[HN Gopher] Coinbase secures Bermuda licence
___________________________________________________________________
Coinbase secures Bermuda licence
Author : overthrow
Score : 149 points
Date : 2023-04-22 00:20 UTC (22 hours ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| favflam wrote:
| Are there other financial markets where a single entity is
| custodian, trading exchange, market maker, and Kyc/Aml all under
| on roof? It seems like a fundamental conflict of interest.
| atdrummond wrote:
| Other market makers (Wintermute, Keyrock, B2C2, etc) work with
| all major CEXes, including Coinbase. This is the same for
| custodians like Anchorage Digital.
|
| I feel like Coinbase would use this info to argue against being
| truly monopolistic of some or all of those markers.
|
| I am definitely certain that Coinbase (specifically Paul
| Grewal, their head lawyer, and, previously, Alex Marx, former
| head of risk) have prepared for similar claims to be made. They
| have an extensive roadmap of expected legal challenges and
| their plans to ameliorate any damage done to their business
| model. I'm confident their goal is dismantle any claim that
| they have monopolistic control of a customer's crypto once
| purchased.
| cturner wrote:
| Many methods of foreign exchange are. Insurance can be.
|
| If anything, it is equities that is unusual, because that
| market is designed to be accessible to retail investors, with
| significant consumer protections.
| chemmail wrote:
| The only reason Bitcoin and hence crypto actually worked is
| because the creator all but disappeared. This removes any and
| all conflict of interest for the rules of bitcoin.
| Unfortunately no other coin has this, and Satoshi can actually
| come back at any time.
| duxup wrote:
| What does that have to do with the other user's question?
| tromp wrote:
| Satoshi certainly did have a conflict of interest as he ended
| up hoarding 5% of all bitcoin. Other coins also had
| disappearing creators, including ones where the creators
| received no financial rewards whatsoever.
| [deleted]
| yashg wrote:
| Crypto is not a financial market. It's a gambling den.
| Unregulated one. Scammers use financial sounding mumbo-jumbo to
| lure destitute suckers with promises of infinite riches. Same
| old game. Wash trading with make believe shitcoins in magic
| internet tokens keeps the line going up so DCAing idiots keep
| providing exit liquidity to OGs to unload their magic tokens.
| elif wrote:
| You are conflating many low cap nonsense coins with actually
| revolutionary and valued ones.
|
| Gambling returns an expected -2% to -10% by design.
|
| If you pick virtually any 5 year interval for Ethereum or
| Bitcoin, you see >100% growth. In the current crash, they are
| up 128% and 187% respectively.
|
| Fiat currencies are not "gambling" even though they fluctuate
| in relative value and even mimic the -2% to -10% expected
| return of gambling far more appropriately than major cryptos.
| apnew wrote:
| The argument that crypto is not gambling just because some
| coins reported >0% returns is rather weak.
|
| The first definition of Gambling I found;
|
| >> the act of playing for stakes in the hope of winning
| (including the payment of a price for a chance to win a
| prize).
| elif wrote:
| "some coins reported >0% returns" is weak I agree.
|
| Fortunately my point was that the main 2 "report >100%
| returns for every single 'player' who waited 5 years."
|
| using your gambling definition, I would say that "chance"
| to return a prize is not accurate as it is a "virtual if
| not outright certainty" historically speaking.
| throwawayadvsec wrote:
| i'm not a crypto supporter, but the same applies to the
| stock market, housing, or any business or investment
| spacebanana7 wrote:
| The difference is that many consumers used crypto as a
| gambling tool. More so than in those other classes
|
| The precise definition of gambling varies by
| jurisdiction, but ultimately the thrill of prizewinning
| and dangers of addiction/financial loss were enjoyed by
| large numbers of crypto buyers [1].
|
| I personally bet on Ethereum the same way I bet on sports
| teams whose players I enjoy watching.
|
| [1] Admittedly my evidence is mostly anecdotal, but it
| seems like everyone knows somebody who used crypto like
| this
| yellowapple wrote:
| I know plenty of people who used and continue to use
| stocks in the exact same way, particularly on apps like
| Robinhood.
| spacebanana7 wrote:
| I think it's fair to call that behaviour gambling too.
|
| Options and derivatives that create or extract artificial
| volatility out of economic prices are gambling tools in
| the hands of most consumers.
|
| The underlying source of randomness for a gambling
| instrument doesn't really matter as long as it's
| statistically well behaved. The physical uncertainty of a
| roulette wheel, the economic uncertainty of the business
| cycle and the athletic uncertainty of a sports match all
| do the job.
| NickM wrote:
| Stock shares are an investment because the stock market
| is a positive sum game in the long run. Yes there are
| risks but the returns produced by the market are due to
| actual value being generated in the form of goods and
| services.
|
| Investing in Bitcoin is like investing in shares of a
| company that produces nothing, and which only is able to
| fund its continued operations by continuing to issue and
| sell more shares once every ten minutes. Investing in a
| real compay that worked that way would be considered
| crazy, but somehow it's supposed to be different because
| it's decentralized. The financial implications are the
| same though; it's a negative sum game instead of a
| positive sum game.
|
| That's why it's more like gambling than an investment.
| The amount of money that comes back out is always going
| to be less than the amount that goes in, in the end.
| throwawayadvsec wrote:
| "because the stock market is a positive sum game in the
| long run"
|
| No, in the actual long run you and every of your
| descendants dies and the earth get disintegrated.
| tanseydavid wrote:
| Is someone who day-trades stocks an "Investor" or a
| "Gambler"?
|
| I think most people who day-trade would call themselves
| "investors" but it seems precisely like gambling to me.
|
| Can trading stocks be both "investing" or "gambling"
| depending on how you approach it?
| MacsHeadroom wrote:
| Day-traders tend to not call themselves investors. They
| call themselves traders.
|
| Investing involves holding assets long term.
|
| But they certainly don't call themselves gamblers. At
| least not any that turn it into a successful career.
| re-thc wrote:
| Those you mention are regulated (to some extent). Is
| crypto? Main issue. Not a level playing field.
| throwawayadvsec wrote:
| we're not arguing about regulations or ethics, he was
| just saying that it was just gambling, more regulations
| wouldn't change that
| Cardinal7167 wrote:
| But crypto _is_ regulated. The SEC has been clear about
| how to treat and tax crypto.
| JumpCrisscross wrote:
| > _SEC has been clear about how to treat and tax crypto_
|
| The SEC has no authority over how crypto is taxed.
| Cardinal7167 wrote:
| Their guidance to treat it like a security has clear tax
| implications, im obviously not saying they control the
| tax legislation itself.
| JumpCrisscross wrote:
| > _guidance to treat it like a security has clear tax
| implications_
|
| Not really. These are independent decisions. The IRS may
| incorporate the SEC's views into its guidance, but that's
| simply a courtesy.
| yashg wrote:
| Nope. Businesses and housing have real utility. They are
| of value. Real value. Crypto tokens are a game of finding
| a bigger fool to make money.
| MagicMoonlight wrote:
| Madoff was also offering >100% consistent growth
| yashg wrote:
| I am not going to educate you on what gambling is, or what
| is the purpose of money. You made me laugh by calling some
| magic tokens revolutionary. Yes a revolutionary new way of
| duping poor people of their money.
| xk_id wrote:
| I remember when I didn't know anything about crypto and I
| believed ppl like you proclaiming this kind of stuff. But i
| was curious so i looked at the "mumbo-jumbo" myself and turns
| out it's actually just technical stuff and not even that
| difficult.
|
| I feel ppl like you act in very bad faith, but you also claim
| crypto isn't even financial infrastructure, so perhaps you're
| just clueless.
| Eisenstein wrote:
| > But i was curious so i looked at the "mumbo-jumbo" myself
| and turns out it's actually just technical stuff and not
| even that difficult.
|
| I don't see how this refutes anything above. Just because
| it is technical doesn't mean it isn't a gambling den and
| that it isn't being used to fleece suckers.
| thehumanmeat wrote:
| Just because it is a gambling den, doesn't mean there
| aren't truly revolutionary ideas and projects in there.
| Same as 2000 tech.
|
| The argument can go both ways.
| Eisenstein wrote:
| Sure, there could be. Where are they and what have they
| revolutionized besides gambling?
| yieldcrv wrote:
| I think that question relies on looking at how any
| infrastructure that gets mentioned also supports the
| people gambling. And then it relies on "revolutionizes"
| to be a greater improvement than an arbitrary metric.
|
| Reason I point that out is there are somethings _I like_
| , that I don't find comparable to other services and just
| convenient, not necessarily revolutionary.
|
| For example, give me a cloud platform that has the same
| pricing structure for developers. The pricing structure
| is that I only pay once application deployment, and then
| get unlimited reads at any amount of bandwidth for free,
| and all my users pay to update my variables and database,
| instead of me. That's not the case with GCP, Azure, AWS
| and anything non-blockchain that I've looked at. I like
| that development environment. I like that the users are
| willing to pay and have an insatiable demand of doing so.
| I don't care that the same application _could_ work at
| orders of magnitude greater throughput on other cloud
| systems when the users now have to be found and then go
| through a 12-step funnel to be convinced to use credit
| card rails. So that observation is going to continue
| attractive developers and their whole networks.
|
| I enjoy the instant collateralized lending. That's
| revolutionary in the sense that the speed is light years
| better.
|
| I enjoy the price discovery that allows for the instant
| collateralized lending.
|
| I enjoy the free and standardized API access that allows
| for the price discovery.
|
| I enjoy being able to chain actions across distinct
| services. Especially consequential financial actions, but
| also not necessarily.
|
| I enjoy being able to simulate the state of the entire
| economy, to see what affects what. Since you can branch
| off of a blockheight and prod locally.
|
| I like that there's enough people there for any of this
| to matter. I'm not someone that needs the
| "revolutionizes" and "a billion users" goal posts. I
| think its right for people to be disillusioned by crypto
| enthusiast's ideological claims. Its still financial
| services, merely because there are finances to service.
| The same as how the non-crypto financial services
| industry works (the largest industry on the planet). It
| doesn't have to have utility _to you_ , it just needs to
| reduce friction for the people that are already there,
| and there are lots now.
|
| This doesn't require the decentralization or chains, just
| the same development environment and distributed use of
| it amongst many organizations. But without the
| speculation component and confidence in the system, that
| won't happen, in the mean time this exists and its fine.
| Eisenstein wrote:
| Are those things you enjoy worth the massive transfer of
| wealth from many people to a few people that seems to be
| the result of crypto markets?
| yieldcrv wrote:
| Yes, it is worth it. Crypto doesn't aim to solve what you
| just described about every market. Crypto has the same
| distributions seen in other markets and economies.
|
| Crypto just lets you watch it in real time. The efficacy
| of its transparency selling point is actually at the crux
| of criticisms.
|
| Whether its simple noticing there's a big market for
| collectibles, but pretending crypto's version of
| collectibles are uniquely speculative problems.
|
| Or seeing that the cryptocurrencies have wealth
| consolidated in the hands of a few, as if that undermines
| something about an infinitely divisible asset, while the
| criticism is describing state currencies.
|
| We can see the phishing attacks and hacks globally,
| compared to not being able to see and quantify that
| outside of crypto, we choose not to make an international
| headline every time someone falls for a scam outside of
| crypto.
| [deleted]
| yashg wrote:
| Just because I have a different opinion than you don't mean
| I haven't done my research or don't know shit. For you
| crypto folks the only legitimate research is the one that
| concludes that it is a magical cure to every problem known
| to mankind. You guys keep harping about doing your own
| research but if someone does research and conclude that
| it's a decentralised ponzi, you dismiss it as bad research.
| xk_id wrote:
| Surely you can appreciate how difficult it is to take
| someone seriously who claims to have done research, only
| to conclude it's mumbo jumbo?
| polygamous_bat wrote:
| > I feel ppl like you act in very bad faith, but you also
| claim crypto isn't even financial infrastructure, so
| perhaps you're just clueless.
|
| You did not present any argument in your defense beyond "I
| looked at it, trust me br0", and then claimed the person
| you're responding to is acting in bad faith.
|
| However, the Bayesian in me says that (from a simple search
| on, say, youtube or twitter), anyone who is extolling the
| virtues of crypto is highly likely to be selling me
| something worthless, and thus acting in bad faith. How do
| you expect people to reconcile these facts?
| yashg wrote:
| Crypto crowd suffers from confirmation bias and are a
| classic example of the Dunning-Kruger effect. Any
| research that doesn't conclude the greatness of crypto is
| not valid research.
| yellowapple wrote:
| > You did not present any argument in your defense beyond
| "I looked at it, trust me br0"
|
| Neither did the other person.
|
| > However, the Bayesian in me says that (from a simple
| search on, say, youtube or twitter), anyone who is
| extolling the virtues of crypto is highly likely to be
| selling me something worthless, and thus acting in bad
| faith. How do you expect people to reconcile these facts?
|
| Opinions are not facts.
| polygamous_bat wrote:
| > Opinions are not facts.
|
| Wouldn't expect bagholders to know the difference.
|
| However, if you read my comments carefully, you'll see
| that I described an experiment that anyone can repeat and
| reproduce to come to their own conclusion.
| xk_id wrote:
| I mean, ignorance is worthless too. You're still getting
| scammed by trusting the skeptics blindly, you just get
| scammed intellectually instead of financially.
| foepys wrote:
| > Just technical stuff
|
| There is nothing technical about the biggest "stable coins"
| not being able to produce a single audit of their
| financials. The only thing they were able to show were
| "attestations" of USD in a bank account and even that was
| done by some shady accounting firms.
| thinkmassive wrote:
| Are those stable coins actually cryptocurrencies?
| Datagenerator wrote:
| Market makers which are in the game of naked short selling
| and using Dark markets to route orders to is the real
| financial market?
| styren wrote:
| Are you implying that they are not providing liquidity to
| "real financial markets"? In that case do you mind making
| your argument?
| weard_beard wrote:
| Providing liquidity by infinitely counterfeiting shares
| and routing them off exchange to prevent accurate price
| discovery is only "useful" to the cartel who sell
| options.
|
| If you're implying that somehow grandma is being done a
| disservice because her pension fund can't make the trades
| they want when they want then YOU need to explain how
| "liquidity" benefits anyone that matters.
| styren wrote:
| I didn't imply anything, I was asking for his reasoning
| since he didn't provide any.
|
| And I'm not sure how to respond to anyone that buckets
| people into those that do and those that don't matter.
| Your argument doesn't seem to be made in good faith.
|
| Such a weird attack and downvote just for asking for a
| clarification?
| weard_beard wrote:
| Providing Liquidity is a crime that harms everyone except
| market makers and economists. I'm pretty sure they don't
| matter.
| [deleted]
| pclmulqdq wrote:
| The ads market comes to mind here, but it is a pretty clear
| violation of securities law to have the broker and the exchange
| be the same company for financial products.
| samwillis wrote:
| Don't get me started on the ad market.
|
| One company is the broker, the exchange, a major placement
| vendor, and the software vendor for algorithmic trading
| (which is a black box anyway). On top of that, in order to
| trade, you have to show them your books so they know
| _everything_ about your business. And finally there is the
| extortion as well, don 't advertise against your own name, oh
| sorry someone else is paying more.
|
| The whole thing is engineered to extract every last ounce of
| margin from the advertisers. However due to the duopoly of
| the two colluding players (they carefully don't compete with
| each other) there is no choice.
|
| It's frankly absurd the situation we have gotten into with
| online ads. It needs significant regulation.
| weard_beard wrote:
| Yes, Citadel securities.
| tornato7 wrote:
| Coinbase is not a market maker. Only FTX had that going,
| through Alameda.
| andirk wrote:
| Any large player can move markets albeit not like the Alameda
| scam. In Coinbase's case, listing a coin can be a big deal.
| However, I've tried to time those new listings and it doesn't
| seem to do too much re: value.
| mlrtime wrote:
| Please provide your source on Coinbase being a market maker. Do
| you have any information here because it's clearly wrong.
|
| Please check before making these claims.
| tarunupaday wrote:
| i do not know why you are being downvoted. coinbase is not
| market maker - in the traditional sense of the word.
|
| "market maker" has a very specific meaning. just because they
| can "move markets" or "list coins" does not make them market
| maker.
| weard_beard wrote:
| They provide liquidity by internalizing orders and never
| bothering to acquire the underlying. Isn't that the
| definition?
| Kranar wrote:
| No.
| jcranmer wrote:
| What you're describing is a typical aspect of brokers.
| Market makers provide large standing buy and sell orders
| so that anyone who wants to buy/sell a security at
| ~market price can do so.
| weard_beard wrote:
| I just described the sausage making of, "anyone who wants
| to buy/sell a security at ~market price can do so."
|
| I'm sorry you don't like sausage.
| olalonde wrote:
| It's great for customers but not so great for "brokers".
| Securities exchanges in the US are not allowed to let retail
| customers trade directly and have to go through "brokers"
| (basically middlemen who take a cut on transactions).
| lottin wrote:
| The ability of a service provider, such as a broker, to set
| prices above production costs depends on the amount of
| competition in the market. The higher the competition, the
| thinner the margins are going to be. So, a monopolistic
| broker that doubles as exchange is absolutely not good for
| customers. In this scenario customers will be charged higher
| prices for brokerage services, compared to what they would be
| paying in a competitive market.
| olalonde wrote:
| Why would adding middlemen lower prices? If it dit, why not
| require another layer? Brokers of brokers, etc. I think you
| can see that it doesn't make sense.
| lottin wrote:
| Okay... I see this is going to be a tough one.
|
| You're not adding an intermediary. The broker and the
| exchange do different jobs. Coinbase is an exchange _and_
| a brokerage firm. Under the current arrangement, Coinbase
| is providing its customers with both exchange and
| brokerage services, so Coinbase customers are paying for
| both. If Coinbase was providing exchange services to
| brokerage firms, and these brokerage firms were providing
| brokerage services to retail investors, these investors
| would still be paying for both services (directly or
| indirectly), but prices would be lower due to competition
| among brokerage firms.
| mlrtime wrote:
| I don't think you get it.
|
| In traditional stock markets you must do:
|
| Retail -> Broker -> Exchange
|
| Coinbase allows:
|
| Retail -> Coinbase Exchange
|
| Retail -> CB Broker -> CB Exchange
|
| Retail -> Broker -> CB Exchange
|
| How is this not better for retail than traditional
| finance? How can I get DMA at the NASDAQ as an
| individual?
| [deleted]
| olalonde wrote:
| > How can I get DMA at the NASDAQ as an individual?
|
| "You can't, but it's for your own good" - Brokers
| growse wrote:
| Of course you can. It's just hilariously expensive, so
| cheaper to get someone to do it for you.
| olalonde wrote:
| I know individuals can become brokers, it was a bit of
| satire. My point was that those regulations ultimately
| benefit brokers, not consumers.
| lottin wrote:
| Oh, yeah? How does a retail investor settle a transaction
| without going through CB broker?
| olalonde wrote:
| I don't understand what you mean here. In what way do you
| consider Coinbase a brokerage? Users on Coinbase can
| trade directly on its exchange and pay trading fees.
| Restricting the exchange to only brokers would mean that
| the middlemen ("brokers") would now pay the trading fees
| and pass that cost onto their customers, plus some
| brokerage fee (which means a higher total fee for users).
| The broker-intermediated trades are necessarily more
| costly than the direct trades.
| lottin wrote:
| Does Coinbase do any of the following?
| - custody of assets - margin trading -
| customer support
|
| If the answer is yes, then Coinbase is providing typical
| brokerage services which could be provided instead by
| firms independent from the exchange. Do you not agree?
| yellowapple wrote:
| The apartment rental market seems like it comes pretty close.
| baby wrote:
| Why?
| rich_sasha wrote:
| All sorts of reasons.
|
| KYC/AML: the exchange wants your business so is more willing
| to drop their standards. In most markets most participants
| trade through brokers who also need to do these checks.
|
| Market making: the exchange has an unprecedented insight into
| how it matches trades and the scope to front run other
| traders. Perhaps even introduce "oops" bugs that their MM
| then exploits.
| jrm4 wrote:
| I mean, of _course_ there are. I can 't name them at this
| stage, but you'd be naive to not understand that those Dark
| Pool things are essentially that.
|
| Now, are there "openly visible ones?"
| iudqnolq wrote:
| You do know that the Dark in Dark Pool refers to the trades
| being secret, not the pools themselves? You can get a
| (partial) list of dark pool names from Wikipedia.
|
| https://en.m.wikipedia.org/wiki/Dark_pool
| steveBK123 wrote:
| The trades aren't even secret, they just don't publish a
| bid/ask (quote). The trades go to the same consolidated
| tape as NYSE/NASDAQ/ARCA/AMEX, etc.
| mlrtime wrote:
| There is so much misinformation on hacker news any time a
| topic is related to traditional finance , crypto or
| blockchain.
|
| Dark Pools (ATS) are very much like exchanges except the
| quotes are not public. All ATS operators are required to
| record every trade to the consolidated tape in which everyone
| in this thread has access to if they want to pay for it.
| e63f67dd-065b wrote:
| That's not what dark pools are at all, please educate
| yourself before saying something this inaccurate.
|
| > custodian, trading exchange, market maker, and Kyc/Aml
|
| Custodians are people who hold on to funds and securities. If
| a mutual fund buys a share of Apple, they don't hold the
| share themselves, it's held by a custodian bank like BNY.
|
| > trading exchange
|
| NYSE/NASDAQ/CBOE/etc are examples of _exchanges_ , where they
| match up buy orders and sell orders, and nothing more. Dark
| pools are examples of exchanges, as they are a private place
| that match up buy/sell orders.
|
| > market maker
|
| Market makers are, as their name suggests, institutions that
| exist to _make markets_. What this often means is that they
| have the _obligation_ to maintain both buy and sell orders on
| specific securities they signed up to make markets for at all
| times. Examples include Jane Street, Citadel, etc.
|
| > kyc/aml
|
| GP probably mistyped; kyc/aml are _regulations_ that must be
| followed by financial firms interacting with their customers.
| Applies to basically everybody here.
|
| A few more:
|
| Clearinghouses: when you trade a security on an exchange, you
| mere _commit_ to buying x for $y at $settlement date,
| typically 2 business days after the trade happens. This
| settlement happens at a clearinghouse, which guarantees both
| sides of the trade.
|
| The objection from most regulators is that a crypto exchange
| typically acts as all of the above simultaneously. They are
| custodians, in that they hold the crypto, they typically make
| markets, they are obviously an exchange, they provide
| clearing and settlement services, all at once. Regulators
| don't like this, since there are conflicts of interest
| inherent in the roles and they should be separated out into
| different institutions.
| jrm4 wrote:
| This is why I said ESSENTIALLY.
|
| Yes, they are technically visible. But so few people know
| about them and understand them, I'm comfortable with my
| characterization.
| e63f67dd-065b wrote:
| No? Dark pools are not essentially a combination of
| market maker, custodian, exchange, etc. Just because they
| are not widely understood doesn't mean that you're
| completely wrong that dark pools are things that they're
| not.
| jshaqaw wrote:
| A Bermuda offshore crypto exchange. What could possibly go wrong?
| faangiq wrote:
| So game over on Monday?
| ajhurliman wrote:
| Just moved my last few bucks out, let's hope it makes it. I was
| so bullish on crypto, anything with that much money and
| brilliance thrown at it must produce some fruit right? I guess
| not.
| ChainOfFools wrote:
| There's a relative handful of people for whom it has indeed
| produced fruit, several dozen to several hundred lifetimes
| worth. Centralize the profits, decentralize the losses.
| Nothing new here.
| jejeyyy77 wrote:
| They're launching an exchange that will offer additional
| services that won't be available to Americans.
|
| This will allow them to take share and compete with Binance.
|
| This seems bullish for Coinbase as Binance is sitting on a huge
| pie. Seems like a loss for the US.
| [deleted]
| thisgoesnowhere wrote:
| Loss of what?
| teacpde wrote:
| Loss of economy. Imagine NYSE doesn't operate in US.
| gitfan86 wrote:
| Except the NYSE hosts companies making planes, cars,
| hotels, buildings, farms, factories and so on.
|
| Coinbase hosts digital beanie babies.
| frank_bb wrote:
| [dead]
| schleck8 wrote:
| Something something BVI, Panama, Belize...
|
| True disruption to the existing system
| etothepii wrote:
| Bermuda is nothing like these places. Bermuda is the third
| largest insurance market in the world, with pretty much every
| Fortune 2000 company having insurance that comes through here.
|
| The ultimate court (though technically a different body)
| contains the same people as the UK's Supreme Court, the legal
| system is accountable to London (through a UK appointed, UK
| career civil servant called the Governor) as are the police.
| The laws and taxes are all made and raised locally. There is a
| high level of infrastructure, safe etc. and best of all (unlike
| SF) I've never seen anyone defecating in the streets.
| varjag wrote:
| If street defecation is your metric than about any place in
| semi-developed world is equally great.
|
| Why all these Fortune 9000 companies run their business via
| Bermuda rather than home jurisdictions again?
| etothepii wrote:
| I am not aware of "Fortune 9000 companies" that "run their
| business via Bermuda". However, large chunks of the worlds
| insurance comes through here.
| sclarisse wrote:
| Why does everyone incorporate in Delaware? Stable,
| predictable law, commonly used and understood by others in
| the industry, and -- I say the following as a top tier
| cryptohater -- somewhere the regulatory authorities aren't
| out to get you as part of their personal or populist
| vendettas.
| varjag wrote:
| Delaware specifically for the lack of corporate tax.
| Mistletoe wrote:
| HN hates crypto so they won't recognize it, but there is a
| massive brain drain and innovation drain leaving the USA right
| now. Cryptocurrencies are the future of money, whether you want
| to believe it or not. For the first time, humans can have money
| free from the whims of a government and the whirr of their money
| printer. That's a revolutionary idea. This won't be stopped by
| any government, you can only put your country at a disadvantage
| by ignoring it or trying to impede it.
| Quindecillion wrote:
| Bitcoin is the future, not cryptocurrencies.
|
| No one is going to use a company's token as money in any
| meaningful way at scale.
|
| Only Bitcoin will be used as money the way we understand money
| now because it's an open and neutral protocol. An internet-
| native money.
| yashg wrote:
| >Bitcoin is the future Nope
| Quindecillion wrote:
| Yep.
|
| I can understand why you would dismiss it if you haven't
| taken the time to really understand it, or just been fed a
| stream of anti-Bitcoin propaganda to fool you into thinking
| you're "informed" about it.
|
| But it's going to be foundational technology to the future
| of the Internet, online commerce, energy, and the wider
| global economy.
|
| Learn why, or miss one of the biggest opportunities in your
| life. Your loss if you choose to ignore it.
| [deleted]
| phatfish wrote:
| And apparently "Satoish" is going to become the most
| powerful person on earth because they hold ~5% of this
| deflationary "foundational" global
| currency/commodity/whatever it is.
|
| That reason alone is why it will never happen.
|
| I would work on saving for that ticket to Mars with Elon,
| there is more chance of starting a new crypto-bro society
| there than Bitcoin going to the moon on earth.
| LAMike wrote:
| It's Satoshi, and good luck on Mars, I'm sure Elon would
| be a great leader for you
| LAMike wrote:
| > Cope
| [deleted]
| root_axis wrote:
| Cryptocurrency tech just plain sucks. After more than a decade
| this is pretty obvious to most everyone. It's not the future of
| money, not even close, and with LLMs siphoning all the fuel out
| of the crypto hype machine, most people don't even care anymore
| - cryptocurrency is a dead meme walking.
| lottin wrote:
| There's nothing revolutionary about it. Commodity money was the
| original form of money. Crypto-currency is an attempt to create
| digital commodity money, except that this is obviously
| impossible. Instead they have created a fiat currency (because
| it's created out of thin air) with a promise attached that they
| will only print a fixed amount of it.
| malthaus wrote:
| the US should be happy that a bunch of "get rich quick
| schemers" & snake-oil salesmen are leaving and losing their
| shirts in the process
| e63f67dd-065b wrote:
| > This won't be stopped by any government, you can only put
| your country at a disadvantage by ignoring it or trying to
| impede it.
|
| Countries have tried and were pretty successful? China banned
| it, and now it's pretty difficult to trade crypto in China. The
| US can pass legislation tomorrow saying no crypto no more, and
| it will be effectively banned from the US. How are you going to
| trade crypto when nobody wants to touch it?
|
| If you don't comply, your bank will shut down your accounts,
| the people running the exchanges will get arrested, their
| websites will get seized, etc. The US financial system is
| pretty good at keeping track of where USD goes after all, it'll
| get pushed into the shadow financial sector where all the other
| crime lives, and that seems pretty much the end for all the new
| crypto projects.
| jeremyjh wrote:
| They can make it hard to interface with the traditional
| fianqncial system but they really can't stop crypto wallets
| from being used can they? I know this makes it useless for
| most people just wanting to clarify.
| polygamous_bat wrote:
| > They can make it hard to interface with the traditional
| fianqncial system but they really can't stop crypto wallets
| from being used can they?
|
| Same way they can't really, with 100% precision, stop
| people from buying or selling fentanyl. But I don't think
| that says much here, does it?
| PragmaticPulp wrote:
| > HN hates crypto so they won't recognize it, but there is a
| massive brain drain and innovation drain leaving the USA right
| now.
|
| That's the narrative the crypto influencers want you to
| believe, but it's not true.
|
| Web3 / crypto projects are having a huge difficulty recruiting,
| even in this market. Few people want to go work in crypto
| because the writing is on the wall.
| imtringued wrote:
| The opportunities to borrow cryptocurrencies without collateral
| are nonexistent and this requires a bank license either way. I
| don't see the innovation.
|
| If you want to look at the past of money, there is the
| Chiemgauer which is the most successful complementary currency
| in Germany and even that one only did 7 million EUR worth of
| actual consumer/business transactions in 2015 (there are no
| updated statistics but it is ongoing and growing).
|
| People keep using the national currency because it reduces
| transaction costs.
| yashg wrote:
| >Cryptocurrencies are the future of money
|
| LOL
| Escapado wrote:
| I don't have a horse in the race but I'm curious why you think
| that?
| bushbaba wrote:
| Disagree on the brain drain. Curious as to where you believe
| the talent is going?
| [deleted]
| kledru wrote:
| Nothing new here, but from all these years of experience, the
| only practical applications for crypto that I've encountered
| have been attempts to extort money from me, to defraud me, or
| to simply speculate. Future of money?
| spaceman_2020 wrote:
| Crypto isn't the future of money.
|
| No one uses it. Its literally a few thousand people left on-
| chain.
|
| The DAUs of OpenSea is down to a couple of thousand.
|
| All that hype, all that money just to serve two thousand
| people...
|
| Frankly, its also completely unusable. Gas cost shot up to
| $50/transaction on Eth mainnet because every idiot was buying
| memecoins named PEPE and CHAD. Even L2 solutions like Arbitrum
| were up to $2/transaction. ZkSync mainnet was
| $15-20/transaction.
|
| And that's when there are only a few thousand active users.
| Imagine what happens if millions actually do come onchain.
|
| The "future of finance" is being held hostage by idiots trading
| shitcoins.
| humanizersequel wrote:
| > a few thousand people left on-chain. > all that money just
| to serve two thousand people
|
| This is clearly false and I welcome you to try and prove
| otherwise.
| spaceman_2020 wrote:
| You know all on chain data is visible, right?
|
| 1. NFT platforms usage volume. OS is down below 5,000 users
| [0]
|
| 2. Arbitrum airdrop to 625k wallets. Most users have
| multiple wallets. I got airdrops on 3 different wallets.
| Some friends sybilled this to over 100 wallets. Actual
| unique wallets not more than 100k. Even free money can't
| entice people to use this. [1]
|
| 3. $PEPE total holders: 35,000. Exclude bots and multiple
| wallets and that's not more than 15k actual users. Hottest
| memecoin that shit up to $150M mcap in four days. [2]
|
| 4. USDT daily unique senders/receivers - under 80,000. This
| doesn't exclude bots, exchanges, smart contracts, and users
| with multiple wallets (I have 8 wallets). You also can't go
| more mainstream or "utility" than this coin. Real unique
| daily users are probably under 30k. [3]
|
| Exchange users are immaterial. They're just traders and
| investors buying the next cycle of trash. Actual usage
| metrics are on-chain users.
|
| This is being pitched as the next Visa but in reality, the
| network slows to a crawl even when it has to serve 10-20k
| real users. Meanwhile, Visa is able to serve literally
| hundreds of millions of users every month.
|
| 0. https://dune.com/queries/1622348/2688962?utm_source=mint
| orsk...
|
| 1. https://dune.com/blockworks_research/arb-airdrop
|
| 2. https://etherscan.io/token/0x6982508145454Ce325dDbE47a25
| d4ec...
|
| 3. https://etherscan.io/token/0xdac17f958d2ee523a2206206994
| 597c...
| humanizersequel wrote:
| I am not interested in getting into the weeds, but
| honestly, the fact that you're pointing to actual
| memecoins like "$PEPE" and spurious DAU measurements, but
| _still_ ceding a 10x of your original 1-2k users claim
| gives me very little confidence in you being a serious
| person.
| spaceman_2020 wrote:
| I have very little confidence in your reading
| comprehension. I said DAUs of OS (OpenSea) are down to a
| few thousand, not all of crypto.
|
| I also shared unique transacting addresses for USDT
| yesterday. That's surely not a memecoin, and that was
| under 80,000 addresses yesterday.
|
| I trade crypto and its very profitable, but don't waste
| your time buying the hopium of this scam.
| olalonde wrote:
| Bitcoin: around 4,000,000,000 USD transacted _yesterday_
| on-chain (not counting off-chain)[0].
|
| Ethereum: around 3,000,000,000 USD transacted _yesterday_
| on-chain (not counting off-chain)[1].
|
| [0] https://www.blockchain.com/explorer/charts/estimated-
| transac...
|
| [1] https://www.theblock.co/data/on-chain-
| metrics/ethereum/ether...
| ChainOfFools wrote:
| This is such a quintessentially crypto huckster response,
| with all the usual blind spots in all the usual places.
| You've measured virtual dollars, while OP was measuring
| actual human users.
| olalonde wrote:
| He didn't. Like he admitted, it's not possible to do so
| with any sort of accuracy using on chain data. There are
| over a billion Bitcoin addresses but this might overcount
| the number of users since wallets are typically composed
| of multiple addresses, or it could undercount due to the
| popularity of custodian service where multiple users
| share the same addresses.
|
| The best we can do are surveys. According to this one[0],
| there are around 34 million Americans that have a
| cryptocurrency wallet. I suppose the world wide number of
| users is a lot higher.
|
| [0] https://www.insiderintelligence.com/insights/us-
| adults-crypt...
| ChainOfFools wrote:
| Your link isn't showing up yet , but I can answer anyway
| with my own survey. I can account for over a hundred
| different crypto wallets, including a number of
| duplicates on the same chain, some of which have been
| active at one point or another over the past decade. At
| one point about 6 years ago it was close to a thousand.
| And in the circles I used to frequent (miners and pool
| ops - often the same entities), this was a middling
| number, not extraordinary at all.
|
| The simple observation that one runs* into the same
| several dozen people over, and over, and over again at
| every crypto congregation whether online or in person,
| should be a strong indication that this is an extremely
| inbred space and the sock puppetry amplification from
| principal to agent is conservatively inflating usage
| metrics by a factor of 100 if not more.
|
| * edit: okay this is somewhat dated information, maybe
| today it's a couple hundred instead of several dozen.
| spaceman_2020 wrote:
| I'm in a few telegram groups with a bunch of large
| whales, including a few influencers you would know by
| name if you're active on Twitter.
|
| One of these whales has a bot farm sybiling every
| protocol imaginable 24x7. Got an Arbitrum airdrop of over
| 1,000,000 tokens across more than 800 wallets.
|
| I have about 10 addresses in my main Metamask account,
| and I have iirc 4-5 Metamask accounts, each with minimum
| 2-3 addresses.
| olalonde wrote:
| > I can account for over a hundred different crypto
| wallets, including a number of duplicates on the same
| chain, some of which have been active at one point or
| another over the past decade.
|
| Indeed, on-chain address data is more or less useless for
| counting users, I mentioned this in my comments. The
| survey I shared wasn't based on on-chain data.
| pclmulqdq wrote:
| On-chain data establishes a useful upper bound on active
| user count, but does not say the actual number. The upper
| bound is low enough to say that it's a few thousand
| users.
| olalonde wrote:
| The upper bound would be over 1 billion for Bitcoin (1+
| billion unique addresses)[0]. The number of daily active
| addresses is around 1 million[1]. And that doesn't
| account for second layer transactions. Where do you get
| the "few thousand" from?
|
| [0] https://studio.glassnode.com/metrics?a=BTC&category=A
| ddresse...
|
| [1] https://studio.glassnode.com/metrics?a=BTC&m=addresse
| s.Activ...
| spaceman_2020 wrote:
| I literally shared on chain data. That's actual users.
| Even if you assume that all 80k unique wallets that
| exchanged USDT yesterday were real users, that's
| just...80,000 users. Niche forums have more users than
| that.
|
| Anyone who has ever created an account on a crypto
| exchange has a crypto address. I have accounts at
| Binance, WazirX, Kraken, Crypto.com, Gate.io, Mexc,
| ByBit, and probably 2-3 more exchanges I can't remember.
| That means I have 10+ addresses.
|
| But that's not real users. Any money I've sent to
| exchanges is just for trading/investing. I'm not actually
| _using_ the tech.
|
| On-chain usage is the only real usage. The rest is just
| banking with more hurdles and scams.
| olalonde wrote:
| > But that's not real users.
|
| I think we're in agreement here? On-chain data is more or
| less useless for counting actual users. That's why I was
| sharing survey data, which is the best approximation we
| can get.
|
| For actual users using the tech, it's also difficult to
| know but we can see that the on-chain transaction volume
| is quite significant (multi billion dollar daily).
| spaceman_2020 wrote:
| > On chain data is more or less useless for counting
| actual users.
|
| I assume anyone who owns crypto but hasn't made any on-
| chain trasaction to not be a real user but just a
| speculator. Ergo, immaterial if you're talking about the
| viability of the network to scale.
| olalonde wrote:
| I meant it was useless in the sense that we can't
| accurately determine the number of users from looking at
| on-chain data. As you've also explained in earlier
| comments, there is the issue of "multiple addresses - one
| user" and there is the issue of "single address -
| multiple users". If we ignore the latter issue, we can
| put an upper bound at ~1 billion users for Bitcoin due to
| the unique address count but that's just an upper bound,
| the actual number is lower but we can't know how much
| lower.
| spaceman_2020 wrote:
| We're on the same page but we're looking at different
| metrics. I'm talking about daily usage which, even if you
| assume that every wallet is a unique user, is in the tens
| of thousands at most.
|
| The entire point is that crypto adoption is abysmally low
| for a tech that almost every tech literate person in the
| world has heard about now, and that this tech falls apart
| even for this limited user base.
| olalonde wrote:
| > I'm talking about daily usage which, even if you assume
| that every wallet is a unique user, is in the tens of
| thousands at most.
|
| That's incorrect. The number of daily active addresses
| for Bitcoin is around 1 million[0].
|
| > The entire point is that crypto adoption is abysmally
| low for a tech that almost every tech literate person in
| the world has heard about now, and that this tech falls
| apart even for this limited user base.
|
| To me, that's super impressive given that many people on
| HN initially dismissed. I personally never thought it
| would grow beyond the initial group of cryptography/p2p
| nerds. I was super shocked when Bitcoin was mentioned on
| TV for the first time. Has any non-governmental money
| ever made it that far? I don't think so. It's come a long
| way, but I understand the numbers are a bit disappointing
| to those who were expecting Bitcoin to completely
| displace fiat. And in the end, it's a matter of
| perspective and there's no right or wrong answer.
|
| [0] https://studio.glassnode.com/metrics?a=BTC&category=A
| ddresse...
| cableshaft wrote:
| People don't have to use something every day to be users.
|
| I mostly just buy crypto once a month and every once in
| awhile make a purchase with it when it makes sense
| (usually either towards a new computer or some place I
| don't want getting my credit card info).
|
| If crypto became the default (which I'd be fine with),
| I'd use it all the time. But there's enough fees
| converting from USD to crypto and then making a purchase
| on top of that, as well as hassle with taxes each year
| (since I do report crypto transactions on my taxes) that
| trying to use it for all transactions, currently, isn't
| worth it for me.
|
| So on most days I wouldn't even show up in that 80,000
| DAU (well, especially since I don't touch USDT at all,
| keep in mind there's quite a few coins out there, not
| everyone interacts with all, or even more than a few of
| them).
|
| And yet I keep up with crypto news, read crypto forums,
| watch videos about crypto, on an almost daily basis.
| Personally, I'd consider myself a user of crypto, and
| find it to be a useful tool. But just like my drill or my
| hammer, I don't use it every single day, just when the
| situation calls for it.
| spaceman_2020 wrote:
| My point is that the network doesn't scale to fit even
| these very few daily users.
| spaceman_2020 wrote:
| Apples and oranges. I'm talking about real usage. You're
| talking about people exchanging house money for more make
| believe money.
|
| Crypto has been positioned as the decentralized
| alternative to Visa and SWIFT. Their real human users
| number in the tens of millions daily.
|
| The point remains that if the tech falls apart even with
| 10-20k real daily users, how does it ever scale to 10-20M
| daily users?
|
| Also, Bitcoin transaction volume peaked in 2018 and has
| been trending down for a while :)
| olalonde wrote:
| No, this is the on-chain transaction data ("real usage").
| The transactions you are referring to ("exchanging house
| money for more make believe money") is the exchange
| volume which does not appear on chain and is a lot higher
| ($18,000,000,000+ for Bitcoin yesterday).
|
| I'm not sure why you say transaction volume peaked in
| 2018, it didn't. You can zoom out from the graph I linked
| to and chose the "All" timeframe. There's a lot of
| variance but 2018 wasn't the peak.
|
| > The point remains that if the tech falls apart even
| with 10-20k real daily users, how does it ever scale to
| 10-20M daily users?
|
| Second layer systems like the Liquid network.
| spaceman_2020 wrote:
| Does this chart look like the volume is growing vis-a-vis
| the marketcap and marketing?
|
| https://bitinfocharts.com/comparison/bitcoin-
| transactions.ht...
| olalonde wrote:
| That graph is for the number of transaction, not
| transaction volume. Bitcoin has a max amount of
| transactions per block and blocks have been more or less
| saturated since a while so the number of transactions
| can't actually increase. It certainly doesn't look like
| it's decreasing. A lot of the transactions has been
| moving to second layer solutions as well, with on-chain
| becoming a sort of settlement layer.
| jejeyyy77 wrote:
| What do you mean by no one uses it?
|
| The market cap of btc says otherwise...
| agumonkey wrote:
| Using as money, not trading.
| jejeyyy77 wrote:
| Market cap is the better metric.
| yao420 wrote:
| Why when USDT is printing a billion in tether several
| days a week. They are artificially pumping the price.
|
| https://twitter.com/whale_alert/status/164915959252008550
| 7?s...
| illiarian wrote:
| It's a useless metric if no one is using it. It's a
| magical purely speculative number.
| jejeyyy77 wrote:
| Market cap is by definition people using it. They've
| exchanged their money for it.
| illiarian wrote:
| > Market cap is by definition people using it.
|
| You and I have very different dictionaries it seems
|
| > They've exchanged their money for it.
|
| A thousand people trading magical tokens they pretend
| cost trillions of dollars doesn't make it: a) worth
| trillions of dollars and b) any significant usage
| jejeyyy77 wrote:
| Eh? The fact that people have exchanged trillions of
| "real" dollars for them means precisely that's what they
| are worth lol.
| lottin wrote:
| Market cap is meaningless. Using market cap as a metric
| anyone can become the richest person in the world. See
| here: https://www.youtube.com/shorts/igENXZRECOs
| the_gastropod wrote:
| That is not how market cap works.
|
| I start a company: SquidSoft, LLC. I sell you equity:
| 0.000000001% of SquidSoft, LLC for $1. Bam, SquidSoft,
| LLC's market cap is $1T even though only $1 has traded
| hands.
| agumonkey wrote:
| using has many meanings here, and store of value was only
| one of them
| SN76477 wrote:
| Crypto is a great service.
|
| But I do not see it as anything other than that.
|
| My process goes like this.
|
| I buy the crypto I need to send, I send it, I am left with 2
| or 3 us dollars I didn't use in a wallet until I need to use
| it again.
|
| Better and easier than PayPal, but there are risks such as it
| isn't secured or backed up and I am ok with those risks.
| LAMike wrote:
| I encourage you to find out the difference between "crypto"
| and Bitcoin
|
| I think the Lightning Network has the potential to onboard
| millions of people today, and billions in the future. Check
| out how to run you're own node, be your own bank with Bitcoin
| and ignore the unscalable and scammy side "crypto" projects
| spaceman_2020 wrote:
| Bitcoin transactions aren't exactly exploding. And now that
| chain is also getting cluttered with trash jpegs
| (Ordinals).
|
| I get the idea and appreciate it. But it's too cluttered
| with scammers, fraud, and plain money laundering to fulfill
| its original mission.
|
| I would be happy if it goes down because if it does succeed
| in its mission, it pretty much means some truly awful human
| beings will have disproportionate power in our new
| financial system.
|
| I'd rather not live in a world where Justin Sun owns a
| large % of my currency supply.
| LAMike wrote:
| > Bitcoin transactions aren't exactly exploding. And now
| that chain is also getting cluttered with trash jpegs
| (Ordinals).
|
| Pick one, it can't be empty and cluttered at the same
| time
|
| > I would be happy if it goes down because if it does
| succeed in its mission, it pretty much means some truly
| awful human beings will have disproportionate power in
| our new financial system.
|
| Typical HN cope
|
| > I'd rather not live in a world where Justin Sun owns a
| large % of my currency supply.
|
| It doesn't matter if he owned more than Satoshi, no
| individual has the power to change the rules of Bitcoin,
| that is what makes it so powerful
|
| Remind me again what the original mission of Bitcoin was
| again? It's in the first few lines of the whitepaper if
| you forgot
| foepys wrote:
| You need to get the people on LN first, which requires an
| on-chain transaction. If we assume 10 tx/s (which is very
| generous) you need over 11 days just to onboard 10,000,000
| people. Then if somebody did some funky business with the
| channel and it needs to get closed to save your funds (have
| fun monitoring all your channels by yourself or paying
| somebody else to do it), you need to wait for another on-
| chain transaction to get access to your funds again.
|
| All of this assuming that the routing problem has been
| solved and the big hubs (I'd call them banks) are able to
| serve the transactions from their initial funding and don't
| have to wait to open channels with more funds.
|
| LN is something that works well in a lab but collapses when
| used by more people than just a few nerds.
| LAMike wrote:
| First off, props for admitting that LN could get 10
| million users on board in 11 days, even with a
| conservative 10 tx/s estimate. If you look into channel
| factories, this could scale the potential users to 100
| million users in less time than ChatGPT took, which is
| the most viral product of the past few decades. Is that
| not good enough for you?
|
| About the whole routing problem and "big hubs" thing -
| remember, the LN is all about being decentralized. As
| more users and businesses join in, routing gets better
| and better, so you won't have to rely on any single big
| player. Plus, with the LN's atomic multipath payments
| (AMP), payments can take different paths, making it even
| easier to send Satoshis around the world. You can run
| your own node with a 10 year old Thinkpad you can buy on
| Ebay for $100.
|
| Also anyone with Cash App can send Bitcoin over LN,
| today. I don't think you would call everyone with that
| app a nerd, would you? There are farmers, grandmothers
| and people in the developing world using Bitcoin to
| survive today, those aren't nerds to me.
|
| Btw it's pretty funny calling other people nerds when you
| lurk on HN. If you haven't noticed, nerds have been
| running the world for a while now.
| olliej wrote:
| They've been given plenty of clarity: crypto is very clearly a
| security and they've repeatedly been told it is such. What they
| want is for new "clarity" in which they are magically no longer
| subject to the same financial regulations that every other
| security is.
| localplume wrote:
| [dead]
| devoutsalsa wrote:
| I briefly worked for a crypto company. This is my personal
| observation.
|
| The SEC regulates understood things. If you create something
| new, they're not going to give guidance for it because they
| don't have to give. They're not in the business of helping
| people create new markets.
| DennisP wrote:
| But they also shouldn't be in the business of preventing
| people from creating new markets, unless we want our society
| to stagnate.
| polygamous_bat wrote:
| > But they also shouldn't be in the business of preventing
| people from creating new markets, unless we want our
| society to stagnate.
|
| That's actually their entire business... to stop
| sophisticated private enterprises from fleecing the public
| by offering unregistered securities.
| hnbad wrote:
| Disruption for disruption's sake doesn't seem desirable.
| Stagnation is bad, but not as bad as going in the wrong
| direction instead of staying still.
| DennisP wrote:
| Historically, top-down control of economies hasn't worked
| out that well. The whole point of free markets is to let
| everyone decide on the directions they want to take.
| [deleted]
| super256 wrote:
| Uhh, the SEC said that bitcoin is _not_ a security, but a
| currency. Like Euro or Yen. [1]
|
| They also said that _some_ cryptos on coinbase _are_
| securities, but when coinbase asked which ones, the SEC said
| ,,lol we won't tell you but we will probably sue you soon for
| that". [2]
|
| [1] https://www.investopedia.com/news/sec-chair-says-bitcoin-
| not...
|
| [2] https://www.coinbase.com/blog/we-asked-the-sec-for-
| reasonabl...
| polygamous_bat wrote:
| > They also said that some cryptos on coinbase are
| securities, but when coinbase asked which ones, the SEC said
| ,,lol we won't tell you but we will probably sue you soon for
| that". [2]
|
| Why is SEC supposed to do the job of Coinbase's lawyers? If I
| want to make a shitcoin tomorrow and ask the SEC for
| "regulatory clarity", are they required to respond to me?
| What if I programmatically create a new shitcoin every 30
| seconds? Am I also allowed to cook up some substances and
| mail them to the DEA to get some "regulatory clarity"?
|
| Coinbase does business in a legally unclear area, which is
| why its primary expense should be lawyers. You can't just
| skimp on that and expect government agencies to do your work
| for you. If you try that, good luck defending yourself in
| court.
| super256 wrote:
| > Why is SEC supposed to do the job of Coinbase's lawyers?
|
| The current legal framework for determining whether
| something is a security or not is the Howey test [1]. And
| it looks like that Coinbase's listings pass the test? If
| they didn't, they would've been sued already.
|
| Why try to redefine what makes up a security on the fly
| without telling anyone?
|
| [1] https://www.sec.gov/corpfin/framework-investment-
| contract-an...
| growse wrote:
| > And it looks like that Coinbase's listings pass the
| test? If they didn't, they would've been sued already.
|
| Sued by who? The SEC? Who have told them that they intend
| to bring a legal action?
| [deleted]
| nothrowaways wrote:
| `
| rohith2506 wrote:
| I can say the same about literally every security apart from
| crypto. Heck, even money is just an useless paper that we put
| too much value on. Proving my point that anyone can be a cynic
| [deleted]
| 1vuio0pswjnm7 wrote:
| "U.S. SEC Chair Gary Gensler told lawmakers on Tuesday that he
| had "never seen a field that's so non-complying with laws".
|
| Crypto firms say they need clarity about regulations, but Gensler
| has said that crypto markets "suffer from a lack of regulatory
| compliance, not a lack of regulatory clarity"."
|
| Maybe calling it a "field" is being too generous. Crime is crime.
| jrm4 wrote:
| Yeah, he really doth protest too much.
|
| Regardless of how you _feel_ about crypto, if you 're at all
| familiar with _law_ you 'd understand that we're simply in
| uncharted territory here; saying that crypto is super dirty and
| non-compliant is quite literally as inaccurate as saying that
| it's super clean and fully in-line. The law simply isn't
| _there_ yet.
| imustbeevil wrote:
| They're unregistered securities. Putting them on the internet
| doesn't change that. We have laws for securities.
|
| If you carve a dollar sign into a Banana, commit fraud and
| embezzle billions of dollars, the problem wasn't the lack of
| Banana law.
| jrm4 wrote:
| I think you've just made a point in _favor_ of crypto, and
| certainly against Gensler, who pretty much made an argument
| in favor of banning "bananas" entirely.
| iudqnolq wrote:
| The law isn't there yet if you want crypto to work. But
| Gensler wants to kill crypto, and for that simply applying
| the existing rules fairly will do.
|
| Crypto doesn't have an inherent right to have the laws
| rewritten to enable it, it needs to make the case for why
| that would be good for the public. So far it hasn't.
| fallingknife wrote:
| Crypto, like anything else, is legal unless it it outlawed.
| And it hasn't been. Only congress has the power to pass
| such a law.
| [deleted]
| WalterSear wrote:
| Unregistered securities are illegal.
| jrm4 wrote:
| Great, now prove crypto is a security. They haven't done
| this yet. I'm sure some fall under that definition, but
| some of the big boys, especially ETH, are at least
| ARGUABLY not, and the SEC simply hasn't done enough
| homework yet.
| lacker wrote:
| Unregistered securities are legal, you just can't sell
| them to the public. That is one possible outcome for
| crypto tokens - you could still own Ethereum, and one
| individual privately selling some to another individual
| would be legal, but companies like Coinbase wouldn't be
| allowed to sell it to the public.
| re-thc wrote:
| Crypto itself isn't illegal but why is it different? A
| real bank needs banking license and regulation and yet an
| "exchange" doesn't.
| jrm4 wrote:
| I get what you _want_ but that 's NOT HOW LAW WORKS or
| should work.
|
| You don't get to declare something is bad first without
| reasoning your way through it through a tested system like
| law. That's more or less anti Constitutional / American
| etc.
| iudqnolq wrote:
| It depends on the specifics.
|
| For example, suppose a drug cartel invents a new formula.
| The DEA gets to ban it under existing law.
|
| I'm not saying that's analogous. I'm merely providing a
| counterexample for your idea that the government always
| has to create custom laws whenever something new happens.
| yellowapple wrote:
| > For example, suppose a drug cartel invents a new
| formula. The DEA gets to ban it under existing law.
|
| The cartels exist in the first place specifically because
| the DEA exists and keeps knee-jerk banning things without
| bothering to demonstrate actual harm.
| iudqnolq wrote:
| I agree. But it's pretty obvious they're legally allowed
| to do it.
| csomar wrote:
| Crypto as in crypto-currencies is simply two (or multiple)
| peers exchanging information between them. They do not need
| a law to permit that, a case for the "good for the public",
| or anyone authorization for that matter.
| ufo wrote:
| By that logic, most financial crimes are just people
| signing and exchanging pieces of paper.
| mikeryan wrote:
| Yes?
| Thorrez wrote:
| Should we make financial crimes legal on the basis that
| "It's just signing and exchanging pieces of paper"?
| drsnow wrote:
| Is that not the case?
| bluecalm wrote:
| Crypto is the same as introducing your own currency and
| printing your own notes. "But it's on the computer"
| doesn't change the nature of it.
| jrm4 wrote:
| Not necessarily; a reasonable argument is "it's just
| another commodity that can change in value." Someone can
| introduce Pokemon cards and they can change value just
| fine.
| DennisP wrote:
| Introducing your own currency and printing your own notes
| is legal and has a long history in the US and elsewhere.
| One famous example is the Ithica Hours.
|
| https://cs.stanford.edu/people/eroberts/cs181/projects/20
| 10-...
| ChainOfFools wrote:
| except with cryptocurrency the added exploitation of a
| broader social custom (privacy) shrouds "you" in a thin
| veil of decentralized deniability, removing all sense of
| accountability.
| iudqnolq wrote:
| The way the law works is often by banning based on intent
| and meaning and content. Exchanging information is too
| general: the law looks at what information, by whom, for
| what purpose.
|
| Nearly every white collar crime fundamentally involves
| some sort of unauthorized communication. (Insider
| trading, for example, involves receiving information by
| virtue of a trusted position and then communication
| information to a broker which causes them to execute
| trades on your behalf). We can even get beyond white
| collar: hiring a hitman is obviously illegal even if it
| involves. communication.
|
| I'm not saying (in this comment) crypto is necessarily
| bad. I am saying you need to defend it on the merits;
| it's just info so it's ok isn't how anything in society
| works.
| jrm4 wrote:
| But no; we're a default "freedom" kind of place.
|
| You don't get to summarily declare crypto verboten and
| make crypto prove it's okay -- the burden is on crypto's
| detractors to show specifically why it's bad.
| polygamous_bat wrote:
| One word: FTX.
| jrm4 wrote:
| No, like a lawyer or policy maker would.
| yellowapple wrote:
| One word:
| https://www.fdic.gov/resources/resolutions/bank-
| failures/fai...
|
| (You can pick which word)
| polygamous_bat wrote:
| Looks like a lot more than a word to me. Also, do you
| respond to car crashes by saying we should get rid of
| speed limits and drunk driving laws?
| iudqnolq wrote:
| Sort of.
|
| Gensler doesn't get to wave his hand and eliminate
| crypto. But he does get to bring lawsuits against crypto
| companies alleging they violate existing law. He will
| have the burden of proof in those lawsuits. If he wins
| them he may be able to effectively eliminate crypto
| through application of existing law.
|
| Edit: I realize "you have to defend it on the merits" was
| poorly phrased. What I meant was that I predict judges
| will find crypto against existing law. So if you want it
| to be allowed you'll need to argue for new laws. But it
| was a very bad way to put it.
| jrm4 wrote:
| And that will be when things get _really_ interesting;
| the entire point of crypto is to route around this.
|
| I'm not saying this as particularly pro OR anti, but
| feels like there's a lot of heads in the sand on the fact
| that some of this stuff provably works VERY WELL, and its
| especially odd that even _tech folks_ (who would be
| expected to understand it) appear to be so "luddite" on
| it.
| polygamous_bat wrote:
| > its especially odd that even tech folks (who would be
| expected to understand it) appear to be so "luddite" on
| it.
|
| Have you considered the alternative hypothesis that these
| smart people are actually understanding the true nature
| of crypto very well, and you are stuck in a confirmation
| bias loop?
|
| Whether the "tech" works is very different question than
| the social effect of it. A biochemist can be awed by the
| effectiveness of fentanyl while also maintaining that the
| average person should never be getting their hands on it.
| jrm4 wrote:
| I _almost_ like your fentanyl comparison -- but where it
| fails to me is that your biochemists will have very
| specific ideas about what will happen.
|
| To me, tech's war on crypto feels more like "the War on
| Drugs." It's fine to be against, but it's the _extreme_
| lack of interest in discussing detail (which if you were
| _anti_ you 'd need to get into to stop it) and they don't
| do that.
|
| Let's say you wanted to attack crypto on principle?
| Great. First you'd need to ID and figure out their weak
| points. Bitcoin kills the environment so you attack
| there. Now, others don't - but a lot of the post ETH
| coins are centralized with a small number of founders, so
| you can get them there. Now, ETH is going to be harder
| because they've done a better job on decentralization...
|
| ETC.
|
| That little paragraph above is orders of magnitude more
| detailed than any actual attack I've seen. Which again-
| SUPER WEIRD for tech folks!
| flangola7 wrote:
| They're not just exchanging information they're
| exchanging something that, by their very own account, has
| financial value. We as society figured out long ago
| through hard real life lessons that there must be
| sophisticated rules and regulations around financial
| transactions or else enormous negative consequences and
| human suffering follow.
| jrm4 wrote:
| 100% agree.
|
| And the "sophisticated" part is important. This is where
| Gensler failed hard. You have to make the case.
| qeternity wrote:
| > we're simply in uncharted territory here
|
| We're not. Gensler certainly doesn't think so. With a few
| exceptions, the overwhelming majority of crypto are
| securities. In most instances, they are indistinguishable
| from equity.
|
| Just because some people believe in the promise of blockchain
| technologies doesn't change the nature of the things that you
| ultimately store on said chains.
| jrm4 wrote:
| Gensler doesn't much think at all, apparently.
|
| Again, "Crypto is securities" is an interesting
| proposition, but there are legal tests and crypto doesn't
| always "pass" all of them. I'm not saying he's definitely
| wrong, I am saying that there's not enough "homework" out
| there to prove he's right and he (et al) need to do better
| about putting up or shutting up.
| polygamous_bat wrote:
| Would you read what you are writing?
|
| Gensler doesn't need to prove _all_ crypto is definitely
| 100% unregistered security, just that some of the ones
| sold by Coinbase is. How certain are you in the claim
| that none of the cryptocurrencies peddled by Coinbase is
| not legally a security?
| qeternity wrote:
| Yeah well that's just not how any of this works.
|
| Gensler makes the rules, and the courts will adjudicate
| any challenges.
|
| There's no homework to be done: most crypto doesn't pass
| the Howey test.
| DennisP wrote:
| Apparently he thought ETH was in uncharted territory.
| Meanwhile the head of the CFTC says many cryptocurrencies
| including ETH are commodities.
| qeternity wrote:
| Yes, the head of the Commodities Futures Trading
| Commission has a clear incentive to call things
| commodities. Unfortunately, he's not the one who gets to
| say whether they're securities.
| DennisP wrote:
| The head of the Securities and Exchange Commission has a
| clear incentive to call things securities.
|
| He doesn't "get to say" whether things are securities
| either. He can _claim_ they 're securities but he has to
| prove cases in court, which isn't turning out to be that
| easy even for XRP.
|
| Ultimately, Congress decides the rules, and not everyone
| in Congress thinks the SEC is doing a good job here.
| fshbbdssbbgdd wrote:
| Some things are "uncharted" but others are simply illegal,
| like selling unregistered securities. The supposed confusion
| on this point is a pretense to help the legal defense
| whenever regulators get around to enforcing the law.
| jrm4 wrote:
| And again, why is crypto a security? There are a lot that
| clearly do fall under it, but many of the big guys don't. I
| don't believe you can summarily call Ethereum a security
| without more homework.
|
| That's where Gensler failed. He may not be wrong, but he
| needs to show his work.
| polygamous_bat wrote:
| > I don't believe you can summarily call Ethereum a
| security without more homework.
|
| Ethereum voluntarily changed its definition since the
| last time SEC gave it "not a security" status.
|
| > That's where Gensler failed. He may not be wrong, but
| he needs to show his work.
|
| I am sure he would be very happy to show his work to the
| court. Thus the Wells notice to Coinbase and the lawsuit
| against Bittrex. He is just not required to show his
| homework to Coinbase, much to the dismay of crypto
| shillers.
| dontknowwhyihn wrote:
| Isn't it interesting how crypto went from tulips to
| securities all of a sudden?
| imtringued wrote:
| Just because some cryptocurrencies are obvious
| securities, especially the ICO ones, doesn't mean there
| aren't tulip like cryptocurrencies. Cryptocurrencies are
| inherently non monolithic in design.
| [deleted]
| karlshea wrote:
| Tulip mania did have to do with securities, it was
| basically an options contract bubble.
| koolba wrote:
| That's rich coming from the guy who couldn't even answer a
| basic yes/no question by Congress, " _Is ethereum a commodity?_
| ".
|
| His congressional testimony was a joke. How that man still has
| the job of SEC chief is quite the mystery. Being CFO of Hillary
| Clinton's 2016 campaign is probably a factor.
| JumpCrisscross wrote:
| > _That's rich coming from the guy who couldn't even answer a
| basic yes /no question by Congress, "Is ethereum a
| commodity?"_
|
| Commodities aren't Gensler's job. It would be like someone
| asking him about the tax code. It's fair for him to say "I
| don't know." What he knows are securities.
| ackbar03 wrote:
| So is ethereum a commodity?
|
| No seriously, I can't answer that either.
| chaxor wrote:
| It's just a currency. That seems rather simple. WTF is a
| "commodity"?
| scrollaway wrote:
| https://www.investopedia.com/terms/c/commodity.asp
| e63f67dd-065b wrote:
| The reason he won't answer the question is because it's
| complicated.
|
| On one hand, yes, Ethereum is obviously a security, it raised
| money from investors to make a thing, and investors expected
| to get rich off it.
|
| On the other hand, Ethereum is currently regulated as a
| commodity by the CFTC.
|
| If he says Ethereum is a security, then there's a political
| mess.
|
| If he says Ethereum is a commodity, then it breaks down the
| SEC's case for all the crypto projects out there that's
| basically stock IPOs but with a thin crypto layer on top.
|
| I would not impute his credentials, he was a partner at
| Goldman Sachs and was chair of CFTC under Obama. He was
| involved in crafting a great deal of policy after 08 around
| the new regulations for financial institutions. He's not
| stupid, he's clearly a better person for the job than most of
| the people here on HN.
| marcell wrote:
| How can crypto companies be expected to follow the law, if
| the head of the SEC cannot say if Ethereum is a security or
| a commodity?
| lacker wrote:
| Well, it's easy to follow the law. Just be conservative
| and treat Ethereum like an unregistered security. Ie,
| don't offer it for sale to the public.
|
| That certainly isn't a good outcome for Coinbase, though,
| so I can see why the crypto companies wish the SEC had a
| different suggestion.
| jeremyjh wrote:
| Laws the CEO doesn't like are "unclear". He doesn't like
| any laws because they are intended to thwart grifters
| like him. So all regulation is unclear.
| duxup wrote:
| Is not giving a yes or no bad?
|
| Maybe it isn't clear?
| hbbio wrote:
| It's really bad.
|
| In the press, he says that "actors are not complying" but
| not being able to answer the most simple question (there
| are others more complex) is *not* playing in SEC favour.
|
| Comply with what? Ethereum is the most used
| "crypto"-currency and the ecosystem players like Coinbase
| (a YC company) are right by saying they *can't* comply...
| they don't know what they are supposed to do despite asking
| repeatedly for years.
| re-thc wrote:
| > Comply with what?
|
| Comply by not operating at all probably. Just the SEC
| can't outright say that.
| dontknowwhyihn wrote:
| The SEC could have prevented Coinbase from becoming a
| publicly traded company, but they didn't.
| thisgoesnowhere wrote:
| What are you suggesting here?
|
| Are you saying that because they said coinbase could list
| that means that crypto is compliant?
| duxup wrote:
| You didn't answer my other question.
| ghayes wrote:
| Yes, it's very bad, as if you're a US company, how do you
| comply if one government agency tells you one thing, and
| another tells you the opposite. Rule of law fundamentally
| requires a shared understanding of the law.
| duxup wrote:
| Did you ask a government agency?
|
| This whole congressional testimony as legal advice for
| your business makes no sense.
| latchkey wrote:
| "the rules are clear"
|
| "great! how would they apply to this simple example?"
|
| "lol, no I can't tell you that!"
| growse wrote:
| The regulators aren't obligated to tell you how to stay
| out of trouble.
| thisgoesnowhere wrote:
| That's not how regulation works with the SEC. The rules
| are broad and are specificly designed to not be strict so
| that they can be applied to new technologies and
| businesses.
|
| You can say you don't like these rules or how they are
| applied but that's how they have been applied since their
| inception. This isn't new.
| latchkey wrote:
| Sadly, the existing rules are clearly not being applied
| well to these "new" (10+ year old) technologies.
|
| After, whatever decades of "the rules", new technologies
| have come along that have stumped "the rules". Now, the
| SEC has to deal with that. Instead of being an adult and
| having a good conversation, they are just kicking and
| screaming.
|
| What's happening is that SEC is saying that you're
| breaking "the rules" (ie: Wells Notice to coinbase).
|
| So, coinbase says... "ok, cool... what rules am i
| breaking?"
|
| The response is: "lol, no I can't tell you that!"
|
| So now Brian is in DC this week talking to regulators
| trying to get some clarity. He's posting all sorts of
| pictures of this on Twitter.
|
| Let's see what happens.
| growse wrote:
| The response to the wells notice is meant to be an
| argument as to why you're not in breach of the law. Not a
| request for more information.
|
| If they're not able to argue why they're not breaking the
| law, then they should hire better lawyers.
| latchkey wrote:
| Comments like this and your second one below, seem so low
| brow and childish. Account from 2011 and 1400 karma...
| keep up the good work there.
|
| Of course they can argue it, that's what is happening.
| They are going to sue the government. Why? Because the
| SEC refuses to even have a conversation about things.
| They've been trying, for years, to do so. This isn't some
| random small company, this is a public company that the
| SEC should be supporting with better answers than just
| refusing to even meet.
|
| Worse off, along this same thread, Gensler doesn't even
| have basic answers to questions that he was prepared for.
| growse wrote:
| You appear to be very confused about the role the SEC
| plays in the industry. They're not a friendly, supportive
| legal advice service, they're _law enforcement_.
|
| In any case, even if the SEC did give out legal advice, I
| don't believe it would form any type of legal precedent.
| Nothing stops the next administration from taking a
| different view.
|
| If you're a large public company knowingly entering into
| a regulated industry where your activities are considered
| by everyone to be a "a bit of a legally grey area", then
| litigation is the _entire ball game_. Do the thing, wait
| to get prosecuted, hope you win.
|
| Alternatively, do some lobbying, get the law changed how
| you want, then do the activity. Been happening for
| centuries. Easy as pie.
| bpodgursky wrote:
| Do you really want to live in a country where the
| government is not willing to tell you whether you are
| breaking the law?
| mikeryan wrote:
| That's literally one of the main jobs of lawyers because
| there's a shit ton of law that's not clearly defined and
| based on obscure precedents or never been tried in a
| court.
|
| Heck half of the court system from Appellate to the
| Supreme court is to figure out what is and isn't legal.
| Most government agencies won't tell you if something is
| legal or illegal because they don't know unless there
| clear case law on the subject, in which case your
| attorney should know, and they'd spend all day guessing.
|
| If Coinbase wants clarity then take it to court and run
| it up the flagpole.
| duxup wrote:
| I don't think congressional testimony is quite that.
| growse wrote:
| > Do you really want to live in a country where the
| government is not willing to tell you whether you are
| breaking the law?
|
| Show me a country where the government tells whether or
| not you're breaking the law without actually prosecuting
| you.
| [deleted]
| pclmulqdq wrote:
| The answer to that question is a little like people arguing
| in court "it depends on what your definition of 'is' is." It
| seems like a simple question, but it's heavily loaded with
| both future implications and past precedents, and it can be
| _very hard_ to answer questions like that unless you 're
| prepared to back up your answer. He clearly hadn't done
| enough research to answer one way or the other.
| latchkey wrote:
| > He clearly hadn't done enough research to answer one way
| or the other.
|
| He definitely has, or at least he should have. When ETH
| switched to PoS things changed, but he hasn't officially
| updated his opinion on it and wasn't willing to go on
| record about it at this latest hearing.
|
| https://coingeek.com/is-eth-a-security-if-it-wasnt-before-
| it...
| pclmulqdq wrote:
| It sounds like we agree that he should have, but he
| hasn't.
| latchkey wrote:
| The guy taught courses at MIT on bitcoin and previously
| shilled algorand. He's done research.
|
| Although, oddly, he's never done a crypto transaction.
|
| He's probably really good at doing standard SEC things,
| but I'm really starting to question his role in the
| cryptodigital economy.
| e63f67dd-065b wrote:
| > Although, oddly, he's never done a crypto transaction.
|
| As Matt Levine wrote on his newsletter, saying that the
| SEC must have traded crypto to regulate it is like saying
| the DEA should have used meth to regulate meth -- if you
| think the thing is bad, then obviously you should
| understand it, then ban it, without using it yourself.
|
| Now, people can disagree whether the thing is bad, but it
| would be foolish to assume that the SEC doesn't know how
| cryptocurrency works. If you look at the career paths and
| previous work of most of the top bureaucrats at the SEC,
| you'll see that they were usually involved in a great
| deal of legislation or had prominent positions in
| industry doing real projects.
| yellowapple wrote:
| > like saying the DEA should have used meth to regulate
| meth
|
| I am being entirely serious when I say that I trust a
| meth addict more than I do the DEA to create or impose
| any sort of regulation.
| indy wrote:
| You don't think it strange that the guy who taught a
| course on blockchains at MIT has never made a transaction
| on a blockchain?
| CPLX wrote:
| No. I also think a botanist could understand how plants
| reproduce without ever having fucked a cabbage.
| latchkey wrote:
| That's absolutely hilarious, but a bad analogy.
|
| Have you ever met a botanist who's never touched a plant?
| jonnydubowsky wrote:
| you win the internet today.
| thisgoesnowhere wrote:
| You think it's strange that people who are researching
| cancer drugs have never taken them themselves?
| latchkey wrote:
| The analogy doesn't work.
|
| Everyone has money. Not everyone has cancer.
|
| Anyone who takes cancer drugs, is doing research. There
| is no "cure" for cancer (yet).
| indy wrote:
| No I don't think that's strange.
|
| A better analogy might be: would you think it strange
| that someone teaching a C programming class has never
| compiled a program?
| latchkey wrote:
| exactly.
|
| would you think it is strange that someone who's teaching
| a C programming class that has never used a computer?
| pclmulqdq wrote:
| I think you may misunderstand the level or type of
| research that is involved in answering this question.
| It's mostly not about cryptocurrency: understanding that
| is the easy part of answering this question. The real
| research that needed to be done is on the law, and it is
| much more complicated and convoluted, and can result in
| unclear answers until someone gets sued and a court is
| forced to decide one way or the other.
| latchkey wrote:
| He has the entire government behind him and also praised
| his team at the SEC.
| pclmulqdq wrote:
| I'm sure that they will write a nice, thorough opinion
| once they are done with their research. They are not
| going to be dropping that opinion to answer a surprise
| question (ie not something they knew was going to be
| asked) in a congressional hearing.
| latchkey wrote:
| In the video, they literally said they asked the question
| in private before hand. Highly suggest you watch it
| before commenting further.
| pclmulqdq wrote:
| I am aware of what happened in the testimony. "In private
| beforehand" doesn't mean "by written request several
| weeks ahead of time." That would be the requirement to
| get an answer here.
| latchkey wrote:
| It is unclear when they had the conversation. It could
| have been weeks ahead of time.
|
| That said, the overall conversation about whether ETH is
| a security, or not, has been going on with Gensler, for
| years.
| bushbaba wrote:
| You assume he hasn't done research. Instead it could be
| his research found there to not be a clear "good" answer
| and the response was his way out of making a call at such
| a relatively early industry stage.
| latchkey wrote:
| > You assume he hasn't done research.
|
| That's literally the opposite of what I just said.
| lacker wrote:
| My guess is he doesn't want to answer the yes/no question
| because this question is going to be the subject of a
| lawsuit, and his lawyers like most lawyers are in favor of
| not talking publicly about court cases outside the courtroom.
| 1vuio0pswjnm7 wrote:
| 1. Genseler cannot say whether ETH is a security or a commodity
| as such statements could have adverse conssequences for the
| Commission in currrent/future litigation, e.g., SEC v Ripple
| Labs.
|
| 2. Even if the SEC were to issue guidance that a certain type
| of crypto operation is exempt from regulation, instead of
| proceeding on a case-by-case basis, it lacks the resources to
| carry out the requisite enforcement against all the crypto
| operations that are not exempt. From what I have read and
| heard, the likely reason why Genseler will not go after Bitcoin
| is because he believes the SEC lacks the resources. BTC has too
| much of a foothold.
|
| IMO, Genseler's SEC is taking on the amount of enforcement it
| believes it can successfully manage, maybe more. Time will
| tell. IMO, just because some crypto operations manage to evade
| SEC enforcement does not mean crypto is a legal grey area. It
| means the SEC has a limited enforcement budget and is pursuing
| actions that it believes have the best chances of success.
|
| There is an extraordinary amount of fraud on the internet. One
| can argue that lack of enforcement against crypto operations is
| because "the law has not caught up", but perhaps the more
| likely explanation is that the authorities have not caught up.
| chrismorgan wrote:
| > _It means the SEC has a limited enforcement budget and is
| pursuing actions that it believes have the best chances of
| success._
|
| I'd have expected enforcement to practically print money due
| to fines. (That one of the deliberate design aspects of fines
| would be that they would cover all the agency's
| investigations, successful and unsuccessful.) Is this not the
| case?
| 1vuio0pswjnm7 wrote:
| "Over at the SEC, a spokesperson said the agency can
| allocate civil penalties to one of three places: the
| general fund at the U.S. Treasury, the Treasury's Investor
| Protection Fund (which is used to help fund awards granted
| to whistleblowers), or another separate fund used to repay
| harmed investors."
|
| According to this, fines are not allocated to the
| Commission to finance further enforcement activity except
| that funding awards to whistleblowers might lead to more
| enforcement actions. Keyword: might
|
| https://www.marketplace.org/2022/08/12/where-does-money-
| coll...
|
| "What Does the SEC Do With Money It Collects From Fines?
|
| This will depend on the nature of the penalty. If investors
| or others were harmed financially due to a transgression,
| the penalties collected will be used to recover those
| losses and make those investors whole. Until the passage of
| the Sarbanes-Oxley Act of 2002, all penalties the SEC
| obtained were paid to the United States Treasury.
|
| Section 308 of the Sarbanes-Oxley Act, the so-called "Fair
| Funds provision," permits the SEC to request that certain
| penalties be added to any disgorgement fund established as
| part of an SEC enforcement action to return money to
| shareholders, investors, whistleblowers, or other victims
| of the defendant's securities law violations."
|
| https://www.investopedia.com/ask/answers/05/secfines.asp
|
| HN commenters seem to pay particular attention to Matt
| Levine's ramblings. Here he is dispelling the myth:
|
| "It is not literally the case that the US Securities and
| Exchange Commission is a for-profit business whose goal is
| to maximize its revenue, and whose most important source of
| revenue is fining financial services companies for their
| misdeeds. But that is sometimes a tempting way to think
| about things."
|
| https://www.bloomberg.com/opinion/articles/2023-02-02/the-
| se...
| tiahura wrote:
| The Securities and Exchange act of 1934 doesn't give the SEC
| authority to regulate bitcoin and thus the SEC doesn't have
| authority to it.
| ghayes wrote:
| The Securities Act and the Exchange Act give the SEC broad
| latitude in regulating securities. The fundamental question
| is: is Bitcoin a security? The situation now is a bit like if
| the SEC tomorrow said Harry Potter books were securities,
| would bookstores suddenly become unlicensed securities
| exchanges?
| latchkey wrote:
| > _The fundamental question is: is Bitcoin a security?_
|
| https://www.coindesk.com/layer2/2022/06/28/secs-gensler-
| reit...
| Quindecillion wrote:
| It's not a security.
|
| It's not a commodity either.
|
| It's money.
|
| You may not agree with that and you may not like Bitcoin,
| but that doesn't change what it is.
| illiarian wrote:
| Basically all of crypto passes Howey test for securities:
|
| --- start quite ---
|
| an instrument qualifies as an "investment contract" for
| the purposes of the Securities Act: "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."
|
| --- end quote ---
| Quindecillion wrote:
| I agree. All of crypto passes the Howey test for
| securities.
|
| Bitcoin doesn't match that definition though. Who or what
| entity is the 'promoter' or 'third party' for Bitcoin?
| There's no registered entity, no (legitimate) foundation,
| no company, no CEO, no board, no chair. It's just a
| protocol.
| illiarian wrote:
| Butcoin's main use case was HODL. You know, in the
| ancient times of just a few years ago.
|
| And now you'd need an electron microscope to find its use
| cases as money.
| spaceman_2020 wrote:
| I've never seen a field with lower adoption than crypto despite
| billions in marketing.
|
| The actual users on-chain is abysmal and frankly, embarrassing.
|
| Current users onchain is in the thousands. Even when the market
| was raging, the biggest memecoin in the world could only manage
| about 1M+ wallets - probably about 80-100k real users.
|
| NFT trading volume is down to under 6-7k active users.
|
| At peak bull market, Tornado Cash, despite its notoriety, had
| about 125 daily transactions.
|
| Arbitrum, an Ethereum scaling solution, gave out literally free
| money in the form of an airdrop (I got $15k worth). The airdrop
| went out to about 650k wallets - under 100k real users.
|
| If crypto were to disappear tomorrow, it would affect a
| population no bigger than a small Indian town.
|
| An absolute mess. No correlation between adoption and
| hype/valuation at all.
| SparkyMcUnicorn wrote:
| What's the source for your data?
|
| I agree with you on the overhype, but if roughly 16% of
| active addresses are real users, then active users within the
| past 24 hours would be around the population of the largest
| city in Indiana rather than a small town.
|
| Source: DefiLlama
| spaceman_2020 wrote:
| I said small Indian town, not Indiana town :)
|
| Regardless, NFT platform unique daily users down to ~10-12k
| across platforms:
|
| https://dune.com/queries/1622348/2688962?utm_source=mintors
| k...
|
| Total unique daily wallets for Tether (USDT) down to about
| 80k unique wallets. This is just unique addresses - doesn't
| filter out bots and users with multiple wallets. You can't
| go more mainstream than this coin.
|
| https://etherscan.io/token/0xdac17f958d2ee523a2206206994597
| c...
|
| There are not more than 20-30k active users on chain at any
| given point.
| jeremyjh wrote:
| Aren't most actual users just in exchange accounts ?
| polygamous_bat wrote:
| Yes, which means they are using a centralized third party
| instead of what's being extolled as the "decentralized,
| trustless" ecosystem. Maybe that's not as big of a
| feature as it is claimed to be?
|
| As a reminder, this is what original comment was talking
| about:
|
| > The actual users on-chain is abysmal and frankly,
| embarrassing.
|
| Which isn't contradictory with most interaction being on
| a centralized platform.
| jeremyjh wrote:
| I guess I just don't think that's a distinction worth
| making. The size of the ecosystem is what matters. The
| billions sitting in accounts denominated in that
| currency, and the daily total volume actually do matter,
| even if the trades are not mostly not happening on chain.
| SparkyMcUnicorn wrote:
| > I said small Indian town, not Indiana town :)
|
| Big difference! My mistake.
|
| The stats you're referencing appear to be ETH chain only.
| I'm not really into NFT's, but aren't they more popular
| on other chains/rollups because of gas cost?
|
| I think the active users might be at least 3x your
| estimates, but I could be wrong. For example, tether's
| market cap is >$80b and only ~$30b of that is on ETH.
|
| https://dune.com/rchen8/defi-users-over-time
| nnx wrote:
| And yet, politicians and the SEC, central banks, or even G7,
| keep talking almost every week about how it needs to be
| regulated...
|
| Isn't it weird that there's so much noise around an industry
| with so few real users then?
| polygamous_bat wrote:
| Think of it this way, a system that is 0.01% of the
| actually useful financial system can still cause 90% of our
| scams/pollutions/grifts, mostly because of regulatory
| arbitrage. Doesn't seem that surprising to me.
|
| It's like saying "the police spends most of their time on
| criminals even though they are a really small percentage of
| the population." Yes? That's how laws work.
| [deleted]
| spaceman_2020 wrote:
| Maybe they want to regulate it because its biggest
| posterboy (SBF) ran the biggest ponzi since Madoff...
|
| Or maybe because its second biggest posterboy (Do Kwon) ran
| the second biggest ponzi since Madoff...
|
| Crypto fanboys will defend this trash so much that they've
| already forgiven and forgotten SBF and Do Kwon.
|
| If this industry wasn't filled with scams siphoning off
| literally tens of billions in real cash, maybe the SEC
| wouldn't want to regulate it so strongly.
| 0xParlay wrote:
| But aren't there people out there who actually want the
| SEC's protection? Offering protection to people who don't
| want it is a creative use of language.
|
| IMO the discourse around crypto is typically poor because
| it's a shallow proxy to politics/philosophy/economics.
| But instead of having a meaningful discussion about any
| one of those topics we get this.
|
| Let's agree crypto is an unregulated digital casino. Why
| do people care so passionately about code enforcement
| when it comes to securities? I could possibly see the
| moral hazard of gambling addiction but given the state of
| gambling commercials that ship has sailed.
|
| It goes along the same vein as the SEC protecting non-
| accredited investors from fraud and risk. I appreciate
| what the SEC does but there's no way to opt-out of being
| protected? There's no waiver that can be signed to say
| "I'm totally going to lose my money and that's okay"?
| Losing money gambling on sports is good. Losing money
| gambling on private equity will not be tolerated in a
| civilized society.
|
| Maybe two people can look at the same fence and feel
| opposite about it. What makes me feel caged could make
| someone else feel safe
| mgaunard wrote:
| Interestingly, the blockchain is only one of the many
| innovations tied to crypto.
|
| While it was the main innovation originally it's not that
| major today.
| mgaunard wrote:
| why is this modded down? This is factual.
|
| Crypto is trading a lot, but on CeFi.
| from wrote:
| Your analysis misses the enormous amount of activity
| including P2P trading that occurs within Binance.
| polygamous_bat wrote:
| > ... P2P trading that occurs within Binance
|
| Isn't that a... giant oxymoron? Binance is a centralized
| third party, BSC is a centralized chain run by Changpeng
| Zhao and his buddies, and in this thread we are talking
| about actual, on chain usage off of these centralized
| platforms.
| spaceman_2020 wrote:
| If you're using an exchange whose founder can't even enter
| the United States and whose HQ is unknown, are you really
| that much better off than using a plain old bank?
|
| I'm not ideologically opposed to crypto. I believe in its
| mission.
|
| But this space needs to a very, _very_ deep clean before it
| can be taken seriously.
| andirk wrote:
| While I agree with all of that, what's the adoption of gold?
| It's almost entirely stored in vaults as storage of value and
| never "used", not even looked at.
|
| I still believe in crypto as a store of value and hence as a
| possible future global currency, but 10+ years later and it's
| still almost entirely speculation.
|
| Recently, some big names (Saudi Arabia, Brazil, maybe China)
| are moving off the dollar and in search of a new global
| currency. Let us see.
| spaceman_2020 wrote:
| Huh? Adoption of gold is in the billions of users.
|
| Every single Indian and Chinese household that has any
| money at all owns at least some gold in the form of
| jewelry.
| [deleted]
| ashwagary wrote:
| >Adoption of gold is in the billions of users.
|
| To be fair, gold has had atleast 1000 years to gain
| adoption as money by half the world. Crypto in comparison
| will probably reach that level of adoption after 30-50
| years of existence.
| spaceman_2020 wrote:
| Gold didn't reach its current adoption over 1000 years.
| It always had the current adoption rate. 1000 years ago,
| if someone gave you gold, you wouldn't wonder, "gee,
| should I keep this shiny yellow metal or throw it away?"
| - you would keep it.
|
| We've found gold ornaments in pre-pottery neolithic sites
| dating back thousands of years. The % of people who want
| to own gold was near 100% even thousands of years ago.
|
| If anything, gold adoption rate has declined in the
| modern fiat age, at least in western countries.
| ashwagary wrote:
| >Gold didn't reach its current adoption over 1000 years.
|
| I didn't say it did, you seem to have misread my post.
|
| >It always had the current adoption rate.
|
| >The % of people who want to own gold was near 100% even
| thousands of years ago.
|
| I dont know how you could possibly make a claim like this
| and defend it. Source?
| gitfan86 wrote:
| [flagged]
| flarex wrote:
| That's the Bahamas not Bermuda.
| rrdharan wrote:
| Come on pretty mama..
| gitfan86 wrote:
| [flagged]
| I_am_tiberius wrote:
| I would be interested why hackernews is so strong against
| cryptocurrencies. I am not sure but I assume most readers are
| from the US where the benefits are limited. Personally, for some
| time already I'm supporting a friend in Colombia financially and
| last year I switched to sending him Bitcoin. It's so much easier,
| cheaper and faster for both of us.
| gitfan86 wrote:
| No one on HN is suggesting that sending money to Boliva,
| Columbia, Venezuala via Western Union with local currencies is
| a great solution to your desire to send money to your friend.
| Most people would say what you re doing is totally reasonable.
|
| We do suggest that 99%+ of crypto value is not being spent like
| that. Most of crypto valuations is built on a vague promise of
| some future useful use cases when the underlying technology is
| just a slow database with no root password.
| I_am_tiberius wrote:
| As mentioned in a previous comment, I believe that crypto has
| limited utility as a business model, primarily serving as on-
| and off-ramps and for transaction fee handling.
| gitfan86 wrote:
| Right, so you can understand that it seems like a scam when
| people are saying that investing in something with limited
| utility is going to be worth 100x what it is today in
| purchasing power.
| I_am_tiberius wrote:
| Yes, that price focus is really silly and distracts from
| the actual utility. But for me that doesn't explain the
| hostility here on hackernews.
| lbwtaylor wrote:
| I understand it's better than traditional remittance services,
| but did you try (transfer)wise? I use it monthly and it's so
| good - fast/cheap/easy - that I haven't felt any draw to
| crypto.
|
| Doesn't bitcoin's volatility affect your use case?
| I_am_tiberius wrote:
| I actually used it in the past (when it was still called
| transfer wise) because of predictable FX rate transfers.
| However, I didn't think of it when we were looking for a
| better solution for this purpose. I guess, it would have
| worked as good as Bitcoin, you're right. In regards to
| volatility: It was not a problem so far as he usually sells
| some months of runway immediately and for the remaining part
| he waits until the rate is to his advantage. Sure, there is
| no guarantee that the price will increase but you have to
| consider that there is at least 15 percent inflation a year
| in Colombia. That makes COB/BTC price pairs more attractive
| than USD/BTC.
| acdha wrote:
| It doesn't offer advantages for most people in the United
| States and we've had decades of people making claims which were
| highly fanciful if not fraudulent, with the hucksters behind
| them refusing to engage intellectually with anyone who points
| out the flaws in their business plans. The field has tried
| rebranding a few times ("web3", NFTs, etc.) to shed that
| reputation but most people simply burnt out on the topic since
| promoters weren't making competitive services.
|
| That doesn't mean that there are no problems with the status
| quo - for example, PayPal and western Union have many critics -
| but rather that the blockchain companies would have been much
| better off building things which were competitive rather than
| relying on MLM marketing. International remittances are so bad
| that even Bitcoin is better but there aren't many cases like
| that and "slower, costs more, riskier, harder to use" is not
| generally a compelling sales pitch.
| I_am_tiberius wrote:
| I just fear that if people here remain hostile, it could give
| regulators the support they need to get rid of it. I don't
| care whether the technology becomes big or not, and I don't
| think it's suitable for business models. However, I do think
| that since 2008, the banking system has changed for the
| worse. People are now suspected of committing a crime if a
| transaction looks odd. Sometimes, I receive emails from my
| bank asking about the source of money I've received. This is
| a huge invasion of privacy, and many people may not have
| documentation about such transactions anymore. It's unfair to
| be treated like a criminal when you haven't done anything
| wrong. I believe that Bitcoin provides great relief from this
| situation. The community can be inconvenient at times, but I
| don't think that matters much.
| armatav wrote:
| Honestly, because it's not used much in the US, and because the
| majority of tech people missed the wealth creation wave of
| Bitcoin.
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