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I mean, Kraken is not a registered securities exchange. They offer many cryptocurrencies. The SEC has indicated that it considers most, probably all, cryptocu

• SeanAnderson 3y ago
  Well, Gary Gensler is on record in 2023 saying Bitcoin is not a security. So, I don't think it's accurate to say "probably all." In previous years Ethereum had also been described as not a security, but that opinion seems to have shifted with time. It's still not super clear to me why he says Bitcoin is not a security, but that Ethereum would be a security. I'm fine with whatever ruling as long as I can understand how it's being applied. I feel pretty good about considering stable coins securities. I'm less certain about NFTs since there is receipt of a (semi)tangible product. I wonder if the recent introduction of ordinals to Bitcoin will result in his opinion on BTC shifting soon, too?
  • kylebenzle 3y ago
    Bottom line is that the founder/owner of Ethereum has said very clearly that investing in ETH is investing in the Ethereum team. Bitcoin Cash has no such "team" you invest in when buying BCH. I think thats the difference.
    • SeanAnderson 3y ago
      Well, I had started the conversation about BTC not BCH. Personally, I feel that BCH has more of a team associated with it than BTC. That said, none of what we're talking about addresses the fact that, in 2018, Gensler said, quote, "Bitcoin. Ether. Litecoin. Bitcoin Cash. Why did I name those four? They’re not securities." Since then, things have changed, and now Gensler only highlights BTC as not a security. If the inflection point was various teams speaking publicly about their usage of funds, and those talking points shifted Gensler's opinion, then OK, but I am not aware of an official moment when his sentiment shifted. As another commenter highlights, it could also be the transition to POS for Ethereum, but, again, I am not aware of Gensler highlighting the transition as the inflection point and this rationale fails to explain LTC and BCH. To me, it feels like chasing opinion and public sentiment - not following rigid, established legal patterns.
      • kylebenzle 3y ago
        Isn't BTC controlled by one single very centralized group, Blockstream? I could be wrong but I thought Adam Back's Blockstream long ago hijacked the GitHub repo and took full control of that project.
        • hanniabu 3y ago
          That's correct, there's effectively no difference
        • SeanAnderson 3y ago
          It very may well be. I don't own any BTC and I had limited awareness of Blockstream until you mentioned it. I feel that this would make a stronger case for it being considered a security, though, no? And yet on September 27th 2023 Gensler reiterates Bitcoin is not a security: https://www.forbes.com/sites/jasonbrett/2023/10/01/sec-chair-gensler-clashes-with-congressman-on-bitcoin-ether/?sh=5ab3d0d470d7#:~:text=For%20Bitcoin%2C%20Gensler%20answered%2C%20%E2%80%9CI%20would%20say%20it%E2%80%99s%20not%20a%20security https://www.forbes.com/sites/jasonbrett/2023/10/01/sec-chair... I feel we're getting a bit into the weeds, though. Is your stance that Bitcoin is a security and that remarks made two months ago by the Chairperson of the SEC are misguided? Or is it that Bitcoin is not a security, but Ethereum is? If so, is that for technical reasons or just due to how it's discussed and marketed?
        • drexlspivey 3y ago
          Blockstream afaik hired a few devs and paid them to contribute to bitcoin core, first I’m hearing about a hijack of the repository
        • FabHK 3y ago
          Seems to me that one can make an argument that the following people, named in bitcoin/src/kernel/chainparams.cpp, control BTC: vSeeds.emplace_back("seed.bitcoin.sipa.be."); // Pieter Wuille, only supports x1, x5, x9, and xd vSeeds.emplace_back("dnsseed.bluematt.me."); // Matt Corallo, only supports x9 vSeeds.emplace_back("dnsseed.bitcoin.dashjr.org."); // Luke Dashjr vSeeds.emplace_back("seed.bitcoinstats.com."); // Christian Decker, supports x1 - xf vSeeds.emplace_back("seed.bitcoin.jonasschnelli.ch."); // Jonas Schnelli, only supports x1, x5, x9, and xd vSeeds.emplace_back("seed.btc.petertodd.org."); // Peter Todd, only supports x1, x5, x9, and xd vSeeds.emplace_back("seed.bitcoin.sprovoost.nl."); // Sjors Provoost vSeeds.emplace_back("dnsseed.emzy.de."); // Stephan Oeste vSeeds.emplace_back("seed.bitcoin.wiz.biz."); // Jason Maurice
  • cft 3y ago
    Also Ethereum switched to proof of stake. Which means that the "stakeholders" (shareholders) are voting what transactions go into the ledger. Bitcoin is proof of work still.
    • landemva 3y ago
      Hmmm, somewhat different than an election voting. With proof of stake, a staker eventually gets an opportunity to follow the validation rules and put some transactions in a block. If they don't properly follow the rules, they will get slashed. If they don't submit a block when it is their turn, they will get gently slashed. In proof of work it is a free-for-all with whoever has the most hashing power winning block submission more frequently. If they submit a block that doesn't follow the validation rules they keep all of their (physical silicon) hashing power and the block is ignored.
    • ChadNauseam 3y ago
      A majority of bitcoin miners can also prevent transactions from entering the ledger at cost to themselves, just like Ethereum stakers. It's a misconception that Ethereum works via stakers voting the way people normally think of voting.
      • cft 3y ago
        The point is that majority mining is disassociated with the majority ownership of the underlying crypto in the pow case
  • landemva 3y ago
    > I feel pretty good about considering stable coins securities. Take that further to airline points and Chipotle points. If the stablecoin does not provide returns to the holder, how is it an investment contract?
    • lmm 3y ago
      > Take that further to airline points and Chipotle points. No-one is holding those with an "expectation of profit". Whereas essentially the only use of "stablecoins" is as investment schemes; even if someone isn't expecting the value of their stablecoin to rise against USD, they're expecting it to rise against something.
      • landemva 3y ago
        Stablecoins are supposed to be stable, and not rise or fall. There is no expectation of profit for a stablecoin like USDC. And USDC doesn't pay interest. People use it for stability and for payments.
        • lowkeyoptimist 3y ago
          Last I checked, you could get 5% interest on your USDC. Is that just something where the exchange is lending it out?
          • landemva 3y ago
            It is not the code of the USDC stablecoin paying 5%, so that reward is something else. Maybe the exchange wants to get many people sending coin to them so their asset base looks big for ... some purpose?
        • ac29 3y ago
          > USDC doesn't pay interest Coinbase, who co-founded USDC, absolutely pays interest on USDC: https://www.coinbase.com/usdc https://www.coinbase.com/usdc (they call it rewards instead of interest in an attempt to avoid regulation, but it is functionally the same thing)
  • pants2 3y ago
    Gensler also said in 2018 that 3/4 of all cryptocurrencies were NOT securities. He likes to continuously expand his power by insisting everything is a security and falls under his jurisdiction.
• yieldcrv 3y ago
  This logic is why the SEC is losing in court The SEC’s first strategy was to go after the companies creating the crypto. Most that are targeted settled and exchanges delisted those crypto assets that were ruled to be securities - registered or not - then the SEC went after well funded, more professional and less risk averse ones and have been losing in court. So this is a war of attrition so the SEC then just went with blanket statements and goes after the exchanges, without telling them which ones are securities. The SEC also has not been winning at this second strategy. All anybody has been asking is for the SEC to tell them the difference between the assets. How can a crypto asset be issued compliantly as only a product, and when does it transition into not being a security if so? The SEC has fumbled over its words as if trained on 10 years of HN crypto comments, and the courts say its arbitrary and capracious.
  • lettergram 3y ago
    It’s because laws set out what are securities. A distributed ledger of cryptographic tokens is by definition not a security. So the SEC just claiming they are isn’t going to win any court. Their goal is really to drain funds and get companies to settle. Because the SEC isn’t supposed to determine what is a security
    • yieldcrv 3y ago
      the security law regulates transactions, that is sufficiently enough to cover cryptographic tokens and the ways they are settled, and thats not where the SEC loses they lose because they cant articulate when they are securities and when they're not securities their theory does play into a trap you pointed out, in that there are plenty of non crypto products that function the same way - limited supply runs sold by corporate issuer where a ton of speculator collectors hope the price goes up based on the actions of the issuer - that the SEC never bothered with. Either they're all securities or none of them are. The SEC has been asked to explain the difference and fails. People on this forum played devils advocate on a supposed legal difference just because they dont like crypto, but their arbiter - the SEC - fails to find those points strong enough to argue its position at all! the courts and the senate are like “wait, you don’t have an argument at all? good lord” but like an abusive spouse it just keeps circling over the same word salad of “you’re supposed to know what I want, its been sufficiently clear the entire time” instead of articulating themselves using their words, to the shock of the couples counselor who already had a bias towards the spouse but can’t come up with anything to help their ridiculous case
• DennisP 3y ago
  The SEC may think that but so far they haven't done well proving it in court.
• hanniabu 3y ago
  The Coinbase Wells letter was in reference to their interest bearing offerings
  • westurner 3y ago
    Presumably Coinbase and Kraken had to register as banks to offer FDIC-insured accounts (and debit cards)? Non-Security Deposits are interest-bearing products that are not securities. Non-Security Deposits: CD Certificates of Deposit, MMA Money Market Accounts, Treasury Bills, Savings accounts, Checking Accounts Do banks require SEC registration to offer interest-bearing Non-Security Deposit products? Have banks ever been required to qualify interest-bearing products as securities contracts, after qualifying each product for list in each US State of operation?
    • soks86 3y ago
      They absolutely are not banks or none of this would be happening. This also is about unregistered securities and not interest bearing accounts although that too is an issue because they're not banks. edit: They're Money Services Businesses and that's it. They might have some state-level lending licenses but I'm fuzzy on that.
      • westurner 3y ago
        FDIC: https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp... : > The Federal Deposit Insurance Corporation (FDIC) is a United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. https://www.sifma.org/resources/general/firms-guide-to-the-consolidated-audit-trail/#:~:text=Any%20broker%2Ddealer%20that%20is,counter%20(OTC)%20equity%20securities https://www.sifma.org/resources/general/firms-guide-to-the-c.... : > Any broker-dealer that is a member of a national securities exchange or Financial Industry Regulatory Authority (FINRA) and handles orders must report to CAT. Eligible securities include NMS stocks, listed options, and over-the-counter (OTC) equity securities. Interledger Protocol works with any type of ledger, has a defined messaging spec, and has multi-hop audit trails: https://westurner.github.io/hnlog/#comment-36503888 https://westurner.github.io/hnlog/#comment-36503888