6 ms·

This is such hyperbole. If you're going to trade securities just register properly and follow the regulations. And yes crypto is a security. The SEC is just doi

by TimPC 3y ago

This is such hyperbole. If you're going to trade securities just register properly and follow the regulations. And yes crypto is a security. The SEC is just doing their job when they fail to register yet trade anyways.

barnabee 3y ago
I agree, one has to follow the law. But on the other hand, I'm extremely glad I don't live in the USA. I don't believe the SEC's definition of a security or the rules they put in place are a net good. I would not like to live under the SEC and other US financial regulator's restrictions — not just relating to crypto, but equity crowdfunding, retail derivatives platforms, and more, too. And I would not value the so-called "protections" that target the easiest to apply rules to over the worst offenders, and that have done little or nothing to provide clarity and end regulatory ambiguity. I am not protected from killing myself skiing, or losing all my money gambling, so I should not be "protected" from accessing certain financial assets/products — especially not to the extent and in the way that this happens in the US. I think many (perhaps almost all) other nations have better definitions around securities, and better, more proportionate, and clearer rules for them (of course probably none are perfect, but that is true of nearly all rules). Some of those countries have even accepted that many of their citizens would like to experiment with these new technologies, and might like to see a different model for their regulation, to allow this experimentation, and tried to create rules to allow this, realising that stability and stasis should not be the goal above all else. It is a shame to see this direction of travel.
- finexplained 3y ago
  [flagged]
  - dang 3y ago
    Yikes, you can't attack other users like that. We ban accounts that do this. I don't want to ban you, so if you'd please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here, we'd appreciate it.
    - finexplained 3y ago
      I'm sorry, I know we're not suppose to engage in ad hominem attacks. I'll refrain in the future.
      - dang 3y ago
        Appreciated!
- 2devnull 3y ago
  “ think many (perhaps almost all) other nations have better definitions around securities” That’s absurd. American markets are preferred by most of the planet. You may choose to keep your money out based on principal, but it won’t be a financially driven choice. It’s like buying a car based on the cars’ color. It’s one aspect but not one of the more important aspects. For most people, the criteria would be returns vs risk. American markets are relatively low risk and high return, even if we aren’t very democratic lately.
- NikolaNovak 3y ago
  For what it's worth, I don't think some of your examples are fully on point. In many countries, gambling is heavily regulated. Not everybody can gamble, not everybody can offer gambling services, and there are rules and disclaimers on tickets/entries/whatever. Similarly, yes you can ski anywhere, but some companies included waivers and disclaimers if e.g. you want to use their lifts or slopes or services. Point is, even the best examples you came up with aren't actually a clear-cut case of "you can do whatever you want, it's on you, with no regulations or warning or protections". At their best, regulations are a collective "We tried this, it sucked/harmed people, ouchie, let's not do it again". They ARE a "Let's learn the hard way" but on a societal scale. It is, to me, insane to take an unpragmatic, extreme, libertarian way of "everybody should learn from their own mistakes only". (at their worst, of course, regulations are oppressive, ridiculous, overly complicated, serve limited or counter purpose, ambiguous, overbearing, and growing ad infinitum:)
koolba 3y ago
Are there any examples of the SEC allowing anyone to register a crypto security? Saying you haven’t done it and not letting you do it is a bit of a catch 22. And none of this addresses the defi ecosystem either. As an end user, can I access a defi app deployed by a non-US entity?
- EGreg 3y ago
  That’s a good point. Look at Telegram. They tried to use Reg D to sell the initial SAFTs, and restricted it only to millionaires, so clearly they were the type of “accredited investor” the SEC wanted. Well, Rule 144 says after a year of holding, these millionaires could sell to anyone. Read section 4a(1) of the Securities and Exchange Act. But, somehow, the SEC got Telegram to abandon its plans and return all the money. Because the SEC argued that TON itself was a security, not a commodity, they said that it cannot be sold to the public. What if the investors were the ones selling, and not TON? If they are not AFFILIATES of TON, purchased without a view to resell, held them for a year, then why can’t they resell a few here and there? They are not considered underwriters under Section 4(a)1. Even most states allow such sales. Not to mention that the new Reg D after the JOBS Act pre-empts state laws for the primary sales, so I am not sure the states could easily win a case. I followed that case and it was never really clear what securities laws Telegram broke by making a Reg D filing and a SAFT. Maybe someone here can explain, if you actually read the case also. Now the decentralized TON community is building it instead. https://www.coindesk.com/markets/2020/04/12/making-sense-of-the-secs-case-against-telegram/ https://www.coindesk.com/markets/2020/04/12/making-sense-of-...
- whateveracct 3y ago
  It's not a catch 22 though. There's coherent logic to it. It isn't that the SEC "isn't allowing you to register." It's that crypto exchanges can't/won't properly register. To put it more abstractly, it makes perfect sense for not all securities to be capable of becoming registered securities.
  - px43 3y ago
    Please take a moment to look at anything that Coinbase legal has put out in the past few years. They have desperately been trying to figure out how to register, to the point of suing the SEC to get information, and the SEC has time and time again refused to provide any information about how to do that. Coinbase was founded, from day one, to be the most compliant cryptocurrency exchange in the US. They have hired massive teams of former lawmakers and regulators to try to navigate the path to get cleared by the SEC. If Coinbase hasn't been able to do it, how could any other company reasonably expect to do it? I expect that when Coinbase eventually responds to this, likely in the next few minutes, the response will contain the full timeline of everything they've done to try and register. I've been listening to their lawyers get interviewed on podcasts and seen the countless blog posts they've posted about trying to get anything from the SEC, which has been entirely ignored. It's pretty infuriating. The SEC needs to label Coinbase as some lawless entity that refuses to follow the rules, when nothing could be farther from the truth.
EGreg 3y ago
other very popular industries could be selling securities, if you actually apply the test. Tell me the flaw in the following, and if there is no flaw, why did the SEC never go after them to make an example: All shows like Yu Gi Oh, Pokemon, etc. have been running, technically speaking, unregistered securities offerings throughout the world and United States, yet the SEC does nothing. They are textbook cases of the Howey Test: 1) People (kids, in fact!) buy Yu Gi Oh trading cards 2) There is an investment of money (either they nag their parents, or they actually spend a non-trivial proportion of their own life savings) 3) With an expectation of profit. Witness how many of them don't actually use the cards, but keep them in mint condition (and as we have seen SEC successfully argue in the recent case SEC vs LBRY, if even a few people buy with expectation of profit, then ALL those sales are securities). 4) From the efforts of others -- namely the producers of the show, and their promotion of Yu Gi Oh trading cards. Trading! Perhaps even selling! 5) There is definitely a common enterprise, that isn't even decentralized. The Yu Gi Oh show is produced in Japan and shown in the USA, and drives the sales of the cards. Cancel the show, and the cards fall in price. Yu Gi Oh Abridged series even lampooned this, to great comedic effect. Oh those foreign-owned Japanese companies, preying on our kids selling them investment contracts! Do they really think the kids are sophisticated investors who think things through when they keep their mint-condition cards! Who will buy the top and be holding the bag after the show is canceled? So being a textbook definition of Howey, why did the SEC never go after Pokemon, Yu Gi Oh and any of the other "merchandising" companies? How about Marvel with their mint-condition comics? Isn't that a "common enterprise" since some people buy comics for their investment value?
- marcinzm 3y ago
  >why did the SEC never go after them to make an example: Because they don't have a market cap over a trillion dollars.
- lettergram 3y ago
  Going after trading cards would point out how crazy the SEC actually is
- djbusby 3y ago
  The cards can also be used for playing and the comics for reading. They escape the Howey Test because they can and are used for non-securities things.
px43 3y ago
Saying "just register properly" is insane at this point. Coinbase has spent millions in legal fees over the past decade trying to get the SEC to publish how to do exactly that, and the SECs repeatedly refused to clarify how to do that. So much so that Coinbase sued the SEC for ignoring process in April, and Gensler got pulled into a congressional hearing a couple months ago where several congress people attempted to get him to clarify rules, and he refused to do so. The SEC wants to "rule by enforcement", and are doing everything in their power to refuse to define clear rules, because then people would be able to follow them, and the SEC would no longer have the power to leverage enforcement actions against them.
- linuxftw 3y ago
  [dead]
  - enraged_camel 3y ago
    Yeah, the whole “we tried to get them to tell us how to do it!” thing is a very weak defense.
    - px43 3y ago
      Coinbase Staking, the specific service that the SEC is going after here, is obviously not a security. It's a hosted custodial wallet, and Coinbase provides delegated staking. IMO Coinbase lawyers are about to eat the SEC alive.
      - ceejayoz 3y ago
        The Howey test sets out four points: * An investment of money - check (into the staking pool) * In a common enterprise - check (the staking pool) * With the expectation of profit - check (obviously) * To be derived from the efforts of others - check (the manager of the pool) It's a security.
        taeric 3y ago
alchemist1e9 3y ago
Are PoW mined coins securities? Who is the issuer? securities require an issuer.
- 0x445442 3y ago
  Bingo. Bitcoin is much closer to gold than Apple stock.
- paulgb 3y ago
  There’s a list of coins that coinbase has sold that the SEC considers securities on page 33 of the filing, and Bitcoin is not in the list. They list coins like SOL and DASH. I’d paste the whole list but my phone won’t let me copy from a PDF.
  - cdiddy2 3y ago
    If bitcoin is not a security, how could someone also create a non-security token like bitcoin? This seems very unclear
  - FireBeyond 3y ago
    The SEC and Supreme Court say that "a note is presumed to be a security unless it bears a strong resemblance, determined by examining four specified factors, to one of a judicially crafted list of categories of instrument that are not securities".
roenxi 3y ago
The only way the US government can effectively enforce their regulations is to kill the exchanges and then try to make sure that organic trade can't happen. How else can they exert control over something like Monero except attempt to kill it? What is option B? It is not hyperbole to observe the obvious; something has to give. It is notable that the crimes here are victimless. I don't recall if I have ever bought anything on Coinbase; but the VIOLATIONS section of the complaint isn't accusing them of anything I care about in my capacity as a crypto trader.
ofslidingfeet 3y ago
It's not hyperbole; you just don't know what you're talking about.

by TimPC 3y ago

barnabee 3y ago

I agree, one has to follow the law. But on the other hand, I'm extremely glad I don't live in the USA. I don't believe the SEC's definition of a security or the rules they put in place are a net good. I would not like to live under the SEC and other US financial regulator's restrictions — not just relating to crypto, but equity crowdfunding, retail derivatives platforms, and more, too. And I would not value the so-called "protections" that target the easiest to apply rules to over the worst offenders, and that have done little or nothing to provide clarity and end regulatory ambiguity. I am not protected from killing myself skiing, or losing all my money gambling, so I should not be "protected" from accessing certain financial assets/products — especially not to the extent and in the way that this happens in the US. I think many (perhaps almost all) other nations have better definitions around securities, and better, more proportionate, and clearer rules for them (of course probably none are perfect, but that is true of nearly all rules). Some of those countries have even accepted that many of their citizens would like to experiment with these new technologies, and might like to see a different model for their regulation, to allow this experimentation, and tried to create rules to allow this, realising that stability and stasis should not be the goal above all else. It is a shame to see this direction of travel.

finexplained 3y ago
[flagged]
- dang 3y ago
  Yikes, you can't attack other users like that. We ban accounts that do this. I don't want to ban you, so if you'd please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here, we'd appreciate it.
  - finexplained 3y ago
    I'm sorry, I know we're not suppose to engage in ad hominem attacks. I'll refrain in the future.
    - dang 3y ago
      Appreciated!
2devnull 3y ago
“ think many (perhaps almost all) other nations have better definitions around securities” That’s absurd. American markets are preferred by most of the planet. You may choose to keep your money out based on principal, but it won’t be a financially driven choice. It’s like buying a car based on the cars’ color. It’s one aspect but not one of the more important aspects. For most people, the criteria would be returns vs risk. American markets are relatively low risk and high return, even if we aren’t very democratic lately.
NikolaNovak 3y ago
For what it's worth, I don't think some of your examples are fully on point. In many countries, gambling is heavily regulated. Not everybody can gamble, not everybody can offer gambling services, and there are rules and disclaimers on tickets/entries/whatever. Similarly, yes you can ski anywhere, but some companies included waivers and disclaimers if e.g. you want to use their lifts or slopes or services. Point is, even the best examples you came up with aren't actually a clear-cut case of "you can do whatever you want, it's on you, with no regulations or warning or protections". At their best, regulations are a collective "We tried this, it sucked/harmed people, ouchie, let's not do it again". They ARE a "Let's learn the hard way" but on a societal scale. It is, to me, insane to take an unpragmatic, extreme, libertarian way of "everybody should learn from their own mistakes only". (at their worst, of course, regulations are oppressive, ridiculous, overly complicated, serve limited or counter purpose, ambiguous, overbearing, and growing ad infinitum:)

koolba 3y ago

Are there any examples of the SEC allowing anyone to register a crypto security? Saying you haven’t done it and not letting you do it is a bit of a catch 22. And none of this addresses the defi ecosystem either. As an end user, can I access a defi app deployed by a non-US entity?

EGreg 3y ago
That’s a good point. Look at Telegram. They tried to use Reg D to sell the initial SAFTs, and restricted it only to millionaires, so clearly they were the type of “accredited investor” the SEC wanted. Well, Rule 144 says after a year of holding, these millionaires could sell to anyone. Read section 4a(1) of the Securities and Exchange Act. But, somehow, the SEC got Telegram to abandon its plans and return all the money. Because the SEC argued that TON itself was a security, not a commodity, they said that it cannot be sold to the public. What if the investors were the ones selling, and not TON? If they are not AFFILIATES of TON, purchased without a view to resell, held them for a year, then why can’t they resell a few here and there? They are not considered underwriters under Section 4(a)1. Even most states allow such sales. Not to mention that the new Reg D after the JOBS Act pre-empts state laws for the primary sales, so I am not sure the states could easily win a case. I followed that case and it was never really clear what securities laws Telegram broke by making a Reg D filing and a SAFT. Maybe someone here can explain, if you actually read the case also. Now the decentralized TON community is building it instead. https://www.coindesk.com/markets/2020/04/12/making-sense-of-the-secs-case-against-telegram/ https://www.coindesk.com/markets/2020/04/12/making-sense-of-...
whateveracct 3y ago
It's not a catch 22 though. There's coherent logic to it. It isn't that the SEC "isn't allowing you to register." It's that crypto exchanges can't/won't properly register. To put it more abstractly, it makes perfect sense for not all securities to be capable of becoming registered securities.
- px43 3y ago
  Please take a moment to look at anything that Coinbase legal has put out in the past few years. They have desperately been trying to figure out how to register, to the point of suing the SEC to get information, and the SEC has time and time again refused to provide any information about how to do that. Coinbase was founded, from day one, to be the most compliant cryptocurrency exchange in the US. They have hired massive teams of former lawmakers and regulators to try to navigate the path to get cleared by the SEC. If Coinbase hasn't been able to do it, how could any other company reasonably expect to do it? I expect that when Coinbase eventually responds to this, likely in the next few minutes, the response will contain the full timeline of everything they've done to try and register. I've been listening to their lawyers get interviewed on podcasts and seen the countless blog posts they've posted about trying to get anything from the SEC, which has been entirely ignored. It's pretty infuriating. The SEC needs to label Coinbase as some lawless entity that refuses to follow the rules, when nothing could be farther from the truth.

EGreg 3y ago

other very popular industries could be selling securities, if you actually apply the test. Tell me the flaw in the following, and if there is no flaw, why did the SEC never go after them to make an example: All shows like Yu Gi Oh, Pokemon, etc. have been running, technically speaking, unregistered securities offerings throughout the world and United States, yet the SEC does nothing. They are textbook cases of the Howey Test: 1) People (kids, in fact!) buy Yu Gi Oh trading cards 2) There is an investment of money (either they nag their parents, or they actually spend a non-trivial proportion of their own life savings) 3) With an expectation of profit. Witness how many of them don't actually use the cards, but keep them in mint condition (and as we have seen SEC successfully argue in the recent case SEC vs LBRY, if even a few people buy with expectation of profit, then ALL those sales are securities). 4) From the efforts of others -- namely the producers of the show, and their promotion of Yu Gi Oh trading cards. Trading! Perhaps even selling! 5) There is definitely a common enterprise, that isn't even decentralized. The Yu Gi Oh show is produced in Japan and shown in the USA, and drives the sales of the cards. Cancel the show, and the cards fall in price. Yu Gi Oh Abridged series even lampooned this, to great comedic effect. Oh those foreign-owned Japanese companies, preying on our kids selling them investment contracts! Do they really think the kids are sophisticated investors who think things through when they keep their mint-condition cards! Who will buy the top and be holding the bag after the show is canceled? So being a textbook definition of Howey, why did the SEC never go after Pokemon, Yu Gi Oh and any of the other "merchandising" companies? How about Marvel with their mint-condition comics? Isn't that a "common enterprise" since some people buy comics for their investment value?

marcinzm 3y ago
>why did the SEC never go after them to make an example: Because they don't have a market cap over a trillion dollars.
lettergram 3y ago
Going after trading cards would point out how crazy the SEC actually is
djbusby 3y ago
The cards can also be used for playing and the comics for reading. They escape the Howey Test because they can and are used for non-securities things.

px43 3y ago

Saying "just register properly" is insane at this point. Coinbase has spent millions in legal fees over the past decade trying to get the SEC to publish how to do exactly that, and the SECs repeatedly refused to clarify how to do that. So much so that Coinbase sued the SEC for ignoring process in April, and Gensler got pulled into a congressional hearing a couple months ago where several congress people attempted to get him to clarify rules, and he refused to do so. The SEC wants to "rule by enforcement", and are doing everything in their power to refuse to define clear rules, because then people would be able to follow them, and the SEC would no longer have the power to leverage enforcement actions against them.

linuxftw 3y ago
[dead]
- enraged_camel 3y ago
  Yeah, the whole “we tried to get them to tell us how to do it!” thing is a very weak defense.
  - px43 3y ago
    Coinbase Staking, the specific service that the SEC is going after here, is obviously not a security. It's a hosted custodial wallet, and Coinbase provides delegated staking. IMO Coinbase lawyers are about to eat the SEC alive.
    - ceejayoz 3y ago
      The Howey test sets out four points: * An investment of money - check (into the staking pool) * In a common enterprise - check (the staking pool) * With the expectation of profit - check (obviously) * To be derived from the efforts of others - check (the manager of the pool) It's a security.
      - taeric 3y ago

alchemist1e9 3y ago

Are PoW mined coins securities? Who is the issuer? securities require an issuer.

0x445442 3y ago
Bingo. Bitcoin is much closer to gold than Apple stock.
paulgb 3y ago
There’s a list of coins that coinbase has sold that the SEC considers securities on page 33 of the filing, and Bitcoin is not in the list. They list coins like SOL and DASH. I’d paste the whole list but my phone won’t let me copy from a PDF.
- cdiddy2 3y ago
  If bitcoin is not a security, how could someone also create a non-security token like bitcoin? This seems very unclear
- FireBeyond 3y ago
  The SEC and Supreme Court say that "a note is presumed to be a security unless it bears a strong resemblance, determined by examining four specified factors, to one of a judicially crafted list of categories of instrument that are not securities".

roenxi 3y ago

The only way the US government can effectively enforce their regulations is to kill the exchanges and then try to make sure that organic trade can't happen. How else can they exert control over something like Monero except attempt to kill it? What is option B? It is not hyperbole to observe the obvious; something has to give. It is notable that the crimes here are victimless. I don't recall if I have ever bought anything on Coinbase; but the VIOLATIONS section of the complaint isn't accusing them of anything I care about in my capacity as a crypto trader.

ofslidingfeet 3y ago

It's not hyperbole; you just don't know what you're talking about.