[HN Gopher] Bitcoin is the only coin the SEC Chair will call a c...
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Bitcoin is the only coin the SEC Chair will call a commodity
Author : el_sinchi
Score : 142 points
Date : 2022-06-29 15:56 UTC (7 hours ago)
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(TXT) w3m dump (www.axios.com)
| Havoc wrote:
| That seems quite arbitrary
| gjsman-1000 wrote:
| 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.
| encoderer wrote:
| Forgive me for being ignorant but can't the congress expand SEC
| powers at any time by changing the law?
| gjsman-1000 wrote:
| Yes, they can. But no, Congress has not because Congress
| can't come to agreement over cryptocurrency.
| lokar wrote:
| They are allowed to, but unable to. Unable to do nearly
| anything.
| xhkkffbf wrote:
| The saying in Washington is that no one is safe when Congress
| is in session. And that's pretty much true. Aside from some
| constitutionally guaranteed activities like petitioning for
| redress of grievances, they can pretty much legislate
| anything they can agree upon. (Assuming they can ever agree
| on anything.)
|
| For instance, the duly elected Democrats who control the
| House, Senate and White House like to point the finger at the
| Supreme Court, but they could easily pass whatever law they
| want about abortion. There would be no more arguing about
| original intent or penumbrae etc.
| jrsj wrote:
| They technically could but it doesn't appear they are going
| to try which means they either don't have the votes or
| think that it's better to try and wait until after the
| midterms
| pmyteh wrote:
| They don't have the votes to break a filibuster in the
| Senate (on nearly anything; Republican party discipline
| is really strong) or to break the filibuster itself (a
| handful of Democrats refuse). So almost all votes are
| just messaging at this point.
|
| I also wouldn't assume a federal Act guaranteeing
| abortion access would survive the supreme court. There's
| a colourable claim that both healthcare and homicide
| regulation are the purview of the states, and I'd expect
| five votes for that with the current Court on this issue
| regardless of its legal merits.
| jsmith45 wrote:
| Of course in order to reject that healthcare qualifies
| under interstate commerce, they would need to either
| reject Wickard v. Filburn and Gonzalez v. Raich, or jump
| through some crazy hoops to justify upholding those,
| while stricking this law down. (Although I'd not be
| shocked if this court tried).
|
| Actions regulating healthcare within one state have at
| least as much impact on interstate commerce as growing
| pot or wheat for personal use. Healthcare is not strictly
| limited to state lines. My insurance does cover visiting
| doctors in a neighboring state for example.
|
| Reopening Filburn would raise a crazy amount of
| questions. USDOT regulation of commercial trucking could
| falter if Filburn was struck down. Until some new clear
| line on what the limit was, there would be widespread
| uncertainly about the federal government's ability to
| regulate things like commercial trucking, flights, drugs,
| etc, at least for transactions that don't cross state
| lines.
|
| I doubt they would actually go that far, as the
| republican party are not actually anti-federalists,
| despite often pretending to be that way.
| pmyteh wrote:
| My perspective is perhaps coloured by being a political
| scientist: we have always (unlike the law professors)
| seen the supreme court in particular as a deeply
| political institution.
|
| The present incumbents have made clear that they're open
| to reopening settled questions, and to a results-focused
| jurisprudence. Given that _New York State Rifle and
| Pistol Association_ has just undercut state power in
| favour of constitutional interpretation while _Dobbs_
| goes entirely the other way, my presumption is that there
| are no major strictly federalist principles at play and
| results will be case-by-case. And, as with _Bush v. Gore_
| , they can always publish an opinion saying "this
| decision is confined to its own facts" if they want to
| signal that they're not intending to displace post-
| _Lochner_ understandings of the commerce clause.
| jandrese wrote:
| Congress won't take action unless rich people start losing
| money.
| vkou wrote:
| The problem with legislature affirming your right to body
| autonomy is that the next legislature can take it away.
|
| Rights need a stronger foundation than being a bi-annual
| political yo-yo.
|
| Procedural and executive questions, on the other hand, are
| the kind of thing the legislature should either take a
| direct hand in through legislature, or delegate to the
| executive (When they do the latter, there is actually more
| public accountability than the former, thanks to the
| required public processes behind executive rule-making.)
| ASlave2Gravity wrote:
| 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?
| gjsman-1000 wrote:
| If the SEC loses, unless Congress were to pass a law to grant
| more authority, the SEC would have almost no ability to
| regulate cryptocurrency as they would have no ability to
| define cryptocurrency as a form of "security" (which is the
| purview they are granted legal authority over, even in their
| name, the _Securities and Exchange Commission_ ).
|
| If the SEC wins, they can define some cryptocurrencies as
| "securities" which then automatically becomes part of their
| regulatory authority.
|
| This is why they are being careful to say _only Bitcoin_ isn
| 't a security now. That speech in 2018, centerpiece of the
| lawsuit, said Ethereum also was not a security. If that
| speech is found a legally binding statement, it's _really
| hard_ to find anything smart-contract-powered from Ethereum
| to XRP as a security.
| JumpCrisscross wrote:
| > _unless Congress were to pass a law to grant more
| authority, the SEC would have almost no ability to regulate
| cryptocurrency as they would have no ability to define
| cryptocurrency as a form of "security"_
|
| This is a fringe theory no administrative lawyer backs.
| Neither, based on crypto's lobbying of the Congress, do
| those with influence in crypto.
|
| Ripple's case is narrow. This legal theory sounds like it's
| being pitched by someone making a "times are about to
| change" pitch.
| corrral wrote:
| > This is why they are being careful to say only Bitcoin
| isn't a security now. That speech in 2018, centerpiece of
| the lawsuit, said Ethereum also was not a security. If that
| speech is found a legally binding statement, it's really
| hard to find anything smart-contract-powered from Ethereum
| to XRP as a security.
|
| That seems like a leap. Paper is a commodity, but a stock
| certificate is (or represents, whatever) a security. A
| contract may be written on paper, but create a security. A
| database isn't a security but an entry in the right
| database, in the right place, might be. It seems to me all
| it would do is keep smart contracts from being securities
| simply because they use Ethereum--if they are, or create,
| securities, I see no reason why those would be any harder
| to regulate than any others.
| throwawaymaths wrote:
| 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.
| gamblor956 wrote:
| 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).
| gjsman-1000 wrote:
| https://www.foxbusiness.com/markets/crypto-trial-century-
| rip...
| JumpCrisscross wrote:
| The closest this article comes to your claim is when it
| says the case "could settle the turf war between regulatory
| agencies like the Commodities Futures Trading Commission,
| the Consumer Financial Protection Bureau and the SEC, all
| vying for jurisdiction in the space" [1].
|
| A Ripple win would apply to the facts and circumstances of
| Ripple and XRP, and isn't expected by anyone informed to
| set a broad precedent constraining the SEC's powers.
|
| [1] https://www.foxbusiness.com/markets/crypto-trial-
| century-rip...
| hajile wrote:
| 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.
| nootropicat wrote:
| Way too many people hold various crypto for any action now. Sec
| can barely deal with Ripple and that's one of the easiest ones.
| riskneutral wrote:
| Way to fuel the Bitcoin maximalist, Gensler. Totally arbitrary.
| daniel-cussen wrote:
| 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.
| eternauta3k wrote:
| 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.
| daniel-cussen wrote:
| Hoarding is about intent, different from saving. Acaparar in
| Spanish. To take up all there is for yourself, so others have
| nothing and suffer in need. Whereas saving is sacrifice, so
| someday there can be something to give in an exceptional
| situation. Or in an exceptional opportunity, as in
| investment, but this is secondary, because the purpose of
| this secondary interpretation is subjugated to the primary
| interpretation, to eg invest to get a good return to at some
| point rescue an orphaned grandchild.
| tromp wrote:
| A fixed block subsidy, i.e. purely linear emission, is
| disinflationary, rather than inflationary, with the yearly
| supply inflation after n years at 1/n. That is large enough
| to deter speculation for several decades at least.
| turdit wrote:
| "So all the other coins? They're shitcoins. There is only
| Bitcoin"
|
| thanks for your thoughtful analysis
| jrm4 wrote:
| 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.
| tboyd47 wrote:
| That's a really interesting parallel with Greek history I've
| never heard before.
| Aaronstotle wrote:
| 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.
| daniel-cussen wrote:
| Well that speaks well of Monero, perhaps that is exceptional,
| apparently not...
|
| I was wrong in discarding them. I would, in addition to
| apologizing, salvage my claim in the following terms: bitcoin
| is the gold standard, the first and foremost, just as every
| metal is unique and gold is gold and nothing else identical.
| But there can also be silver, and platinum, and rhenium, and
| ruthenium, and rhodium, and copper, and many others. Bitcoin
| was the first, and is unique, but is not the last.
| knicholes wrote:
| Does anyone know how this affects taxes?
| drcode wrote:
| I think it would fall under capital gains either way, so
| shouldn't matter much. Not a tax lawyer though.
| papercrane wrote:
| In the US? It doesn't at all. The SEC chair's opinion on if
| something is a community vs. a security has no bearing on what
| the IRS thinks. The distinction only really matters when
| deciding which agency is responsible for enforcing any
| regulations.
|
| As far as the IRS is concerned they treat them the same for
| capital gains.
| adrr wrote:
| I only think it only affects who can buy it. Example gold is a
| commodity and anyone can buy it. And unregulated security would
| require accredited investors.
| pazimzadeh wrote:
| From the original Ethereum pre-sale blog post:
| https://blog.ethereum.org/2014/07/22/launching-the-ether-sal...
|
| > 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.
| akritrime wrote:
| A claim like this was also the reason behind Howey Test being a
| thing.
| phabricator wrote:
| Ether's confusing though because the SEC has explicitly said in
| the past that "offers and sales of Ether are not securities
| transactions." https://www.sec.gov/news/speech/speech-
| hinman-061418
|
| Gensler's comments today suggest the opposite will be true?
| AlexandrB wrote:
| Same feel as "No copyright intended" disclaimers on YouTube
| videos a few years ago.
| paulmd wrote:
| 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?!
| bawolff wrote:
| Just because they claim something doesn't make it true.
| Cobragri wrote:
| Commodities have no capped supply and fungible. GRIN resembles to
| commodity with its emmission model and fungibility feature as
| well.
| [deleted]
| legutierr wrote:
| > Commodities have no capped supply
|
| Since when has this ever been true?
|
| Silver is a commodity, is it not?
|
| https://en.wikipedia.org/wiki/Silver_Thursday
| Cobragri wrote:
| That wikipedia article mentions derivative market silver,it
| is a contract based silver at futures excchanges.
|
| Silver has a perpetual mining for thousand years, like gold.
| smabie wrote:
| Feels like if BTC is a commodity, then BCH and LTC clearly are as
| well, no?
| tesrx wrote:
| Correct. At a minimum, those are not a security.
|
| Gensler has commented on those specifically in the past [1].
|
| [1] https://twitter.com/litecoin/status/1435991743720165378
| kayamon wrote:
| A commodity must be fungible -- i.e. that would imply BTC and
| BCH/LTC were economically interchangeable.
|
| They aren't. Bitcoin's blockchain has a longer proof-of-work
| than BCH. Honest nodes will only mine the longest blockchain
| (per Satoshi). Therefore any blockchain shorter than Bitcoin's
| will ultimately collapse in the long term, making them
| unsuitable to be considered commodities.
| etaioinshrdlu wrote:
| Can you try again using less hand-wavey logic?
|
| Every point you make doesn't seem to make much sense.
| kayamon wrote:
| If you don't believe it or don't get it, I don't have the
| time to try to convince you, sorry.
|
| Perhaps try some online learning resources:
| https://ocw.mit.edu/courses/15-s12-blockchain-and-money-
| fall...
| AlexandrB wrote:
| Being fungible means every BTC is the same other BTC and
| every BCH is the same as every other BCH, not that BCH is the
| same as BTC.
|
| Water and oil are both fungible commodities. No one would
| claim they're economically interchangeable _with each other_.
| kayamon wrote:
| Exactly, so BTC and BCH would be considered different
| commodities. But BCH can never win provably in the long-
| term, so therefore would not be able to qualify as a
| functioning commodity.
| HashBasher wrote:
| Really? Is corn fungible with oil?
| kayamon wrote:
| No?
| lawn wrote:
| Yes, and there are plenty of other examples too.
| colesantiago wrote:
| SEC Chair != SEC
|
| This is just equivalent to 'employers opinions does not reflect
| my own'
| omniglottal wrote:
| SEC chair delivering speech written by SEC lawyers, on the
| other hand... this == SEC
| nathias wrote:
| Pretty idiotic that they can't make new categories for new tech
| and have to shoehorn it into the old.
| oldgradstudent wrote:
| Why do you need new categories when the old ones fit?
|
| A Ponzi over Blockchain is still a Ponzi.
| nathias wrote:
| You must be the smartest boy alive.
| gamblor956 wrote:
| The SEC cannot make new categories until and unless Congress
| passes a law either making new categories or authorizing the
| SEC to do so.
| stonogo wrote:
| 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.
| JumpCrisscross wrote:
| > _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.
| nathias wrote:
| But as we can see from anything else, X when digital becomes
| completely different, it becomes at the same time possible to
| scale it, to automate it and it becomes international. I fear
| regulatory capture that will capture all the innovation and
| profits for US VCs (again).
| JumpCrisscross wrote:
| Money is already digital, highly automated and
| internationally scaled. The American payments/settlement
| system is arguably more decentralised than blockchains.
| Crypto brings unique attributes to the table. But being
| digital, automatable and international aren't major
| differentiators.
|
| To the degree we're seeing a persistent class of winners in
| crypto, it's not users. And it's not VCs. It's Wall Street.
| Because this is an old, dirty game. Some folks just gave it
| a new paint job.
| formerkrogemp wrote:
| Bitcoin is useless and always has been.
| kayamon wrote:
| Bitcoin solves the double-spending problem.
| AlexandrB wrote:
| You forgot the last bit: "...without a central authority."
|
| There is no double-spending problem in traditional banking
| because it is not decentralized.
| kayamon wrote:
| Perhaps you should read about fractional reserve banking.
| The same money can indeed be loaned out against ones will
| and reappear elsewhere in the economy in two different
| places at once.
| jeffbee wrote:
| This interpretation seems to require a willful misrepresentation
| of what the man said. He said it _is_ a speculative asset, is has
| the basic properties of a security, and people other than himself
| have labeled it a commodity.
| Geee wrote:
| No. He was talking about other cryptoassets being securities,
| and named only bitcoin as a commodity.
| TimPC wrote:
| This is huge. Essentially if they find anyone sold crypto to
| unaccredited investors they would be engaging in illegal sales of
| a security. This may lead to lawsuits where crypto sellers find
| they are on the hook for the losses of people they illegally sold
| to. It may also lead to jail time for a substantial portion of
| the crypto community.
| IAmGraydon wrote:
| >It may also lead to jail time for a substantial portion of the
| crypto community.
|
| I'm cracking up over here. Are you actually being serious?
| f38zf5vdt wrote:
| They'll be kept company there by all the people who caused
| the 2008 US housing crisis.
| mirntyfirty wrote:
| I'd claim that tax misrepresentation would likely lead to
| some jail time, particularly for those that don't have the
| funds for legal representation. As far as I can tell, the
| prevailing point of Bitcoin is to make capital gains.
| DennisP wrote:
| If crypto is a commodity, people still owe the same capital
| gains tax.
|
| The IRS has been giving tax guidance on crypto for years;
| any US person in crypto with half a brain has been
| following it.
| mirntyfirty wrote:
| Agreed. I was providing an example whereby a person could
| end up in jail from participating in crypto.
| mjburgess wrote:
| tyrfing wrote:
| No, this is just a SEC vs CFTC turf war. Neither is willing to
| concede the "territory" to the other; the only notable part
| here is that the SEC still doesn't think ETH is settled. It's a
| minor TV interview, not something "huge".
|
| https://www.klgates.com/CFTC-and-SEC-Perspectives-on-Cryptoc...
| Animats wrote:
| _Essentially if they find anyone sold crypto to unaccredited
| investors they would be engaging in illegal sales of a
| security._
|
| Well, yes. That's the Howey test. It's pretty simple. A lot of
| crypto issuers liked to think it didn't apply to them, but the
| SEC has been saying consistently that it does. There's argument
| over whether crypto brokers, exchanges, or miners are subject
| to regulation. But anybody who created and issued a
| cryptocurrency is clearly making a public offering of a
| security.
|
| The crypto community got away with a lot during the "line goes
| up" phase, because the SEC usually acts only when investors
| lose money. After a 2 trillion US dollar loss in market cap,
| that phase is over. There will be more complaints and more
| enforcement actions.
| DennisP wrote:
| So far at least, this is not the worst bear market ever in
| crypto. ETH right now is down about 80%, but in 2018 it
| dropped 94%.
| Animats wrote:
| It's the biggest financial impact. Last time around, it
| wasn't that big a financial market segment.
| aaaaaaaaata wrote:
| Curious, do you think this makes a fast recovery less
| likely? Or more?
| [deleted]
| jrsj wrote:
| The odds of this happening are effectively 0, federal
| government is working on a regulatory framework for crypto
| markets and it definitely doesn't involve jailing anyone for
| sales that have previously been considered legal by basically
| everyone
| colejohnson66 wrote:
| It would probably run afoul of the Constitutional protection
| against "ex post facto" laws.[0] If something (in this case,
| selling Bitcoin) was legal when you did it, but is now a
| crime, it is unconstitutional to prosecute you for it.
|
| [0]: Article I, Section 9 <https://en.wikisource.org/wiki/Con
| stitution_of_the_United_St...>
| gamblor956 wrote:
| Agency rules are not laws, and thus are not actually
| subject to the prohibition against ex post facto _laws_.
| Notably, if existing laws or rules would already apply to
| make activities illegal, and the new rules are simply
| making that explicit, the courts will upheld (criminal)
| charges based on the new rules.
|
| Importantly, with agency rules, courts can and have looked
| at the "intent of the law" authorizing the agency's rules
| to uphold criminal convictions under newer agency rules
| that were technically within the scope of the rules at the
| time the acts were committed.
|
| This happens all the time in the tax world; see for example
| the Bermudan tax loss harvesting scheme that got a lot of
| people sent to prison even though the schemes were
| technically within the rules at the time accounting firms
| started selling them to clients.
| macksd wrote:
| I also think it's unlikely, but California did at one point
| revoke a tax exemption and applied that decision
| retroactively, expecting interest on unpaid taxes that the
| law at the time said you didn't owe. As I recall, this
| wasn't considered ex-post-facto simply because being fined
| for under paying taxes isn't the same thing as convicting
| someone as a crime, so the rule of law doesn't have to work
| the same way. You can take any constitutional protection
| and someone will come up with an argument in their head for
| why it doesn't apply to things they don't like.
| CPLX wrote:
| Unregulated selling of securities has been a crime for a
| very long time. There are no ex-post issues at work here.
| rafale wrote:
| But the SEC (and other branches) has been slow at
| providing regulatory clarity. So they share part of the
| blame.
| bawolff wrote:
| Is this ex-post facto? Its not like the law is new or that
| its suddenly illegal, people just weren't sure before if it
| was violating the law, which is really different from
| creating a new law.
| treis wrote:
| No, this is grossly misleading. Bitcoin is the only one he was
| prepared to say publicly at that moment was a commodity. That
| doesn't really say anything about other coins other than he's
| not willing to take a public stand at that moment.
| smohnot wrote:
| He said BTC was the only cryptocurrency he was comfortable saying
| was a commodity, while many were securities
|
| 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 wrote:
| What's the difference between a security and a commodity? And
| what does this distinction change for the SEC?
| bedros wrote:
| Difference is scarcity
| sshine wrote:
| > What's the difference between a security and a commodity?
|
| Securities: Stocks and Bonds
|
| Commodities: Metals, Grains, and Oil
|
| A commodity's defining feature is its interchangeability. One
| unit is essentially the same as another unit. To an orange
| juice company oranges are oranges, to an apple juice company
| apples are apples, and to an oil refinery one barrel of oil
| is a lot like any other barrel of oil. Commodities must meet
| certain minimum quality standards and markets do distinguish
| between different types of the same commodity. But for the
| most part it's about quantity.
|
| https://www.findlaw.com/consumer/securities-
| law/securities-v...
|
| A commodity is a basic good used in commerce that is
| interchangeable with other goods of the same type.
| Commodities are most often used as inputs in the production
| of other goods or services. The quality of a given commodity
| may differ slightly, but it is essentially uniform across
| producers.
|
| https://www.investopedia.com/terms/c/commodity.asp
|
| > And what does this distinction change for the SEC?
|
| Good question.
|
| This thread is full of suggestions. I couldn't find a truly
| compelling one except that Bitcoin could fit the description
| of a commodity.
| phabricator wrote:
| The Howey Test
| null0pointer wrote:
| Thanks, headline is a bit misleading,
| wolframhempel wrote:
| 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.
| ASlave2Gravity wrote:
| 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.
| undersuit wrote:
| 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.
| kloch wrote:
| 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.
| uncomputation wrote:
| 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.
| DennisP wrote:
| Bitcoin has a single popular client. There are people who work
| on that client.
|
| Ethereum has five execution clients, developed by independent
| teams, and another five proof-of-stake clients, also developed
| by independent teams, plus an open community of researchers
| where anyone can participate. The Ethereum Foundation funds
| some of this, but not all of it.
|
| If the various teams don't agree to do something, it won't get
| done. You can verify for yourself that no one party is in
| charge, simply by listening to the public dev calls.
| 0des wrote:
| > Bitcoin has a single popular client.
|
| False.
| DennisP wrote:
| > Although there are many different implementations, the
| original implementation, Bitcoin Core, is by far the most
| popular, and it is used as the reference implementation
|
| https://river.com/learn/what-is-bitcoin-core/
|
| Since it is the reference implementation, other clients
| have to follow its lead. And that's the lead of a fairly
| small group:
|
| > Over the years, the code has had more than 800
| contributors. However, only seven people serve the role of
| "maintainers" nowadays.
|
| https://bitcoinist.com/who-funds-bitcoin-core-developers-
| her...
| yokem55 wrote:
| Bitcoin-core is currently about 97% of bitcoin nodes.
|
| Geth is about 80% of ethereum execution layer nodes.
|
| But the bigger difference is cultural - alternative clients
| are a core part of ethereum's development culture and is
| actively supported and nurtured. This is complete with
| social campaigns to get folks to switch away from majority
| clients to prevent situations where a bug in one client
| could cause big issues in the network. The same kind of
| environment is not present in bitcoin land.
| kinakomochidayo wrote:
| Exactly this. There was a recent community push for
| consensus layer clients to be more decentralized, which
| seemed to have worked. Next is the execution layer
| clients to have better % in use.
| kinakomochidayo wrote:
| It's true. Bitcoin Core is the most used, so development is
| basically centralized.
|
| https://coin.dance/nodes
| splix wrote:
| Not really. If one of the clients interpreted a part of the
| spec in a different way, event if they are right, they would
| have change it to follow an officially approved code because
| that's the consensus.
|
| There are examples like
| https://github.com/openethereum/parity-
| ethereum/blob/55c90d4...
| kinakomochidayo wrote:
| "Officially approved" specs are talked about amongst the
| devs in all client teams on the Ethereum calls, with
| proposals having to go through the EIP process, which are
| then implemented by each team.
|
| Also, Parity Open Ethereum is deprecated.
| thinkmassive wrote:
| Actively used alternative implementations:
|
| https://github.com/btcsuite/btcd
|
| https://bitcoin-s.org/
|
| https://bcoin.io/
|
| https://bitcore.io/
|
| https://bitcoindevkit.org/
| kinakomochidayo wrote:
| None of these clients will likely ever compete with Bitcoin
| Core.
|
| https://coin.dance/nodes
| [deleted]
| AtlasBarfed wrote:
| If Ethereum can be changed from Proof of Work to Proof of Stake
| on a "whim", how is it not centralized in some capacity?
| DennisP wrote:
| That's quite a whim. It's been the plan since 2014.
| kinakomochidayo wrote:
| It was supposed to transition to PoS from the beginning.
| mixedCase wrote:
| On a "whim" in so far as miners agree on the change.
| 0des wrote:
| And that change took years for everyone to standardize and
| design and then agree on to activate.
| Vespasian wrote:
| Miners have no say in it.
|
| They "only" participate in the on chain consensus while the
| switch to PoS is governed by the underlying social
| consensus of what code to run.
| kreetx wrote:
| Define whim, and how does it relate to being centralized? I
| don't think there is anyone forcing the miners to keep
| another Ethereum classic running.
| Melting_Harps wrote:
| > Bitcoin has less foundation- or team-based leadership that
| have plagued other crypto projects.
|
| It's designed that way, but it has been attempted before: under
| the guise of that name, no less. I just saw Charlie Schrem on a
| live stream a while ago, and he strikes me as the person who
| best represents those conmen. Many have falled by teh way side,
| others in to utter irrelevance, and then imbeciles like Bruce
| Fenton refuse to go away and still clings onto his 'foundation
| status' as though that gave him any legitimacy as he runs for
| office.
|
| I'll just say this: Bitcoiners, especially early adopters,
| don't have any tolerance for these pseudo-thought leader BS,
| and nothing irks us more when someone tries to speak on behalf
| of the community. We vote with our hashing power and our nodes,
| nothing else matters. We may disagree about specific things,
| like LukeJRs refusal to let go of his smaller block idea, but
| the truth is this is a cohesive unit it that is bound by self-
| interest as much as is its about a central ethos: it's the most
| resilient community I've ever been a part of and I value it
| most because of it's refusal to be co-opted despite its MANY
| attempts, even by people who calling themselves a 'chief
| scientist' and was 2nd only to Satoshi--who I will remind you
| appealed to the community to not 'kick the hornet's nest' and
| then did exactly that in regards to using BTC to fund
| Wikileaks.
|
| > even a good one eg the move to proof of stake
|
| You lost all credibility here.
| Alex3917 wrote:
| How is this any different than something like GRIN? I'm not
| involved in either community, but at least superficially they
| certainly look similar.
| mistrial9 wrote:
| GRIN does not move more than $1B USD per hour?
| Alex3917 wrote:
| I meant in terms of not being a security, rather than being
| a commodity.
| mtoner23 wrote:
| while it may be smart from a securities/legal/tax persepctive
| it also dooms bitcoin to be a useless coin. Transaction speeds
| abysmal and the energy usage is absurd. These could never be
| changed
| chromatin wrote:
| Lightning Network is a layer 2 network on top of Bitcoin that
| is governed by smart contracts at the base layer and has
| transaction speed of seconds. It's increasingly used in place
| of base layer transactions for small to medium sized amounts
| (e.g. US$1 - $1000). Anything on the order of US$10k+ can
| reasonably transacted on the base layer, and when I am
| spending that much I don't mind a 10 minute confirmation
| time.
| pcdoodle wrote:
| I'd sign the title of a property over after 3 confirmations
| on the base layer. Lightning looks cool too, haven't had a
| chance to use it yet.
| hnthrow1010 wrote:
| The idea that Bitcoin has no leaders is a big lie that these
| regulators should be able to see through. You can take look at
| any of the well-known whales to see obvious evidence against
| that claim. They make the claim because it allows them to
| maintain plausible deniability while manipulating the market as
| much as they possibly can. I wouldn't trust anyone in finance
| who says they're not doing managerial work and direction; that
| work is _required_ to make the stated goals work. It 's about
| as big a red flag as when recruiters say "our company has no
| bosses and no management". It might fool some naive people, but
| those who are observant can see who's really in charge.
| gesman wrote:
| Manipulating the price is not the same as controlling the
| project direction.
| etherael wrote:
| Project direction controlled entirely by core devs and the
| centralised exchanges that bless their output as "bitcoin"
| regardless of the fact it directly contradicts the original
| consensus mechanism for the project and the changes
| implemented by said devs fundamentally broke the utility of
| the project.
|
| SEC and similar are likely granting BTC "commodity" status
| purely because it is so utterly controlled and
| unthreatening, completely divorced from its original intent
| of addressing the central banking charade, that any energy
| they can push into it is energy they won't have to deal
| with being directed to a legitimate decentralised
| cryptocurrency that actually works and over which no such
| control exists.
| majinuub wrote:
| > Project direction controlled entirely by core devs and
| the centralised exchanges that bless their output as
| "bitcoin" regardless of the fact it directly contradicts
| the original consensus mechanism for the project and the
| changes implemented by said devs fundamentally broke the
| utility of the project.
|
| Core devs and exchanges do not entirely control the
| project direction. Non-backwards compatible changes
| cannot be made to Bitcoin without the miners AND node
| operators adopting the new client. It takes the
| cooperation of the devs, miners, and node operators to
| make a hard fork. "The Blocksize War" by Jonathan Bier
| documents a bunch of failed hard fork attempts that were
| backed by a good number of devs, large miners, and large
| exchanges. They failed because the node operators were
| not on board.
| etherael wrote:
| I am aware of the official cover story. You appear to be
| unaware that it is a lie.
|
| Look up the historical record. By what metric was the BTC
| chain allocated to the present by bitfinex? I'll give you
| a hint, hash power not only had nothing to do with it, it
| was explicitly said that it would be ignored in the
| announcement.
|
| And reality flies in the face of what you just claimed,
| node operators had nothing to do with the metric. It's
| all just outright rigged.
| sshine wrote:
| > it was explicitly said that it would be ignored in the
| announcement
|
| Can you elaborate or give references to how Bitfinex
| controls the Bitcoin blockchain in such a way that the
| gridlock between miners and core devs isn't what keeps
| Bitcoin conservative?
|
| How is the network rigged in such a way that node
| operators have nothing to say? You're not referring to
| miner centralisation?
| [deleted]
| erdewit wrote:
| What makes Bitcoin a commodity is that nobody can issue more
| Bitcoin, other then from mining, just like with physical
| commodities. The market can still be manipulated by the big
| players but that is besides the point. When more of an asset
| can be issued (created from thin air) then it is a security.
| empraptor wrote:
| i'm not sure why people keep thinking that there is a hard
| limit to number of bitcoins that can be mined when the
| network can be updated to allow more coins to be mined.
| [deleted]
| tboyd47 wrote:
| If there are "leaders" in Bitcoin, it would not be the
| whales. It is not Proof of Stake where money buys you a
| voting right.
| DennisP wrote:
| Money buys you voting rights in some proof-of-stake
| implementations that give governance rights to stakers.
| Ethereum's doesn't do that. Its stakers have no more
| governance rights than miners.
| anonporridge wrote:
| Except Ethereum is planning to eliminate miners and move
| to proof of stake.
| konschubert wrote:
| In Pow, Money buys you mining capacity which is voting
| rights.
| shanusmagnus wrote:
| It's true that in every field known to man, money buys
| influence, at least in some broad and hazily-defined
| sense of the word.
|
| But the form of influence that can be bought in btc is
| not voting rights for what happens with the asset, not in
| any direct way. The distinction matters here.
| tboyd47 wrote:
| Tell that to the BCH investors
| etherael wrote:
| Mining BTC doesn't get you voting rights at all. The core
| devs will still make pants on head retarded changes and
| the centralised exchanges will dutifully trade their
| trash output as if it were really bitcoin, mining just
| gets you the right to maybe profit on rubber stamping
| their trash depending on market conditions.
|
| BTC has no mining. Only rubberstamping.
| Dylan16807 wrote:
| But you have to trade it away to buy the machines. That's
| very different from giving power to the people holding
| lots of coins.
| anonporridge wrote:
| Especially because mining is a business that you can fail
| at if you don't balance costs and income properly.
|
| That's much preferable to proof of stake where early
| investors can just squat on their coins indefinitely with
| almost zero cost to maintain their authority percentage
| forever.
| yokem55 wrote:
| Except if the community at large doesn't like how a
| particular staker/validator is doing their job, the
| staker's assets can be burned in a hard fork that enjoys
| sufficient broad legitimacy. The capital can be outright
| destroyed. In contrast, there is no way a community in a
| proof of work system can burn a particular miners
| hardware if that miner becomes able to abuse the network.
| At most they could change the mining algo, but that wipes
| all miners out, and such a change can really only happen
| once.
| lottin wrote:
| In PoW miners buy physical capital and electricity, in
| PoS miners buy digital tokens. It's exactly the same,
| except PoS is less detrimental to the environment.
| rafaelero wrote:
| It would be the same if holding a token from a PoS system
| cost money. Since it doesn't, then it is definitely not
| the same thing.
| lottin wrote:
| Of course it costs money, holding a token has an
| opportunity cost.
| Dylan16807 wrote:
| The opportunity cost of not investing is in a different
| ballpark from spending that money on machines and
| electricity.
| kinakomochidayo wrote:
| There's a difference between governance PoS and consensus
| PoS (Ethereum). There are also several variations of PoS.
| eric_cc wrote:
| Can you give a good example of how one of bitcoin's
| "managers" changed bitcoin recently?
| postalrat wrote:
| When bitcoin and bitcoin split. Technically bitcoin cash
| should be considered classic bitcoin and the commodity.
|
| The "managers" were basically able to create a new crypto
| and give it the bitcoin name.
| etherael wrote:
| About five years ago they permanently restricted
| transaction volume to about 4 per second. After that I
| stopped paying attention because you couldn't ask for a
| clearer demonstration of their complete control than the
| fundamental destruction of the entire purpose of the
| project even existing.
|
| So there's that.
| jazzyjackson wrote:
| so you lost the blocksize war, that doesn't mean "they"
| have control over the whole project
| potatototoo99 wrote:
| You can always fork bitcoin and throw whatever hashing
| power you want at it. PoW gives you that.
| kinakomochidayo wrote:
| You sure can, until the Bitcoin Core supporters tell
| people that the fork is an attack on Bitcoin, and crypto
| media spreads that lie.
| etherael wrote:
| And bitfinex backs blockstream and the rest follow
| because they don't want to add to the confusion and
| tether prints billions into existence to signal fake
| assent to fundamentally idiotic changes like permanently
| limiting chain throughput to a fax machine or so whilst
| censoring any venue which dares point out the abject
| stupidity, insanity and corruption implicit in all of the
| above.
|
| But yeah, sure, whatever. Definitely don't throw Brer
| rabbit in that there briar patch. Stick it to the man,
| use the obviously captured and sabotaged trojan horse.
|
| What could possibly go wrong? Laser eye me up.
|
| I cannot believe how far bitcoin has fallen. Utter clown
| world madness.
| steego wrote:
| Well that's a disingenuous punt of a response:
|
| You can always fork it and start your own teeny-tiny
| forked Bitcoin network and pretend like the Network
| Effect is irrelevant to liquidity, right?
|
| Who needs liquidity?
|
| The truth is cryptocurrencies are like anything else that
| is a network: The people who control how people connect
| to and participate in a network will effectively exert
| some amount of control over the network.
|
| I'm sorry, but there is nothing magical about crypto-coin
| networks and blockchains.
|
| If there's one thing you can learn throughout history,
| it's that power in networks have a tendency to
| consolidate and that networks have a tendency to break
| down and be replaced with new networks.
|
| There is nothing inherently special about the Bitcoin
| network or any other crypto network that makes it immune
| from being controlled by either internal or external
| influence.
|
| If you think there is: I'd appreciate you sharing what
| you believe are effective safeguards.
| lend000 wrote:
| You might as well be talking about the boogieman. Who are
| these whales who control the market? Why were so many mega-
| whales selling at $27K and lower this year, when they could
| have sold at the top? Michael Saylor is one of, if not the
| biggest crypto holder right now, and the dude is clueless and
| currently underwater in his position.
|
| Talking about whales is just superstition for people who
| can't find any alpha in the markets. It's an excuse for why
| you didn't know the price was going to go in a certain
| direction. You see it a lot in amateur trading Discords and
| subreddits.
| itsoktocry wrote:
| > _Talking about whales is just superstition for people who
| can 't find any alpha in the markets. It's an excuse for
| why you didn't know the price was going to go in a certain
| direction._
|
| Ah yes, the price predictoor, even more common in amateur
| trading Discords and subreddits.
| lend000 wrote:
| Well that is sort of the point of such groups ;)
| vmoore wrote:
| 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?
| ianferrel wrote:
| Under US law (Howey test) a security is something that
|
| 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)
| ForHackernews wrote:
| Under this definition, surely all cryptocurrencies fail test
| #4.
|
| Everyone is going to get rich and nobody is going to have to
| put in any effort, just HODL.
|
| WAGMI! To the moon!
| ianferrel wrote:
| Most cryptocurrency promotors _claim_ that they have this
| brilliant team and a great roadmap and in the future all
| the activity they 're going to promote is what will make
| the token worth something, etc. Which is actually what
| _does_ make them a security.
|
| The claim in the article is that Bitcoin is mostly not like
| that. There's a protocol and a bunch of users, but there's
| no one who's leading the enterprise and _causing_ the value
| to do something. Not sure I buy that claim, but it 's not
| totally crazy.
| unicornmama wrote:
| There are some projects run by corporations who create and
| sell tokens, and whose founders have made claims promising
| returns derived from ongoing operations and investments.
| [deleted]
| Shank wrote:
| > 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.
| seoaeu wrote:
| 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
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