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I have very little skin in the game and certainly haven't dabbled in the NFT world. And I “don’t like” the idea that a regulator can essentially leverage ambigu

by dcow 3y ago

I have very little skin in the game and certainly haven't dabbled in the NFT world. And I “don’t like” the idea that a regulator can essentially leverage ambiguous language to prosecute after the fact just to leave innovators on their toes. This is required to achieve your goal of innovators asking “should I be doing this”, because otherwise there are clear guidelines and nobody is left wondering. Nothing has changed about the legal system, you’re right, but you expressed a desire to live in a more ambiguous regulatory regime where people are unsure whether they’re committing crimes or not because we’re okay with a changing interpretation of how regulations apply. That rubs me the wrong way and frankly feels pretty dystopian. Yeah I agree that practically it’s good to not have a bunch of buffoons running around doing quasi-legal securities offerings by a different name. But would it really have hurt to have the SEC say “we’ll be applying the Howey Test to NFTs, if you plan to sell one we’d recommend consulting a lawyer versed in securities law before proceeding”. Were consumers really damaged when their founders keys weren’t worth anything? Who in their right mind even treats a founders key as an honest security? Seems like there’s some blame on both sides here. It’s conversely not great to have consumers not using their brains, applying zero scrutiny, and buying into whatever the new street fad is then wailing for the Uncle SEC when their little crypto tokens became worthless. In short, I don’t think you need an ambiguous regulatory regime to achieve a climate of healthy innovation. You just need the SEC to not drag its feet on action and a little up front “hey don’t be idiots we consider this stuff a security <insert reminder of penalties for violation of securities law> so do your homework”.

ameister14 3y ago
I honestly don't think a year and a half from conception and marketing of the assets to charges by the SEC is all that slow, especially in a new market.
Animats 3y ago
> But would it really have hurt to have the SEC say “we’ll be applying the Howey Test to NFTs, if you plan to sell one we’d recommend consulting a lawyer versed in securities law before proceeding”. They did that a few years back for ICOs, sending out "You seem to be doing an ICO. Tell us why you don't need to register this as a security". The ICO market mostly evaporated. A few ICOs did a securities registration. Embarrassing questions have to be answered in a securities registration. Like "Who are you?" "Where do you live?" "What's your previous financial experience?" "Do you have a criminal record?". Crypto people are scared of that stuff.
- junofan 3y ago
  Got a link to the registration form? Would like to learn more.
  - Animats 3y ago
    SEC contacting ICO issuer regarding need for registration.[1] Form D, for small (under $5 million) issuers with a limited number of stockholders.[2] Free to file. Useful for legit small businesses, but not so much for crypto, because crypto issuers want a big "market cap" and lots of HODLrs. Form S-1, for large issuers.[3] This is the classic paper form as a PDF, but today you file this as an XML document. Software to format the XML file is available from several companies. Anyone can download those files and analyze them, plus, at last, the SEC web site has a decent web search interface that displays the financial info. Filing fee is $110.20 per $1,000,000 raised. Misstatements on a form S-1 are felonies. One of the main reasons crypto bros hate this process. [1] https://www.sec.gov/news/press-release/2017-227 https://www.sec.gov/news/press-release/2017-227 [2] https://www.sec.gov/education/smallbusiness/exemptofferings/formd https://www.sec.gov/education/smallbusiness/exemptofferings/... [3] https://www.sec.gov/files/forms-1.pdf https://www.sec.gov/files/forms-1.pdf
wpietri 3y ago
> It’s conversely not great to have consumers not using their brains, applying zero scrutiny, and buying into whatever the new street fad is then wailing for the Uncle SEC when their little crypto tokens became worthless. I disagree. A few centuries of experience make it pretty clear that there's a spectrum between highly regulated markets and unregulated markets. The highly regulated markets are a social good and beloved by both investors and people running actual decent businesses, because they enable effective matching between spare capital and the places where it can be effectively deployed. So I think it's great that most investors feel safe enough to invest in things. It makes the world better. Think of it like the market for food. You can walk into pretty much any store in the US, buy pretty much any packaged food item, and safely eat it. Is it bad that you aren't applying your whole intellect to decide whether that muffin is safe? I'd say no, it's in fact good that you don't have to think about it. But that's only enabled by some pretty intense regulation on food. Some would argue that it's interfering in the marketplace to keep people from selling shoddy discount food, and that we should just let the invisible hand work it out. That people "wailing" when they start throwing up is just them being crybabies, and that they should caveat emptor harder if they don't like blood in their stool. But I think free market fundamentalists like that are deranged. I think markets exist to help fulfill human purposes, and that we should minimize the extent to which scammers, jerks, and monsters can parasitize them. And I think that for all the hue and cry about "innovation" in the cryptowhatever space, I've seen very little that's actually a significant socially positive improvement. In contrast, over the same period that Bitcoin has done approximately nothing useful, we've seen things from M-Pesa to Venmo actually serve millions and millions on a regular basis.

by dcow 3y ago

ameister14 3y ago

I honestly don't think a year and a half from conception and marketing of the assets to charges by the SEC is all that slow, especially in a new market.

Animats 3y ago

> But would it really have hurt to have the SEC say “we’ll be applying the Howey Test to NFTs, if you plan to sell one we’d recommend consulting a lawyer versed in securities law before proceeding”. They did that a few years back for ICOs, sending out "You seem to be doing an ICO. Tell us why you don't need to register this as a security". The ICO market mostly evaporated. A few ICOs did a securities registration. Embarrassing questions have to be answered in a securities registration. Like "Who are you?" "Where do you live?" "What's your previous financial experience?" "Do you have a criminal record?". Crypto people are scared of that stuff.

junofan 3y ago
Got a link to the registration form? Would like to learn more.
- Animats 3y ago
  SEC contacting ICO issuer regarding need for registration.[1] Form D, for small (under $5 million) issuers with a limited number of stockholders.[2] Free to file. Useful for legit small businesses, but not so much for crypto, because crypto issuers want a big "market cap" and lots of HODLrs. Form S-1, for large issuers.[3] This is the classic paper form as a PDF, but today you file this as an XML document. Software to format the XML file is available from several companies. Anyone can download those files and analyze them, plus, at last, the SEC web site has a decent web search interface that displays the financial info. Filing fee is $110.20 per $1,000,000 raised. Misstatements on a form S-1 are felonies. One of the main reasons crypto bros hate this process. [1] https://www.sec.gov/news/press-release/2017-227 https://www.sec.gov/news/press-release/2017-227 [2] https://www.sec.gov/education/smallbusiness/exemptofferings/formd https://www.sec.gov/education/smallbusiness/exemptofferings/... [3] https://www.sec.gov/files/forms-1.pdf https://www.sec.gov/files/forms-1.pdf

wpietri 3y ago

> It’s conversely not great to have consumers not using their brains, applying zero scrutiny, and buying into whatever the new street fad is then wailing for the Uncle SEC when their little crypto tokens became worthless. I disagree. A few centuries of experience make it pretty clear that there's a spectrum between highly regulated markets and unregulated markets. The highly regulated markets are a social good and beloved by both investors and people running actual decent businesses, because they enable effective matching between spare capital and the places where it can be effectively deployed. So I think it's great that most investors feel safe enough to invest in things. It makes the world better. Think of it like the market for food. You can walk into pretty much any store in the US, buy pretty much any packaged food item, and safely eat it. Is it bad that you aren't applying your whole intellect to decide whether that muffin is safe? I'd say no, it's in fact good that you don't have to think about it. But that's only enabled by some pretty intense regulation on food. Some would argue that it's interfering in the marketplace to keep people from selling shoddy discount food, and that we should just let the invisible hand work it out. That people "wailing" when they start throwing up is just them being crybabies, and that they should caveat emptor harder if they don't like blood in their stool. But I think free market fundamentalists like that are deranged. I think markets exist to help fulfill human purposes, and that we should minimize the extent to which scammers, jerks, and monsters can parasitize them. And I think that for all the hue and cry about "innovation" in the cryptowhatever space, I've seen very little that's actually a significant socially positive improvement. In contrast, over the same period that Bitcoin has done approximately nothing useful, we've seen things from M-Pesa to Venmo actually serve millions and millions on a regular basis.