      I hadn't thought of it this way and appreciate hearing this argument. But I think you're too optimistic about the extent to which people have adopted cryptocurrencies for their own sake and actively prefer them to fiat.
dan-rocks 3y ago
2024 is the year of the Bitcoin on the desktop. /s
heeebeeejeebees 3y ago
trash article
crtified 3y ago
Curious: what exactly are the mechanics of this seeming dire prediction? Is it being implied, or threatened, that forthcoming actions will lead to the insolvency (and resultant loss of customer funds) of the worlds major crypto 'exchanges' ? Again, by what particular mechanism(s) is this to occur ? I don't outright disbelieve it, but nor is this the first rodeo we've seen.
kgilpin 3y ago
What was interesting about cryptocurrency was the idea of holding your own private keys and conducting transactions directly on the blockchain. In that scenario, everyone is their own “exchange” (kinda) and the SEC might let it roll. Cryptocurrency exchanges really have almost nothing to do with actual cryptocurrency. They just use the terminology (and the hype) as levers to try and build an unregulated exchange. Centralized exchanges are regulated - so here comes that process.
- __loam 3y ago
  Crypto can't pump without the exchanges because it's too inconvenient and risky to use for most people. It has value because of the exchanges bringing in retail pumping them.
nathias 3y ago
regulatory capture well on the way
nootropicat 3y ago
I used to be optimistic, but it's 2023 and the only non-ponzi use case of crypto are stablecoins. What people actually want is to easily trade and transfer US dollars. Some tokens are pure ponzi schemes (like shib, btc) some are ownership in something that could have productive use (eth, some other smart contract platforms tokens). Yet that use isn't actually happening, so from a general pov it's all a ponzi. The most likely outcome is that nothing productive happens at all. For an average buyer (esp. btc) mark-to-market returns are already underperforming stocks for years when looking even at previous ATH. So many people own some crypto there's no possible separate source of greater fools elsewhere - most current crypto owners will end up at a massive loss. The long-term underperformance compared to other assets will get even worse. From the pure hype perspective, I think there's room for one last bubble. There's an army of bagholders (of every token) that will throw good money after bad when prices are sufficiently high again, giving up real wealth (again) in exchange for virtual tokens of either zero or much lower value. They still hold hope of at least going back to 0, or maybe even making money. After the next one, they won't. It will get really depressing.
- notfed 3y ago
  > non-ponzi ... stablecoins Erm... https://youtu.be/-whuXHSL1Pg https://youtu.be/-whuXHSL1Pg
jasfi 3y ago
He's pointing out lack of regulation. That typically means more regulation is needed, and is likely on the way. Not that crypto platforms will be banned and die.
jaimex2 3y ago
Is he talking to American citizens only? None of what he is saying applies to me.
TrapLord_Rhodo 3y ago
Interesting development... Why exclude Bitcoin in all of this? is it unlike other cryptos in it's 'unknown ICO'? What makes bitcoin a commodity, vs. Solana, Cardano and Polygon being securtys. Is it the distribution of tokens, method of ICO, tech stack? Snowden showed us the US gov has complete worldwide monitoring, so there's no way they don't know who satoshi is/ was/ were... There's some unknown POI, with $56B and you don't think the CIA and FBI aren't extremely concerned about that person. People always pointed towards bitcoin as being used for 'Money laundering' but its the perfect honey-pot. It's not private, it's completely public and i can tell exactly where and how you interact with the chain. So many idiots think, 'bitcoin's private! let's launder money through it in a super stupid way that still hits all the KYC flags. Oh, your wallet uses tornado cash wash? all incoming and outcoming wallets are now flagged. Why didn't the US ban Bitcoin out the gate? It's not like they US doesn't have presidence here. They shut down and put in jail previous creators of 'internet money'. China (Who also has world-wide monitoring) was also extremely fast in noticing it. in 2013 with a market cap of 1.3b, they banned it while the US was completely apathetic. BTC was created by the CIA. There, i said it.

364 points by legrande 3y ago

simmerup 3y ago

Good advice regardless. Every month we get more evidence that exchanges don't adequately protect their users interests.

wolverine876 3y ago
Did you need more evidence? It seemed clear from the start - these were not trustworthy businesses.

eterm 3y ago

Finbold is not a reliable news source / site. Even r/cryptocurrency flags finbold as unreliable.

capableweb 3y ago
Even? Like biased subreddits are the bastion of what's reliable or not
- eterm 3y ago
  It's a news source which only posts (pro-) crypto news yet gets automatically flagged in the one place it should thrive because it is so unreliable. A moot point because the URL has been changed regardless.
tedivm 3y ago
In this case they're pretty much just quoting the dude, with links back to his tweets.
dang 3y ago
We've changed the URL to the original source, as the HN guidelines request. More at https://news.ycombinator.com/item?id=36408638 https://news.ycombinator.com/item?id=36408638
waboremo 3y ago
Finbold's reliability doesn't matter much here since this is just a shell article about a tweet https://twitter.com/johnreedstark/status/1666780985189433347 https://twitter.com/johnreedstark/status/1666780985189433347
Jason676 3y ago
Nop. I noticed r/cryptocurrency flags enormous amount of articles from many recognized websites. And this article is based on a quote from former SEC official.

ramesh31 3y ago

Turns out the answer to "How is this not a regulated security?" is "It is."

officialchicken 3y ago
Turns out that he isn't attacking the mechanics or underlying offerings (security vs commodity) as you seem to imply. He does not like the lack of regulation around the (decentralized, unregulated) distribution and prefers the broker-dealers regulation and clearinghouse oversight.

paxys 3y ago

If you don't hold your own keys privately and offline then you don't really own any crypto. At best you own a share in a dicey exchange that may go under at any time (due to regulation, fraud or whatever else).

roarcher 3y ago
An exchange is basically a bank without the regulations and consumer protections of real banks. It also defeats the purpose of crypto. It's the worst of both worlds.
- babypuncher 3y ago
  And then they wonder why regular consumers aren't fleeing banks to start using crypto for everything. I've yet to see cryptocurrencies actually solve a problem that your everyday average person has when buying groceries or going out to eat. They just make things more difficult and confusing, and all these attempts to alleviate that just lead us straight to "banks, but worse".
  - roarcher 3y ago
    The volatility alone must be a dealbreaker for most people. Shockingly, the average consumer does not enjoy the rollercoaster thrill of having no idea how much buying power they'll have tomorrow.
    - BasedAnon 3y ago
      The increasing volatility of fiat is making this less of a problem.
      - roarcher 3y ago
        Maybe, but the world's major currencies have a long way to go before they're anywhere near Bitcoin levels of volatility. At the moment crypto is suitable for speculation and not much else. As a currency it's only superior in a couple of use cases, namely if a government has frozen your accounts or you're doing something illegal.

dang 3y ago

Url changed from https://finbold.com/former-us-sec-attorney-get-out-of-crypto-platforms-now/ https://finbold.com/former-us-sec-attorney-get-out-of-crypto..., which points to this. Submitters: "Please submit the original source. If a post reports on something found on another site, submit the latter." - https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

cinntaile 3y ago
This is irrelevant for the thread at hand but I submitted something recently from the original source. The problem was that it's a banned domain on HN.

uLogMicheal 3y ago

John Reed Stark is their expert? https://twitter.com/JohnReedStark/status/1670457201943511040 https://twitter.com/JohnReedStark/status/1670457201943511040 "The only killer app for crypto that seems tangible is its excellent use to orchestrate global crimes." The bias is abundant, it's well known this guy hates crypto.

_jab 3y ago
I mean, is he wrong? Genuinely the only other application I’ve seen which seems plausible is for use in places like Venezuela where the official currency is worthless.
- uLogMicheal 3y ago
  Yep, the only use cases for decentralized, programmable monetary systems are criminal. /s
  - thatguy0900 3y ago
    Well you don't seem to have any other examples of things that can't be done with fiat
    - uLogMicheal 3y ago
      You comment this as many major central banks are conducting trial / rollout plans for CBDC. I prefer the decentralized side of cryptocurrency where the rules, censorship, and supply is transparent and limited.
      - FormerBandmate 3y ago
        Banks work fine now for payments. The only real advantage of crypto over CBDC is that you can more easily sell drugs and guns. No one is losing their bank account for donating to Donald Trump

zhvihti 3y ago

It's strange to me how people keep comparing cryptocurrencies to equity, but don't compare them to their closest counterpart - fiat currencies. Are fiat currencies treated like securities? No. Are there "best execution requirements" when I exchange my USD for EUR. No. Did somebody have to register the Brazilian Real with the SEC for it to be exchangeable in the US? No.

vladd 3y ago
People cannot create fiat currencies out of thin air. When done it's a crime (currency forgery).
- Marsymars 3y ago
  That doesn't sound right. e.g. https://en.wikipedia.org/wiki/Canadian_Tire_money https://en.wikipedia.org/wiki/Canadian_Tire_money
  - alephnerd 3y ago
    Have you ever been to a Canadian Tires? CTM is used the same way you'd use Airline Miles or Credit Card Points.
    - Marsymars 3y ago
      Yes, I’m familiar with how it’s used. And its usage seems pretty clearly at odds with “People cannot create fiat currencies out of thin air without it being a crime”. (I could have used any number of other examples - WoW gold, Disney Dollars, etc.)
- carlosjobim 3y ago
  It's a crime if you or I do it. It's a blessing of quantitative easing when the rulers - our lords and saviors - do it.
  - wolverine876 3y ago

waboremo 3y ago

There will never be a better representation of what's wrong with crypto platforms than this tweet[1] here demonstrating the sheer ignorance at every level (tech, finance, regulation, etc) from its biggest proponents. Also very hilarious. [1] https://twitter.com/Legendary_NFT/status/1667106949840748545 https://twitter.com/Legendary_NFT/status/1667106949840748545

csomar 3y ago

This was posted in 8 June. With big name brokers in the US making a move into the crypto market today, is it fair to say this guy has no idea what he is talking about? + https://www.bloomberg.com/news/articles/2023-06-20/crypto-exchange-backed-by-citadel-securities-fidelity-goes-live#xj4y7vzkg https://www.bloomberg.com/news/articles/2023-06-20/crypto-ex...

alephnerd 3y ago
EDX is non-custodial and open ONLY to institutional investors. The SEC's enforcement on Crypto Platforms is specifically aimed at separating the Broker Function from Exchanges.
adventured 3y ago
Not if the intention is to drive crypto into the ground first and destroy the initial sector players (eg Coinbase), so the establishment banking / finance system can recapture all of it in one swift regulatory move. It would then be ideal to be entirely out of crypto until the destruction is largely over, and the establishment gets its lock on the market. There were only ever two possibilities. They control & own it, or it doesn't get to exist legally. Everything else was naive fantasy and ignorance about how the world actually works and will always work (power, politics, guns).

waynecochran 3y ago

With crypto trading platforms, the SEC lacks any sort of oversight and access — and has scant ability to detect, investigate and deter fraudulent conduct. As a result, the crypto marketplace operates without much supervision Isn't that the main idea of a decentralized currency? No doubt this has/does/will harbor criminal activity, but it will also foster the ability to exchange goods and services without third parties. This has huge benefits when the third parties are rogue and overextend their surveillance. Freedom is what we should be after. This has a cost in terms of criminal activity -- even to the extreme.

paxys 3y ago
This entire conversation is about centralized exchanges.
- waynecochran 3y ago
  Trying to force centralization onto something that was fundamentally designed to be decentralized.
uLogMicheal 3y ago
I wonder if the SEC knows how to use a blockchain explorer? That claim is made false from a simple glance at one.
- alephnerd 3y ago
  They do. The SEC pays competitively and there are a lot of crypto adept people who feel there is also a case for regulation in the space.
  - uLogMicheal 3y ago
    People need to justify the battle they are paid to fight so they find reasons to do so? I hope they realize at some point that they are playing for the wrong team. The increased surveillance they want means privileged access for few versus everyone needing to play under the same rules of transparency.

deleted 3y ago

[deleted]

cs702 3y ago

Three highly speculative predictions: 1. The courts are more likely than not to rule that many crypto-assets -- but not all -- should be regulated as investments. It won't be fun for a lot of crypto traders. 2. Over time, the usual giant financial institutions are bound to become the dominant market makers in crypto-assets. In all likelihood, one of them will end up buying Coinbase. Those giant financial institutions already know how to comply with regulatory bureaucracies worldwide, efficiently, at scale. Rinky-dink exchanges lacking the machinery for large-scale efficient compliance will not be able to compete and go out of business. 3. Bitcoin, which the SEC considers a commodity (it's explicitly excluded from the lawsuits), is bound to become even more dominant in terms of market capitalization. The longer Bitcoin survives, the more it will get adopted and integrated into the world's financial fabric, e.g., as a store of value. If this sounds far-fetched, consider that many smart and smart-sounding people have predicted Bitcoin's demise, and so far their arguments have been proven wrong: https://99bitcoins.com/bitcoin-obituaries/ https://99bitcoins.com/bitcoin-obituaries/ . We sure live in interesting times!

misnome 3y ago
3 - The “value” is higher, but can you actually do more with it now than you could five years ago? Hasn’t the entire community given up on buying things such that they know pretend that was never the goal? Without any real way to convert back and forth into real money, what reassurance is there that the price even means anything when every single holder is incentivised to lie and transact with themselves just to keep the numbers up? How can a global system capable of five transactions a second ever be integrated into “the world’s financial fabric”? Side-chains seem to just be a great way to centralise around more unknown entities who may or may not run off with your cash.
- cs702 3y ago
  > ...can you actually do more with it [I assume you mean Bitcoin] now than you could five years ago? Not really. To date, Bitcoin has been used successfully only as an alternate store of value -- one which, like gold, doesn't depend on the financial credibility of a particular government or country. Bitcoin's continued existence depends only on the integrity of its distributed consensus algorithm, which so far has withstood all attempts at hacking it. The "alternate store of value" opportunity is not small. Gold alone has a current market capitalization of $12.9 trillion.[a] --- [a] https://companiesmarketcap.com/gold/marketcap/ https://companiesmarketcap.com/gold/marketcap/

BasedAnon 3y ago

that's cool and all but look man i'm just not selling idk how else to tell you man it's just i'm not selling hahahaha

paul_grisham 3y ago
Glowies SEETHING

burnished 3y ago

Woof, lots of emotional and nigh incoherent responses to a pretty thoughtful little statement. Doesn't inspire confidence when the average response seems to boil down to a form of religious fervor. Which is too bad, seems like it would have been the perfect place for a thorough rebuttal.

EA-3167 3y ago
I think there's a lot of sunk cost in those comments, along with a lot of frustrated ideology. For people who thought they had finally gotten a way to bring their ideology into the real world, or imagined all sorts of riches, the state of crypto and the burgeoning regulatory environment may be too much to emotionally process and accept. As for why there isn't much in the way of thorough rebuttals, I suspect anyone trying to formulate one would pretty rapidly run into the wall of reality not agreeing with their existing stance.
- Joeboy 3y ago
  "Get out of crypto trading platforms" is entirely aligned with the "idealogical" crypto people, isn't it? "Not your keys, not your coins" and that.
  - ethanbond 3y ago
    Maybe the truly ideological (an-cap types), sure, but many of the “most ideological” are just religiously greedy and want the best of all worlds — basic logic be damned. Regulated exchanges and coins in cold storage you can’t do much with is the worst of both worlds for those people.
  - TX81Z 3y ago
    The “not your keys set” is fine, most of them got their BTC at $1 and if BTC falls to $3 they still tripled initial investment. The people who got in later don’t understand “owning” a bitcoin on an exchange and having the key in your possession are VERY different. Those people are idiots.
apercu 3y ago

rohith2506 3y ago

I am absolutely baffled by how much negative criticism the whole blockchain industry gets here and I would like to understand the reasoning behind it. Most of the arguments fall into these following buckets concluding to "IT MUST DIE" 1. The whole crypto is a get rich quick scheme with predatory practices everywhere. It's a wild wild west with no sort of regulations. Well, guess what, regulated industry is no different either. If people wants to commit crime, they will commit crime. The whole pyramid and MLM schemes have originated from traditional routes. it's nothing new. And regarding fraud, Did everyone actually forgot about Enron, Bernie Madoff and of course 2008 financial crisis where the almight SEC played a key role handing over billions and billions to these investment banks who knowingly committed fraud and pushed some of the pension funds into bankruptcy and pushed the whole world into recession. What's this fascination towards the old methods even though they repeatedly showed us that they are inadequate 2. I haven't seen a single use case of blockchain in the world yet. This is a valid critic and I do understand. Any decent distributed system engineer will understand that decentralisation is hard. consensus is hard. You know what was hard for almost 25 - 30 years and everyone's losing their shit right now and drinking the cool-aid? The good old AI. No one cared about neural networks until the compute caught upto speed. Like it or not, we are entering a new phase in the technology where two things will definitely rise to prominence 1. Data is / will become the most essential commodity and I am terrified by the idea that few monopolies with their "don't be evil" facade will control them and become trillion dollar firms. We need to switch the model and reimagine how the internet should work. If anyone calls this paranoid,I am happy to place a bet that in ten years, if nothing is done, we will be living through orwellian future 2. A massive decoupling from US economy. I wonder what people call US economy if they call crypto pyramid scheme. Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy When you think hard about 1&2 and come up with solutions, congratulations, you just reinvented the blockchain. If not, I am happy to hear how would you solve. In a nutshell, for god's sake , try to understand the reasoning and motivation behind why new ideas originate, gather a community and attract smart people to work on them

toomuchtodo 3y ago
Blockchains are unnecessary in a world with trusted entities and functional legal frameworks. In places that require a blockchain, you're still going to be at the whim of whomever has a monopoly on force. Sure, your key passphrase may be in your head. You'll end up getting beat with a rubber hose. It was never your crypto so long as someone has the guns (wrt "Not your keys, not your crypto"). https://xkcd.com/538/ https://xkcd.com/538/ > A massive decoupling from US economy. I wonder what people call US economy if they call crypto pyramid scheme. Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy US Treasuries would like a word (they are the safest financial asset in the world, "full faith and credit"). There is no safer capital market than the US. Sure, there will be some de-dollarization, but that won't fix a rapidly aging China, a "teetering near the cliff" Russia, a Central and South America that is slow steady state, etc. And Africa? Very young still but a hard sell for investing. > Sitting on trillions and trillions of debt, printing money according to their will completely ignoring the effect of their childish actions on the global economy Debt backed by future productivity, but also debt that can also always take a haircut during legal proceedings. Laws and courts > smart contracts, broadly speaking.

krrishd 3y ago

Would be curious to see HN crypto critics mount their arguments against: 1. Physical cash / gold (ie. bearer instrument moneys that are non-trivial to seize or control at scale) 2. The digitization of the above, retaining the same "non-trivial to seize or control at scale" property in a digital medium

deleted 3y ago

[deleted]

tlogan 3y ago

Why do you need crypto platforms? Isn’t the whole point of crypto that you do need “platforms” to use it or store it?

yazaddaruvala 3y ago

I'm not pro crypto exchanges, but does the SEC really live up to this guy's promises? > SEC registration establishes critical requirements that protect investors from individual risk and protect capital markets from global systemic risk. The requirements also make U.S. markets among the safest, most robust, most vibrant and most desirable marketplaces in the world. Does he mean the requirements that continue to allow dark pools[0]? or the ones that allow arbitrage (theft?) through low-latency order flow[1], prior to high-latency trade execution? [0] https://en.wikipedia.org/wiki/Dark_pool https://en.wikipedia.org/wiki/Dark_pool [1] https://en.wikipedia.org/wiki/Payment_for_order_flow https://en.wikipedia.org/wiki/Payment_for_order_flow

Eisenstein 3y ago
> The requirements also make U.S. markets among the safest, most robust, most vibrant and most desirable marketplaces in the world. ... > Does he mean the requirements that continue to allow dark pools[0]? > or the ones that allow arbitrage (theft?) through low-latency order flow[1], prior to high-latency trade execution? Which markets don't have those?
- yazaddaruvala 3y ago
  > In Canada, PFOF is not allowed on Canadian listed securities,[5] so Canadian brokers charge commissions,[8] however, according to the current Canadian securities regulations, brokers can accept PFOF on non-Canadian listed securities.[9] It is also banned in the United Kingdom.[5][10] According to Euronext, European authorities have regulated payment for order flow, and the practice is allowed in a number of national jurisdictions across Europe.[11] On the wiki page for PFOF
jfghi 3y ago
To me this reads as an off topic whataboutism. Perhaps [0] and [1] deserve their own articles, but neither detract from the overall point of what the tweet is saying and provide any demonstration as to why crypto platforms should continue breaking the law.
erredois 3y ago

lordfrito 3y ago

[flagged]

nkuttler 3y ago
Dunno, it seems like you started a thread with name calling.
- lordfrito 3y ago
  Fair enough. Was trying to make a constructive point, but clearly my bias leaked through. Point is that it seems any discussion here is fruitless, just both sides digging in. I usually appreciate the discussions here. These are just frustrating. Sure I don't have to click, but I still do. Anyhow my 2c.
  - tasuki 3y ago
    Actually what I see near the top is a good discussion with reasonable comments from both sides.
scottiebarnes 3y ago
> Armchair finance experts Just wondering what you think a "real world" finance expert looks like. Venture capitalist? Fund manager? Nobel prize winner in economics? Money is made up, a human social construct. A room of of the best experts can't tell you with any accuracy what will happen next, unless they're the central bank.
deecewan 3y ago
> This site is usually much classier and intelligent we must be on different sites
__MatrixMan__ 3y ago
> I feel like we should consider whether crypto related posts should be allowed moving forward Censoring crypto as a topic would be an ironic move

pazimzadeh 3y ago

> I am 100% objective, independent and neutral Show, don't tell

fwungy 3y ago

There are $5T of foreign exchange transactions per day. Btc is already getting traction in the developing world as a reliable currency and that is likely to grow under de-dollarization. The entire crypto market is about $1T right now of which btc is about half. There is so much space for Btc to grow as an option for international settlement, it's already working and trusted as much or more than many sovereign currencies. As it becomes more trusted it will increase in price which will decrease its volatility. If Btc just takes a little slice of the FX market it's an easy 5-10x. I wouldn't bet everything on it, but it does seem rational to have a corner of your portfolio in it. The Feds and the bankers hate it because it's a direct threat to their business model. There's no room for a middle man to fugazi in btc.

jayd16 3y ago
Do you think crypto will remain dominant over a more traditional digital banking solution once established players recognize there's a market? If so, why?
- johngladtj 3y ago
  The established players already know there's a market. The reasons they don't service it are regulatory, not technological, and so an unregulatable Option will eat their lunch.
- jbverschoor 3y ago
  You obviously haven’t dealt with banks in the eu lately.
- fwungy 3y ago
  It doesn't need to be dominant. It's such a small sliver right now that it could go 10x and still not be anywhere near dominant. There are a lot of places where the government is not strong enough to maintain a reliable currency on its own. The USA was the global currency up till now because it was universally trusted, but that's changing. The people who have profited from the international dollar are maneuvering to keep their monopoly.

stainablesteel 3y ago

that list of concerns read like selling points to me i suppose its just a religious difference

vore 3y ago
It's all well and good until you're unlucky enough to find yourself at the wrong end of it all.

jbverschoor 3y ago

Meanwhile, https://edxmarkets.com/about/ https://edxmarkets.com/about/ just launched

softbt 3y ago

The comments are so funny, made my day

raydiatian 3y ago

People who defend crypto on Twitter make my skin crawl.

pwndByDeath 3y ago

I'm waiting for Putin to put a BTC price for oil. BTC isn't optimal for small transactions, but it is useful for exchange among peers who have no trust in a 3rd party to fairly regulate trade (e.g. Sanctions) If two nations bypassed banks with a system like BTC, then we would see what the point of BTC is.

StopHammoTime 3y ago
A large economy would never do that because it devalues their own currency. He’s currently making people buy Rubles with Euros AND there’s no transaction fee. Europe might be working toward energy independence from Russia but that’s still a while away. Plus, what point does BTC have to Russia? They can’t exchange it for Fiat and no one accepts it for anything of useful value. At best It’s just an extra step between them getting their Fiat currency. He could convince other nations to use BTC, but he would be better off convincing them to use the Ruble. Nation States don’t want un-sanctionable assets - they just don’t want to be victims of those sanctions. Even if Putin did do any of that, it just proves the SECs point. The US Government does not want people transacting with sanctioned nations and individuals. They would rather make it illegal than lose the financial power they currently have. For better or worse, governments don’t want crime (or more specifically their definition of it) to be supported by their citizens. This is why the SEC (and soon, Congress too, I’m sure) won’t stop. The existence of Cryptocurrencies are antithetical to their own existences.

TX81Z 3y ago

I’m Torn: his credentials are impressive so I should listen to what he has to say, but he also paid for Twitter Blue so I assume he’s an utter moron.

olalonde 3y ago

If all that is true and SEC registration is so great for investors, why isn't any exchange satisfying that market demand and registering with the SEC? Seems like a no-brainer.

oxley 3y ago
There are two problems: 1. It's not clear whether exchanges like Coinbase could technically comply with the rules for running a securities exchange, because the fine print of "what to do" doesn't fit well at all with the technical reality of "what does it mean to hold a cryptoasset" [1] 2. The SEC want token "creators" to register them as securities. Which they could do, but they would then be subject to SEC oversight, which is precisely what they're trying to avoid. ICOs are really a way of raising money from retail investors like a public company, without following any of the regulation around public companies. So even if we solved 1., there might not be many tokens left to legally trade on a registered securities exchange. [1] From a nonpartisan research organization: https://capmktsreg.org/wp-content/uploads/2023/06/CCMR-Crypto-Exchanges-Cannot-Register-With-the-SEC-06-06-23.pdf https://capmktsreg.org/wp-content/uploads/2023/06/CCMR-Crypt...

dontupvoteme 3y ago

Wouldn't surprise me in the slightest if we find out decades from now this was part of a response to the threat of dedollarisation.

slavboj 3y ago

"With traditional SEC-registered financial firms, the SEC has unlimited and instantaneous visibility into every aspect of operations." That is obvious horseshit.

lukeasrodgers 3y ago
Yes, this claim along with "I am 100% objective, independent and neutral" are bombastic and serve only to undermine his argument. He seems like a smart and reasonable person, and some of his other writing that I've just come across, e.g. https://www.linkedin.com/pulse/why-sec-regulation-enforcement-bogus-big-crypto-john-reed-stark/ https://www.linkedin.com/pulse/why-sec-regulation-enforcemen..., is free of that type of extravagance, so it's unclear why he would make the claim you cite. Perhaps just the "Twitter tends to lower the quality of all discourse" factor.

mavu 3y ago

Ahh, always a nice pass time to go to those tweets and block the first 30 accounts that reply. feels good man.

glerk 3y ago

This is hilarious. So crypto exchanges selling “securities” will be driven out of the US. Ok. US users will have to first buy “approved” cryptocurrencies like Bitcoin, transfer them to a non-US exchange or p2p exchange like Bisq and use a VPN to buy whatever they want. The real winners here are these lawyers and apparatchiks who have never created anything of value in their entire life.

mehlmao 3y ago
As opposed to all the valuable things being crated with cryptocurrencies?
- deleted 3y ago
  [deleted]
- glerk 3y ago
  Correct. And if you personally don't see anything of value being created by cryptocurrencies, nobody is forcing you to invest or work in this field. It's the beauty of free markets when they're allowed to operate properly. Btw ever wondered why in the year of our lord 2023 you can't trade stocks on the NASDAQ after 4pm EST, and why an ACH transfer takes 3 days to settle? I guess it's easier to piss away billions in lawyers and lobbyists to gatekeep the competition instead of R&D to improve your products.

jsdeveloper 3y ago

yes its all that, but people invest in crypto as they don't want to be regulated any more. government control people using money, all these people are more worried about loosing this control , rather than securing financial security of people.

simple-thoughts 3y ago

It doesn’t really matter to actual blockchains what the sec does or doesn’t do. It does matter to the centralized bandits like coinbase who tell people they are “buying crypto” when in fact they are buying a liability that may or may not be worth anything in bankruptcy court. I’ve never held any crypto in a exchange since mt gox, and a new cohort has learned the same lesson from ftx and the fake “defi” platforms.

schoen 3y ago
Sure, but it's still a tough scenario if the vast majority of people don't have a reliable way to convert fiat currency to or from cryptocurrencies (or to or from cryptocurrencies that regulators don't approve of). That would likely mean less liquidity, less broad appeal and application of applications using cryptocurrency, and potentially more stigma.
- simple-thoughts 3y ago
  Less liquidity between the fiat and crypto ecosystem cuts both ways - it makes fiat less valuable since low liquidity creates a class of products and services that cannot be purchased with fiat. If people still want those services, they will barter for them instead using p2p platforms. Examples that already exist include - sending Amazon packages for crypto, providing free or discounted rent for crypto, food delivery services for crypto, etc. This creates a situation where more goods and services can be purchased with crypto than without it, meaning crypto is better money than fiat. Liquidity between fiat and crypto privileges centralized insiders who have the connections to fit into regulators molds and thus leak compliance into the wider crypto ecosystem. Thankfully regulators are too dumb to understand this and are shutting down the main threat to crypto, which is coinbase and it’s kind.
  - schoen 3y ago
    I hadn't thought of it this way and appreciate hearing this argument. But I think you're too optimistic about the extent to which people have adopted cryptocurrencies for their own sake and actively prefer them to fiat.

dan-rocks 3y ago

2024 is the year of the Bitcoin on the desktop. /s

heeebeeejeebees 3y ago

trash article

crtified 3y ago

Curious: what exactly are the mechanics of this seeming dire prediction? Is it being implied, or threatened, that forthcoming actions will lead to the insolvency (and resultant loss of customer funds) of the worlds major crypto 'exchanges' ? Again, by what particular mechanism(s) is this to occur ? I don't outright disbelieve it, but nor is this the first rodeo we've seen.

kgilpin 3y ago

What was interesting about cryptocurrency was the idea of holding your own private keys and conducting transactions directly on the blockchain. In that scenario, everyone is their own “exchange” (kinda) and the SEC might let it roll. Cryptocurrency exchanges really have almost nothing to do with actual cryptocurrency. They just use the terminology (and the hype) as levers to try and build an unregulated exchange. Centralized exchanges are regulated - so here comes that process.

__loam 3y ago
Crypto can't pump without the exchanges because it's too inconvenient and risky to use for most people. It has value because of the exchanges bringing in retail pumping them.

nathias 3y ago

regulatory capture well on the way

nootropicat 3y ago

I used to be optimistic, but it's 2023 and the only non-ponzi use case of crypto are stablecoins. What people actually want is to easily trade and transfer US dollars. Some tokens are pure ponzi schemes (like shib, btc) some are ownership in something that could have productive use (eth, some other smart contract platforms tokens). Yet that use isn't actually happening, so from a general pov it's all a ponzi. The most likely outcome is that nothing productive happens at all. For an average buyer (esp. btc) mark-to-market returns are already underperforming stocks for years when looking even at previous ATH. So many people own some crypto there's no possible separate source of greater fools elsewhere - most current crypto owners will end up at a massive loss. The long-term underperformance compared to other assets will get even worse. From the pure hype perspective, I think there's room for one last bubble. There's an army of bagholders (of every token) that will throw good money after bad when prices are sufficiently high again, giving up real wealth (again) in exchange for virtual tokens of either zero or much lower value. They still hold hope of at least going back to 0, or maybe even making money. After the next one, they won't. It will get really depressing.

notfed 3y ago
> non-ponzi ... stablecoins Erm... https://youtu.be/-whuXHSL1Pg https://youtu.be/-whuXHSL1Pg

jasfi 3y ago

He's pointing out lack of regulation. That typically means more regulation is needed, and is likely on the way. Not that crypto platforms will be banned and die.

jaimex2 3y ago

Is he talking to American citizens only? None of what he is saying applies to me.

TrapLord_Rhodo 3y ago

Interesting development... Why exclude Bitcoin in all of this? is it unlike other cryptos in it's 'unknown ICO'? What makes bitcoin a commodity, vs. Solana, Cardano and Polygon being securtys. Is it the distribution of tokens, method of ICO, tech stack? Snowden showed us the US gov has complete worldwide monitoring, so there's no way they don't know who satoshi is/ was/ were... There's some unknown POI, with $56B and you don't think the CIA and FBI aren't extremely concerned about that person. People always pointed towards bitcoin as being used for 'Money laundering' but its the perfect honey-pot. It's not private, it's completely public and i can tell exactly where and how you interact with the chain. So many idiots think, 'bitcoin's private! let's launder money through it in a super stupid way that still hits all the KYC flags. Oh, your wallet uses tornado cash wash? all incoming and outcoming wallets are now flagged. Why didn't the US ban Bitcoin out the gate? It's not like they US doesn't have presidence here. They shut down and put in jail previous creators of 'internet money'. China (Who also has world-wide monitoring) was also extremely fast in noticing it. in 2013 with a market cap of 1.3b, they banned it while the US was completely apathetic. BTC was created by the CIA. There, i said it.