The SEC will hardly ever clarify a grey area. They will say "token offerings need to follow federal securities laws" which also means "this particular token, unlike other tokens, follows federal securities laws because it is not a security"
Its kind of like asking a barber if you need a haircut.
The number of promises the Ethereum foundation and developers have made with regard to expected ROI? Pretty much zero in centralized fashion. Not a security.
If I sell potatoes on the street promising MOON RETURNS 50% a month, i'm selling securities.
> simply labeling a digital asset a “utility token” does not turn the asset into something that is not a security.
Your point only works in one direction: of course if something is marketed promising returns then it is a security. The lack of such marketing does not imply anything in either direction.
That said, I do believe that Ether is a utility token.
> And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required. And of course there will continue to be systems that rely on central actors whose efforts are a key to the success of the enterprise. In those cases, application of the securities laws protects the investors who purchase the tokens or coins.
This is published as a transcript of a speech. Is it the official position of the SEC as a whole?
I understand that even if it isn't, it does show a glimpse of where the SEC is thinking on this. I'm not so sure about it being an official position though.
It probably is. A few days ago a SEC guy (maybe the same?) was on CNBC, and they were pushing for an answer to this question, and he refused to make any comment, and said that a position will come in due time.
The first sentence has a footnote disclaiming these are personal remarks. Still, I think no one else would have a more relevant opinion about how the SEC is thinking about this.
[1] The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners or other members of the staff.
It's an interesting distinction which begs the question of how securities enforcement will work on currencies which start off looking like securities and "evolve" out of that designation like Bitcoin and Ether did. As implied by the statement, the "fundraising that accompanied the creation of Ether" would probably qualify as a securities offering since it absolutely relied on central actors to maintain initial development until it had grown sufficiently to become more of a decentralized platform. At what point are token purchases no longer protected by securities law?
The SEC (or SEC leadership) has shown a willingness to take a fairly nuanced view on how cryptocurrencies are classified. Will be interesting to see how this thinking evolves as nuance comes with complexity.
Applied is a mischaracterization of what Ethereum did.
Ethereum got a legal opinion from a law firm in the United States, and simultaneously convinced the regulators in the Canton of Zug, Switzerland to create a completely new term for them. State regulations in the Swiss Confederacy extend to the sovereign protection of the Switzerland brand and all of its economic treaties.
Ethereum nor the Ethereum foundation applied for US securities anything. Not a Reg D offering, not Reg S, not anything.
The parent question remains valid: if one did register as a security, how does the asset transition to not being a security.
Sounds like we need a new Reg for transitional securities. As it stands, the SEC is still applying its broad discretion to not levy criminal and civil sanctions to unregistered transitional securities.
So basically it's probably fine for GDAX to continue to let folks trade Ethereum, but that doesn't mean that Vitalik et al. won't get indicted. IMHO the latter is much more important than the former with respect to the future value of the asset, so saying that Ethereum likely isn't currently security doesn't strike me as being especially meaningful.
There's no chance Vitalik et al will get indicted. The SEC is not going to try to make an example out of the most successful decentralized protocols which did its crowdfunding long before they issued any kind of advisory on the application of US securities laws on token sales.
They did not indict the organizers of the DAO, and that had much more security-like features, like passive dividends for holders of its tokens, and also collapsed and came close to losing the majority of its contributors' funds.
The SEC recognizes smart contract based crowdfunding is a new financial technology still in its infancy, and are not going to come down with a iron fist on anything that doesn't blatantly defy securities law. So far they've only gone after blatant scams (organizers lying about the project's credentials, misappropriating funds, misrepresenting assets held as collateral, etc).
> which did its crowdfunding long before they issued any kind of advisory on the application of US securities laws on token sales.
If the SEC had provided some sort of novel guidance then this would make sense, but their statements have consistently been that token sales are nothing new and the same laws from the last 70+ years apply.
Can we please change the title to "SEC Director of Corporation Finance thinks Ethereum is not a security" or something along those lines? Because it is not SEC's view that Ethereum is not a security but someone working there.
Check out United States v. Baker for reliance on authority of a Government Official.
A good practical example is where Obama said his Justice Dept would not enforce Federal Laws on Marijuana in States where actors are complying with those State Laws. If the Federal Government preceded to crack down, U.S. v. Baker would provide a solid defense of good faith reliance on authority of a Givernment Official where the act is otherwise in clear violation of federal law.
I believe there are several divisional directors, but the commission is made up of 5 commissioners appointed by the president. So while he has a big job, he is essentially a staffer, with policy being set at the commissioner level.
That is not how attribution works. If tomorrow Sundar Pichai says he loves crypto currency it doesn't mean Google is going to start competing with Bitmain. News will still say - Google's Sundar Pichai says etc. But if it happens in an official forum like Google I/O then it means something else.
This didn't happen in any official capacity like say a Senate hearing or a ruling. The guy was a guest speaker at a Yahoo forum. So while he is entitled to his view it is not official position.
It was published on the SEC website,and even if it wasn’t, a good faith reliance on this government official as detailed in U.S. v. Baker seems to apply.
We've reverted the title from “SEC Director of Corporation Finance: Ethereum is not a security” to that of the article. It's not up to submitters to make any interpretation of the content—Hacker News users can read just fine.
>And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.
>I would like to emphasize that the analysis of whether something is a security is not static and does not strictly inhere to the instrument.[10] Even digital assets with utility that function solely as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security. If a promoter were to place Bitcoin [or Ether] in a fund or trust and sell interests, it would create a new security.
Recommend changing the title to Bitcoin/Ether, but even that is a serious simplification; more like: "Sales of Ether/Bitcoin are not inherently securities transactions"
Keep in mind the definition we can use legally for a security is "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party." (https://en.wikipedia.org/wiki/Howey_test)
What's interesting about this ruling with respect to Ethereum is that one of the main reasons Ethereum has done so well is because of the development team. If they were terrible, Ethereum investors could have lost all of their money, but instead the developers have done a wonderful job and that has resulted in substantial profits for those holding ether.
The investors do not get dividends or equity, but they absolutely have invested in a common enterprise (Ethereum, the Ethereum network, and the Ethereum codebase) with an expectation of profit (obviously) based on the efforts of a third party (the developers - who control the entire codebase and have moved Ethereum forward every step of the way).
Although this ruling is obviously good news for Ethereum, it seems to set a bit of a double standard with respect to what we've seen about Ethereum tokens, where the situation is very similar to this, but yet they're instead ruled as being securities due to the above reasons. It is interesting that one of the key points here is their notice of 'decentralization' - how much decentralization is required for something to not be a security? It's a very difficult question, because development is generally always centralized in any project, there's few other ways to get things done efficiently.
The price of Ethereum is up almost 10% in the last 24 hours, partially related to this news as we see a spike in price coinciding with this announcement across the market (https://coinmarketcap.com/).
>>What's interesting about this ruling with respect to Ethereum is that one of the main reasons Ethereum has done so well is because of the development team. If they were terrible, Ethereum investors could have lost all of their money, but instead the developers have done a wonderful job and that has resulted in substantial profits for those holding ether.
It is certainly one of the main reasons, but it's not clear it's the majority of the reason. The community around Ethereum was very large from the very start.
Much of the value generated has been as a result of independent teams creating DApps and various utilities (e.g. blockchain explorers like Ethercan, browser extensions like MetaMask, web-based wallets/DApp-browsers like myetherwallet.com), and unpaid volunteers contributing to its EIP process.
The token sale smart contract template that set off the token sale boom was created by one of the early independent projects, I believe Digix.
I don't see how the SEC could rule eth is a security and maintain its integrity, which is critical when dealing with this new technology if it wishes to retain some form of control into the future.
The primary use of ether in its purest abstraction (ie not packaged in an index fund), is in the form of gas to power the individual steps of the computer. It is no more a security than the gasoline in your car.
However, based on the statements, there are going to be a lot of coins that are a security and a lot of coins are going to blur the line to the point of near invisibility. It is arguable that Eth is already doing this.
It's clear the SEC is far behind, and needs a new framework by which to judge these coins, instead of hammering them into existing frameworks designed explicitly for older financial vehicles.
>The primary use of ether in its purest abstraction (ie not packaged in an index fund), is in the form of gas to power the individual steps of the computer. It is no more a security than the gasoline in your car.
I’m sure if you compared the number of people who bought ETH to actually use as gas to facilitate a transaction vs simply investing for profit compared to the number of people who bought gas to fuel their cars vs resell for profit...you might not get so wrapped up in you analogy
The relevant part is not if you can make a profit, but if there is a "promoter" which says that. He gave an example how buying a house is not a security even if you expect prices to go up, but buying the same house through another legal entity with management can be a security.
> The primary use of ether in its purest abstraction (ie not packaged in an index fund), is in the form of gas to power the individual steps of the computer. It is no more a security than the gasoline in your car.
Yes, and the piece addresses that directly:
> But this also points the way to when a digital asset transaction may no longer represent a security offering. If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.
In other words, as long as Ethereum's promise is just that -- promise --, and the people buying ETH are expecting a return on their purchases from the efforts of the Ethereum developers, it is likely to be classified as a security. To the extent that ETH is used as "gas" to power a computation, and people buy it to use it for that purpose, ETH is no longer a security.
I think a fundamental confusion here is that the law, and in general regulatory enforcement bodies like the SEC, look at something like this by how it is actually used in practice, not by the mathematical properties, or the intent of the developers.
As an example, he points out that simply calling the thing you're selling a "token" instead of "an investment" when the network is not even up and running yet, does not fundamentally change the facts on the ground. People are buying your "token" because they want to see it be worth something in the future, and it's not up to them whether it increases in value. He's saying, sorry, that's a security.
> And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.
It seems to me that eth would trigger many of his factors (listed below) for determining whether or not it is a security. How many people are buying eth for "gas" vs holding it for a return?
> What are some of the factors to consider in assessing whether a digital asset is offered as an investment contract and is thus a security? Primarily, consider whether a third party – be it a person, entity or coordinated group of actors – drives the expectation of a return. That question will always depend on the particular facts and circumstances, and this list is illustrative, not exhaustive:
> Is there a person or group that has sponsored or promoted the creation and sale of the digital asset, the efforts of whom play a significant role in the development and maintenance of the asset and its potential increase in value?
> Has this person or group retained a stake or other interest in the digital asset such that it would be motivated to expend efforts to cause an increase in value in the digital asset? Would purchasers reasonably believe such efforts will be undertaken and may result in a return on their investment in the digital asset?
> Has the promoter raised an amount of funds in excess of what may be needed to establish a functional network, and, if so, has it indicated how those funds may be used to support the value of the tokens or to increase the value of the enterprise? Does the promoter continue to expend funds from proceeds or operations to enhance the functionality and/or value of the system within which the tokens operate?
> Are purchasers “investing,” that is seeking a return? In that regard, is the instrument marketed and sold to the general public instead of to potential users of the network for a price that reasonably correlates with the market value of the good or service in the network?
> Does application of the Securities Act protections make sense? Is there a person or entity others are relying on that plays a key role in the profit-making of the enterprise such that disclosure of their activities and plans would be important to investors? Do informational asymmetries exist between the promoters and potential purchasers/investors in the digital asset?
> Do persons or entities other than the promoter exercise governance rights or meaningful influence?
There's something I can't reconcile in my head about crypto: What is the vested interest in a country like the US allowing crypto to become the de facto world currency, thus stripping the power of the Reserve away from the US (and indeed any other country with an interest in managing its own currency)? Doesn't it behoove countries with this interest to work to the bitter end to prevent crypto from becoming de facto?
And if I'm right, and crypto _can't_ become de facto, what is it aside from a security, since it would have no "home"?
A decent fraction of the people in charge of making these decisions understand that new, risky forms of enterprise can lead to benefits for a lot of people.
Despite being a regulatory body, the SEC has a very free-market culture.
I think you're right insofar as wanting to get out of the way of companies, but I think when it comes to something as fundamental as _the currency which operates at a national level_, it would decidedly be more cautious, especially in giving away the power to inflate or offer 0% interest overnight loans.
For its part, the US doesn't seem to have an interest in actual freedom, but rather, "freedom under the confines of what the US wants." If the US loses control of its currency, it loses control over things like, for instance, the 2008 market meltdown. I don't see the US willingly waving its hands during a scenario like that, saying "Welp, sorry, can't do anything about this, it's all crypto now."
> And we are way away from crypto replacing anything.
Unless there's a way for the US (or any respective region with a currency) to dig its population out of these catastrophes, it seems like we are infinity away from crypto replacing anything.
The main reason is that its not 2012 any more and the executive branches already know what crypto is and won't spend resources on that war of attrition.
The do-ers in government already know that their available tools to stop crypto would only slow it down as it routes around them.
The legislative branch could easily take a less educated reaction, and you saw that in 2011-2012 in the US. In the meantime, crypto grew faster than the knee-jerk machinations of government could react and it is already big enough and the officials are more educated about it.
There doesn't need to be a vested interest in the governing institution. Distributed ledgers offer a chance at a more efficient and egalitarian form of governance itself, without invoking the 19th century political ideologies that shaped the 20th century and now prevent anyone from proposing anything radical. Blockchains and DLT currently don't achieve that, and various agencies in the executive branch recognize its ability to offer them benefits and adapt to reach their potential.
The price of a standing army, stability of a country's market, faith of its people in its government institutions. If you go blunt with it, you can say that a country is worth, in real terms, its GDP times its predictable future stability in years.
The zero sum effect of cryptocurrency displacing central banks is only one part of the potential set of effects. There's also the potential impact of cryptocurrency revolutionizing finance the way the internet revolutionized communication, and that has broad-based benefits for all interest groups.
1. As long as lots of money is being made, wealth created, and economic growth happening, politicians are willing to suspend action in shutting it down to see where it goes. They may not be not sure whether it’s a bubble or legit growth but won’t do anything until the answer to that question becomes more obvious than it is now.
2. “Blockchain not Bitcoin” has given cover to continue development of the technology under a dual use concept - the tech developed by permissionless cryptocurrencies could be of great value to enterprise blockchains. Lots of lobbying around this the past 5 years.
3. Politicians believe crypto won’t become the de facto world currency, for various reasons. The tech is too messy and risky (true), or they control certain gateways like fiat on/off ramps.
4. Ultimately the govt decides what is “legal tender” for payments, debts, and tax collection. Meaning the USD or other national currency is the only one ever guaranteed to be accepted in that country for debt payments and tax collection. Crypto may co-exist with it, but never fully replace it for that reason.
There’s a lot of hype and wishful thinking around crypto, and it’s fun and fascinating technology for sure, but there are decades of development to go before it’s realistically conceivable it could become the defacto global currency.
That said, it’s not necessarily a security just b/c it has no home. Money originally evolved as a tool invented by people not governments. There’s precedent for money being a grassroots thing rather than a centralized thing. Cryptocurrency is just a new way of doing that.
That's not a loophole. It has a significant effect on the flexibility and participation set of initial fundraising. I would argue it reinforces the traditional VC paradigm that limits accessibility to the wealthy.
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[ 0.22 ms ] story [ 117 ms ] threadThe SEC will hardly ever clarify a grey area. They will say "token offerings need to follow federal securities laws" which also means "this particular token, unlike other tokens, follows federal securities laws because it is not a security"
Its kind of like asking a barber if you need a haircut.
Scammy ICO promises? It's a security.
The number of promises the Ethereum foundation and developers have made with regard to expected ROI? Pretty much zero in centralized fashion. Not a security.
If I sell potatoes on the street promising MOON RETURNS 50% a month, i'm selling securities.
Edit: OK, you completely rewrote your comment and we now agree.
But it's not:
> simply labeling a digital asset a “utility token” does not turn the asset into something that is not a security.
Your point only works in one direction: of course if something is marketed promising returns then it is a security. The lack of such marketing does not imply anything in either direction.
That said, I do believe that Ether is a utility token.
> And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required. And of course there will continue to be systems that rely on central actors whose efforts are a key to the success of the enterprise. In those cases, application of the securities laws protects the investors who purchase the tokens or coins.
I understand that even if it isn't, it does show a glimpse of where the SEC is thinking on this. I'm not so sure about it being an official position though.
[1] The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners or other members of the staff.
The SEC (or SEC leadership) has shown a willingness to take a fairly nuanced view on how cryptocurrencies are classified. Will be interesting to see how this thinking evolves as nuance comes with complexity.
Ethereum got a legal opinion from a law firm in the United States, and simultaneously convinced the regulators in the Canton of Zug, Switzerland to create a completely new term for them. State regulations in the Swiss Confederacy extend to the sovereign protection of the Switzerland brand and all of its economic treaties.
Ethereum nor the Ethereum foundation applied for US securities anything. Not a Reg D offering, not Reg S, not anything.
The parent question remains valid: if one did register as a security, how does the asset transition to not being a security.
Sounds like we need a new Reg for transitional securities. As it stands, the SEC is still applying its broad discretion to not levy criminal and civil sanctions to unregistered transitional securities.
They did not indict the organizers of the DAO, and that had much more security-like features, like passive dividends for holders of its tokens, and also collapsed and came close to losing the majority of its contributors' funds.
The SEC recognizes smart contract based crowdfunding is a new financial technology still in its infancy, and are not going to come down with a iron fist on anything that doesn't blatantly defy securities law. So far they've only gone after blatant scams (organizers lying about the project's credentials, misappropriating funds, misrepresenting assets held as collateral, etc).
If the SEC had provided some sort of novel guidance then this would make sense, but their statements have consistently been that token sales are nothing new and the same laws from the last 70+ years apply.
This would be equivalent to equating the opinion of a single Supreme Court Justice to a ruling of the Supreme Court on a subject.
Check out United States v. Baker for reliance on authority of a Government Official.
A good practical example is where Obama said his Justice Dept would not enforce Federal Laws on Marijuana in States where actors are complying with those State Laws. If the Federal Government preceded to crack down, U.S. v. Baker would provide a solid defense of good faith reliance on authority of a Givernment Official where the act is otherwise in clear violation of federal law.
This didn't happen in any official capacity like say a Senate hearing or a ruling. The guy was a guest speaker at a Yahoo forum. So while he is entitled to his view it is not official position.
>And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.
>I would like to emphasize that the analysis of whether something is a security is not static and does not strictly inhere to the instrument.[10] Even digital assets with utility that function solely as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security. If a promoter were to place Bitcoin [or Ether] in a fund or trust and sell interests, it would create a new security.
Recommend changing the title to Bitcoin/Ether, but even that is a serious simplification; more like: "Sales of Ether/Bitcoin are not inherently securities transactions"
The SEC commented before that Bitcoin is not a security, so the Bitcoin related part is not news.
What's interesting about this ruling with respect to Ethereum is that one of the main reasons Ethereum has done so well is because of the development team. If they were terrible, Ethereum investors could have lost all of their money, but instead the developers have done a wonderful job and that has resulted in substantial profits for those holding ether.
The investors do not get dividends or equity, but they absolutely have invested in a common enterprise (Ethereum, the Ethereum network, and the Ethereum codebase) with an expectation of profit (obviously) based on the efforts of a third party (the developers - who control the entire codebase and have moved Ethereum forward every step of the way).
Although this ruling is obviously good news for Ethereum, it seems to set a bit of a double standard with respect to what we've seen about Ethereum tokens, where the situation is very similar to this, but yet they're instead ruled as being securities due to the above reasons. It is interesting that one of the key points here is their notice of 'decentralization' - how much decentralization is required for something to not be a security? It's a very difficult question, because development is generally always centralized in any project, there's few other ways to get things done efficiently.
The price of Ethereum is up almost 10% in the last 24 hours, partially related to this news as we see a spike in price coinciding with this announcement across the market (https://coinmarketcap.com/).
It is certainly one of the main reasons, but it's not clear it's the majority of the reason. The community around Ethereum was very large from the very start.
Much of the value generated has been as a result of independent teams creating DApps and various utilities (e.g. blockchain explorers like Ethercan, browser extensions like MetaMask, web-based wallets/DApp-browsers like myetherwallet.com), and unpaid volunteers contributing to its EIP process.
The token sale smart contract template that set off the token sale boom was created by one of the early independent projects, I believe Digix.
The primary use of ether in its purest abstraction (ie not packaged in an index fund), is in the form of gas to power the individual steps of the computer. It is no more a security than the gasoline in your car.
However, based on the statements, there are going to be a lot of coins that are a security and a lot of coins are going to blur the line to the point of near invisibility. It is arguable that Eth is already doing this.
It's clear the SEC is far behind, and needs a new framework by which to judge these coins, instead of hammering them into existing frameworks designed explicitly for older financial vehicles.
I’m sure if you compared the number of people who bought ETH to actually use as gas to facilitate a transaction vs simply investing for profit compared to the number of people who bought gas to fuel their cars vs resell for profit...you might not get so wrapped up in you analogy
Yes, and the piece addresses that directly:
> But this also points the way to when a digital asset transaction may no longer represent a security offering. If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.
In other words, as long as Ethereum's promise is just that -- promise --, and the people buying ETH are expecting a return on their purchases from the efforts of the Ethereum developers, it is likely to be classified as a security. To the extent that ETH is used as "gas" to power a computation, and people buy it to use it for that purpose, ETH is no longer a security.
I think a fundamental confusion here is that the law, and in general regulatory enforcement bodies like the SEC, look at something like this by how it is actually used in practice, not by the mathematical properties, or the intent of the developers.
As an example, he points out that simply calling the thing you're selling a "token" instead of "an investment" when the network is not even up and running yet, does not fundamentally change the facts on the ground. People are buying your "token" because they want to see it be worth something in the future, and it's not up to them whether it increases in value. He's saying, sorry, that's a security.
> And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.
Wouldn't the hard forks seem to go against this?
> What are some of the factors to consider in assessing whether a digital asset is offered as an investment contract and is thus a security? Primarily, consider whether a third party – be it a person, entity or coordinated group of actors – drives the expectation of a return. That question will always depend on the particular facts and circumstances, and this list is illustrative, not exhaustive:
> Is there a person or group that has sponsored or promoted the creation and sale of the digital asset, the efforts of whom play a significant role in the development and maintenance of the asset and its potential increase in value?
> Has this person or group retained a stake or other interest in the digital asset such that it would be motivated to expend efforts to cause an increase in value in the digital asset? Would purchasers reasonably believe such efforts will be undertaken and may result in a return on their investment in the digital asset?
> Has the promoter raised an amount of funds in excess of what may be needed to establish a functional network, and, if so, has it indicated how those funds may be used to support the value of the tokens or to increase the value of the enterprise? Does the promoter continue to expend funds from proceeds or operations to enhance the functionality and/or value of the system within which the tokens operate?
> Are purchasers “investing,” that is seeking a return? In that regard, is the instrument marketed and sold to the general public instead of to potential users of the network for a price that reasonably correlates with the market value of the good or service in the network?
> Does application of the Securities Act protections make sense? Is there a person or entity others are relying on that plays a key role in the profit-making of the enterprise such that disclosure of their activities and plans would be important to investors? Do informational asymmetries exist between the promoters and potential purchasers/investors in the digital asset?
> Do persons or entities other than the promoter exercise governance rights or meaningful influence?
And if I'm right, and crypto _can't_ become de facto, what is it aside from a security, since it would have no "home"?
Despite being a regulatory body, the SEC has a very free-market culture.
There is a reason US is called "leader of the free world", and why "freedom" is such an used word.
And we are way away from crypto replacing anything.
> And we are way away from crypto replacing anything.
Unless there's a way for the US (or any respective region with a currency) to dig its population out of these catastrophes, it seems like we are infinity away from crypto replacing anything.
The do-ers in government already know that their available tools to stop crypto would only slow it down as it routes around them.
The legislative branch could easily take a less educated reaction, and you saw that in 2011-2012 in the US. In the meantime, crypto grew faster than the knee-jerk machinations of government could react and it is already big enough and the officials are more educated about it.
There doesn't need to be a vested interest in the governing institution. Distributed ledgers offer a chance at a more efficient and egalitarian form of governance itself, without invoking the 19th century political ideologies that shaped the 20th century and now prevent anyone from proposing anything radical. Blockchains and DLT currently don't achieve that, and various agencies in the executive branch recognize its ability to offer them benefits and adapt to reach their potential.
> There doesn't need to be a vested interest in the governing institution.
You seem to believe that currency has no value but what we attribute to it. This is false.
Launder money for black projects.
Track people who think they’re beyond the reach of government.
1. As long as lots of money is being made, wealth created, and economic growth happening, politicians are willing to suspend action in shutting it down to see where it goes. They may not be not sure whether it’s a bubble or legit growth but won’t do anything until the answer to that question becomes more obvious than it is now.
2. “Blockchain not Bitcoin” has given cover to continue development of the technology under a dual use concept - the tech developed by permissionless cryptocurrencies could be of great value to enterprise blockchains. Lots of lobbying around this the past 5 years.
3. Politicians believe crypto won’t become the de facto world currency, for various reasons. The tech is too messy and risky (true), or they control certain gateways like fiat on/off ramps.
4. Ultimately the govt decides what is “legal tender” for payments, debts, and tax collection. Meaning the USD or other national currency is the only one ever guaranteed to be accepted in that country for debt payments and tax collection. Crypto may co-exist with it, but never fully replace it for that reason.
There’s a lot of hype and wishful thinking around crypto, and it’s fun and fascinating technology for sure, but there are decades of development to go before it’s realistically conceivable it could become the defacto global currency.
That said, it’s not necessarily a security just b/c it has no home. Money originally evolved as a tool invented by people not governments. There’s precedent for money being a grassroots thing rather than a centralized thing. Cryptocurrency is just a new way of doing that.