Bitcoin has less foundation- or team-based leadership that have plagued other crypto projects. This leadership (eg Ethereum foundation) gives crypto projects the air of legitimacy, but also the impression, as Hinman put it, that some managerial work and direction is expected, tipping the scale towards security. If the network becomes decentralized to the point where no one party has sway over its direction (even a good one eg the move to proof of stake), only then can you consider it a commodity, at least in Hinman’s view.
Not only does this make sense but it also further speaks to the strength of the bitcoin project, specifically Satoshi’s decision to not be a public figure/BDFL. I doubt this security-commodity issue factored in specifically, but it was really a brilliant and largely unprecedented move that aligns with bitcoin’s political philosophy as well: no leaders.
The SEC and Wallstreet have been locked in an eternal cat and mouse game for decades. And given that Wallstreet has the money and hence the talent and options it tends to be a step ahead of the SEC.
I expect this will be even more true for crypto. While I believe that some regulation might be a good thing as it makes crypto safer for the wider public I am genuinely doubtful that the SEC has the capabilities or the right incentives to be that regulator.
In this case the tension is not between SEC and Wall Street but between the SEC (which regulates stocks and bonds) and the CFTC (which regulates commodities and derivatives).
Most people in Wall Street and the crypto community want clearer regulations so they know what the rules are for specific coins/tokens and transactions. What we have now is a very slow Government trying to catch up with technology coupled with infighting between different regulators defending their own turf.
Fortunately there was a bill introduced in the US Senate (referenced in the article) that would clear up much of this, along with various taxation issues.
It's the same problem that the ATF has with regulating guns or the FDA with regulating drugs; classifications are inherently limited and once you define one I can now make something that doesn't fit your existing classifications.
Which is good, we don't want to give the government over-reaching powers, but we also want them to do something.
I think it boils down to public adoption, right? Like, everyone, even the bell-hop, was telling me to buy. It was beyound insane. But they said that because they all saw the graphs. It made the news, etc. But I rarely meet people who will happily take BTC or what have you. Now, is this because it's still in geeksville, or because it's harder to pay taxes, or because its slow? Where do you draw the line on usability? We know why it was made.
> Ether is a product, NOT a security or investment offering. Ether is simply a token useful for paying transaction fees or building or purchasing decentralized application services on the Ethereum platform; it does not give you voting rights over anything, and we make no guarantees of its future value.
Ah yes, the "this ROM is legal as long as you delete it before 24 hours after you download it!" clause. Everyone knows it's not a crime as long as you loudly yell THIS IS NOT A CRIME while doing it. After all why would someone say that if it's not true?!
The SEC can threaten, but they may have blown up their opportunity to regulate cryptocurrency. If they lose the Ripple vs SEC lawsuit (and, according to observers, it's not been going as well for the SEC as they would wish), they could permanently lose almost all ability to regulate cryptocurrency by their lack of timely action and because of one speech by an SEC official four years ago.
The SEC is basically trying to argue that the speech was personal opinion (and the speech said that ETH was not a security), but Ripple alleges that the speech, though perhaps not an official statement, was much more than a personal opinion. We now know the SEC lawyers were involved in writing the speech, which is making life difficult for the SEC. This is also why the SEC is being far more careful now and is saying only BTC is not a security, but that ship may have sailed.
It's being called the Crypto Trial of the Century. A win for Ripple on the SEC's slip-up could mean the SEC is powerless to intervene in most crypto markets. A win for the SEC would result in mass regulation.
No lawyers familiar with how administrative agencies work agree with that assessment. And that is, importantly, not how rulemaking works at administrative agencies.
EDIT: Administrative agency "rulemaking" is constrained by a fixed set of procedures that an agency must follow in order to "promulgate" a rule. First, they must publish a draft of the proposed rules, allow for several weeks or months of public comment, spend several weeks or months reviewing those comments, revise the rules as needed based on the comments received (or explain why no revisions are necessary), and then finally publish the finalized rules in the Federal Register.
Comments made by a single employee do not convey, or constrain, an agency's position on matters within its scope (unless those comments are made in, and pursuant to, a legal proceeding, in which case they are binding only for the limited scope of that legal proceeding).
Would you mind sharing more of your thoughts on what might play out if the SEC loses? And then also, if you don't mind, what would happen if the SEC wins?
The SEC is in tough position. Either elon musk can tweet random stuff as personal opinion, or a speech given by the SEC chair has legal standing. I'm watching with popcorn.
Bitcoin is a tool first, and a commodity second. I never "hold" bitcoin, or if I do is for an extremely short while. I've used it plenty of times for almost a decade in this fashion:
1. Get paid in BTC for a service or a product (or buy BTC with offshore money)
2. Sell to someone for an agreed on price
3. Get cash/local currency/supplies/whatever
Two thoughts:
- Lower hype on bitcoin is a good thing for me, as it will bring less attention to it from goverments. I just need a critical mass of people there are enough buyers/sellers/miners.
- The two things that worry me are: governance of the project, and the fact that bitcoin mining traffic can be detected (somewhat like torrents). So, if govts want, they could force the ISPs to check for traffic that may indicate mining, raid, and eventually kill all mining operations (China probably will). Most likely, some countries will be more lax on that.
Finance newbie here, but what is a 'security'? I looked it up, but can't grok it despite people's best attempt to describe it. All the articles can't sum it up in an ELI5 way. What's the TL;DR way of describing a security, and how does BTC fare in this? Is BTC a security?
Probably not in the traditional sense. The difference Bitcoin has to most cryptocurrencies is that it was specifically designed with no "premined" blocks and no preordained rewards. In contrast, a lot of projects sold tokens through an "ICO" with a promise of a future project developed against it. ICOs are basically securities, because you're buying the token without actually any guarantee that the project delivers on what it needs to deliver on for the value to change.
In contrast, again, Bitcoin was just offered as a cryptocurrency, from the start. The first block encoded a current event to distinguish the fact that there aren't any rewards already allocated to creators. It was also launched with the complete product available from the start (sans network upgrades).
Note: I'm not saying that Bitcoin is good or anything. I'm just distinguishing between it and most other tokens. Bitcoin has governance systems in place and other systems that make it "more security like" but clearly the SEC chair doesn't seem to believe it crosses that line.
The other replies give the technical definitions, but the high level picture is that a security is an investment opportunity. The issuer of a security has to follow a bunch of laws to ensure that said issuers don’t go around scamming everyday people
It's always nice to know that such important things are never left in the hands of the ignorant masses and are instead left to the rich aristocracy who know what is best for lesser men.
> they can't make new categories for new tech and have to shoehorn it into the old
Nobody is doing that. For all the new techiness of crypto, its popular failure modes of pumps and dumps, rug pulls and promoters lying through their teeth is identical to the pre-Securities Act securities landscape. So for those narrow problems these proven solutions should work.
The only 'new tech' is essentially math-based anti-counterfeit protection. Aside from that, this is all firmly traditional financial footwork; "____, but with computers" doesn't really move the needle.
I agree with this. I have said it's the only crypto worth participating in because it's the only crypto that originated for idealistic reasons.
In that capacity it is similar to gold, which in the Golden Age (something everybody talked about in Antiquity and I decided to believe, but I've never encountered anybody else believing in) was openly swapped around as little inventions (you can make all kinds of shit with gold, it's a miracle material, lubricant, any precision, single isotope, list goes on endlessly) and gifts, but then some assholes decided to start hoarding it and enslaving people to mine it, charging interest using it, weigh one gold gift against another saying they balance out, use it to pay for wars to amass more gold. And it became something we just hoard underground. In other cultures it's this stuff, like Kechwa (Inca) it was about worshipping the sun and sure enough it basically is the sweat from the sun because it only is created by stars in supernovas. Idealistic in its origin.
Except in satellites, in satellites it's used for all kinds of shit, the foil for reentry (silver and gold, but only the gold resisted reentry), as lubricant, for welding (4:1 gold to tin), for the electronics of course, as a conductor in some cases so wire, heat foil. And medicine, so dentistry a huge amount but also implants, gold-titanium alloys. And injections for rheumatism in a chemical composition. And anything that must not rust, the go-to is gold.
So all the other coins? They're shitcoins. There is only Bitcoin, everyone else just wanted to get rich quick. Satoshi never cashed out, I divine he committed suicide in 2015 embarrassed not by its success but in how much he owned by being the first to mine it. It was the only crypto that didn't get pre-mined, but he didn't get other people on board fast enough to avoid owning tons of it. So Lycurgus, too, he made the laws of Sparta so they would never be slaves in response to the end of the Golden Age and the constant threat of conquest--basically successful--but was embarrassed of benefitting by then becoming king, so he said "don't change the laws til I return" and left, and starved himself to die. And many say he never existed. Just like many say Satoshi never existed.
It's ironic for a comment about Bitcoin to call people assholes for hoarding. Cryptocurrency is all about making a system which works because people act in their self-interest. If they wanted people to use it and not hoard it, they should've made it easier to spend, or harder to hoard, i.e. inflationary.
Monero had no pre-mine either, and addresses the bitcoin privacy gaps. Most cryptos are obviously get rich quick schemes, I don't think it means you should immediately discard every other token.
The dude in charge looks absolutely ridiculous -- but this is why I'm very interested in Richard Heart and his Hex / Pulse stuff.
If you "game theory" him out, I believe he adds up to being in crypto for idealistic reasons as well, despite the appearance of the methods he's using to get there.
[+] [-] smohnot|3 years ago|reply
it didn't address explicitly what all others were
“That’s the only one I’m going to say because I’m not going to talk about any one of these tokens”
https://twitter.com/SBF_FTX/status/1541565079992369155?s=20&...
[+] [-] omginternets|3 years ago|reply
[+] [-] null0pointer|3 years ago|reply
[+] [-] uncomputation|3 years ago|reply
Not only does this make sense but it also further speaks to the strength of the bitcoin project, specifically Satoshi’s decision to not be a public figure/BDFL. I doubt this security-commodity issue factored in specifically, but it was really a brilliant and largely unprecedented move that aligns with bitcoin’s political philosophy as well: no leaders.
[+] [-] wolframhempel|3 years ago|reply
I expect this will be even more true for crypto. While I believe that some regulation might be a good thing as it makes crypto safer for the wider public I am genuinely doubtful that the SEC has the capabilities or the right incentives to be that regulator.
[+] [-] kloch|3 years ago|reply
Most people in Wall Street and the crypto community want clearer regulations so they know what the rules are for specific coins/tokens and transactions. What we have now is a very slow Government trying to catch up with technology coupled with infighting between different regulators defending their own turf.
Fortunately there was a bill introduced in the US Senate (referenced in the article) that would clear up much of this, along with various taxation issues.
[+] [-] undersuit|3 years ago|reply
Which is good, we don't want to give the government over-reaching powers, but we also want them to do something.
[+] [-] ASlave2Gravity|3 years ago|reply
[+] [-] nootropicat|3 years ago|reply
[+] [-] pazimzadeh|3 years ago|reply
> Ether is a product, NOT a security or investment offering. Ether is simply a token useful for paying transaction fees or building or purchasing decentralized application services on the Ethereum platform; it does not give you voting rights over anything, and we make no guarantees of its future value.
[+] [-] paulmd|3 years ago|reply
[+] [-] bawolff|3 years ago|reply
[+] [-] AlexandrB|3 years ago|reply
[+] [-] akritrime|3 years ago|reply
[+] [-] phabricator|3 years ago|reply
Gensler's comments today suggest the opposite will be true?
[+] [-] gjsman-1000|3 years ago|reply
The SEC is basically trying to argue that the speech was personal opinion (and the speech said that ETH was not a security), but Ripple alleges that the speech, though perhaps not an official statement, was much more than a personal opinion. We now know the SEC lawyers were involved in writing the speech, which is making life difficult for the SEC. This is also why the SEC is being far more careful now and is saying only BTC is not a security, but that ship may have sailed.
It's being called the Crypto Trial of the Century. A win for Ripple on the SEC's slip-up could mean the SEC is powerless to intervene in most crypto markets. A win for the SEC would result in mass regulation.
[+] [-] gamblor956|3 years ago|reply
EDIT: Administrative agency "rulemaking" is constrained by a fixed set of procedures that an agency must follow in order to "promulgate" a rule. First, they must publish a draft of the proposed rules, allow for several weeks or months of public comment, spend several weeks or months reviewing those comments, revise the rules as needed based on the comments received (or explain why no revisions are necessary), and then finally publish the finalized rules in the Federal Register.
Comments made by a single employee do not convey, or constrain, an agency's position on matters within its scope (unless those comments are made in, and pursuant to, a legal proceeding, in which case they are binding only for the limited scope of that legal proceeding).
[+] [-] encoderer|3 years ago|reply
[+] [-] ASlave2Gravity|3 years ago|reply
[+] [-] throwawaymaths|3 years ago|reply
[+] [-] 12amxn12|3 years ago|reply
1. Get paid in BTC for a service or a product (or buy BTC with offshore money) 2. Sell to someone for an agreed on price 3. Get cash/local currency/supplies/whatever
Two thoughts:
- Lower hype on bitcoin is a good thing for me, as it will bring less attention to it from goverments. I just need a critical mass of people there are enough buyers/sellers/miners.
- The two things that worry me are: governance of the project, and the fact that bitcoin mining traffic can be detected (somewhat like torrents). So, if govts want, they could force the ISPs to check for traffic that may indicate mining, raid, and eventually kill all mining operations (China probably will). Most likely, some countries will be more lax on that.
[+] [-] riskneutral|3 years ago|reply
[+] [-] CynicusRex|3 years ago|reply
[+] [-] smabie|3 years ago|reply
[+] [-] vmoore|3 years ago|reply
[+] [-] ianferrel|3 years ago|reply
1. You invest money in
2. Along with others
3. With the expectation of profit
4. Derived from the efforts of others
ETA: (the others in #2 need not be the same others in #4)
[+] [-] Shank|3 years ago|reply
Probably not in the traditional sense. The difference Bitcoin has to most cryptocurrencies is that it was specifically designed with no "premined" blocks and no preordained rewards. In contrast, a lot of projects sold tokens through an "ICO" with a promise of a future project developed against it. ICOs are basically securities, because you're buying the token without actually any guarantee that the project delivers on what it needs to deliver on for the value to change.
In contrast, again, Bitcoin was just offered as a cryptocurrency, from the start. The first block encoded a current event to distinguish the fact that there aren't any rewards already allocated to creators. It was also launched with the complete product available from the start (sans network upgrades).
Note: I'm not saying that Bitcoin is good or anything. I'm just distinguishing between it and most other tokens. Bitcoin has governance systems in place and other systems that make it "more security like" but clearly the SEC chair doesn't seem to believe it crosses that line.
[+] [-] seoaeu|3 years ago|reply
[+] [-] Cobragri|3 years ago|reply
[+] [-] legutierr|3 years ago|reply
Since when has this ever been true?
Silver is a commodity, is it not?
https://en.wikipedia.org/wiki/Silver_Thursday
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] hajile|3 years ago|reply
[+] [-] knicholes|3 years ago|reply
[+] [-] nathias|3 years ago|reply
[+] [-] JumpCrisscross|3 years ago|reply
Nobody is doing that. For all the new techiness of crypto, its popular failure modes of pumps and dumps, rug pulls and promoters lying through their teeth is identical to the pre-Securities Act securities landscape. So for those narrow problems these proven solutions should work.
[+] [-] stonogo|3 years ago|reply
[+] [-] gamblor956|3 years ago|reply
[+] [-] oldgradstudent|3 years ago|reply
A Ponzi over Blockchain is still a Ponzi.
[+] [-] Havoc|3 years ago|reply
[+] [-] colesantiago|3 years ago|reply
This is just equivalent to 'employers opinions does not reflect my own'
[+] [-] omniglottal|3 years ago|reply
[+] [-] daniel-cussen|3 years ago|reply
In that capacity it is similar to gold, which in the Golden Age (something everybody talked about in Antiquity and I decided to believe, but I've never encountered anybody else believing in) was openly swapped around as little inventions (you can make all kinds of shit with gold, it's a miracle material, lubricant, any precision, single isotope, list goes on endlessly) and gifts, but then some assholes decided to start hoarding it and enslaving people to mine it, charging interest using it, weigh one gold gift against another saying they balance out, use it to pay for wars to amass more gold. And it became something we just hoard underground. In other cultures it's this stuff, like Kechwa (Inca) it was about worshipping the sun and sure enough it basically is the sweat from the sun because it only is created by stars in supernovas. Idealistic in its origin.
Except in satellites, in satellites it's used for all kinds of shit, the foil for reentry (silver and gold, but only the gold resisted reentry), as lubricant, for welding (4:1 gold to tin), for the electronics of course, as a conductor in some cases so wire, heat foil. And medicine, so dentistry a huge amount but also implants, gold-titanium alloys. And injections for rheumatism in a chemical composition. And anything that must not rust, the go-to is gold.
So all the other coins? They're shitcoins. There is only Bitcoin, everyone else just wanted to get rich quick. Satoshi never cashed out, I divine he committed suicide in 2015 embarrassed not by its success but in how much he owned by being the first to mine it. It was the only crypto that didn't get pre-mined, but he didn't get other people on board fast enough to avoid owning tons of it. So Lycurgus, too, he made the laws of Sparta so they would never be slaves in response to the end of the Golden Age and the constant threat of conquest--basically successful--but was embarrassed of benefitting by then becoming king, so he said "don't change the laws til I return" and left, and starved himself to die. And many say he never existed. Just like many say Satoshi never existed.
[+] [-] eternauta3k|3 years ago|reply
[+] [-] Aaronstotle|3 years ago|reply
[+] [-] tboyd47|3 years ago|reply
[+] [-] jrm4|3 years ago|reply
If you "game theory" him out, I believe he adds up to being in crypto for idealistic reasons as well, despite the appearance of the methods he's using to get there.
[+] [-] turdit|3 years ago|reply
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[+] [-] black_13|3 years ago|reply
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[+] [-] formerkrogemp|3 years ago|reply
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[+] [-] kayamon|3 years ago|reply