Why? Does it hurt you? Its all just a huge tech experiment just like the internet was. We have no clue where it leads to but I want to see it in 10 or 20 years.
What I mean to say is they should both be regulated as securities which is what they both are. And yeah it's fly by night unregulated attitude hurts plenty of people. Doesn't have to hurt me to be bad.
A security of what?
Just because it does hurt people doesn't make it inherently bad. If you could avoid being hurt maybe other can too and thous who did get hurt anyway took the risk on purpose. Noting wrong with that. The SEC should prevent people from misleading or fraudulent offerings not from anything that has a known high risk. Selling a random token is like printing my own money. The SEC would not prevent me form selling worthless piece of paper if I dont mislead buyers into thinking its some kind of ownership for something. There is a difference between preventing fraud and preventing stupidity.
There’s a legal test called the Howey test you can use to find out if what you’re looking at is a security. [1] Roughly speaking a security is anything you put your money into with the expectation of it becoming worth more through no effort of your own.
> “Selling a random token is like printing my own money. The SEC would not prevent me form selling worthless piece of paper if I dont mislead buyers into thinking its some kind of ownership for something.”
You seem to misunderstand the definition of a security but even if you were right the conversation doesn’t end there.
The SEC absolutely has a mandate under the Securities Act to stop people who could be hurt by garbage offerings from buying them. They got this because permitting random unregulated securities sales in part led to the Great Depression, and they didn’t call it that because it was a pretty good depression. Sale of hot garbage on margin to folks who had no idea what they were doing destabilized the entire American financial system for a decade.
This is totally fair because if folks, especially poor folks, get wiped out they end up on public assistance. That means gains are privatized and losses are socialized. The SEC drew a totally reasonable middle ground line with the accredited investor rules. Accredited investors can buy all the hot garbage they want. Folks who can’t afford to can’t. That’s what securities registration gets us.
You may not agree with it but it is strictly their mandate.
You dodged the question. A security of what?
And yes they do that that right IF there is a security of some sort being sold OR IF there is a contract that implies some sort of security like benefits OF IF there is fraudulent promises being made like promised RoI or voting rights or something.
If you just sell something physically created or digitally created that you legally own and the other party agreed on the price and possible other agreements then this is not in the scope of the SEC.
We dont know the agreements ripple made but there has defensively been a price both sides agreed on and sell restrictions that prevented the buyers from crashing the market.
Non of that promises returns, special right or ownership of something else than the XRPs. There is also no allegation of fraud or fraudulent behavior so no sign of misleading statements or promises that where made.
The whole think boils down to that the SEC says the XRP sold with a contract where securities because of the contract alone. Something like that never happens.
Its not even possible that some XRPs are securities while other are not.
With ETH its a bit different it was retroactively declared as a security at the ICO which never held up in court because it was never challenged by anyone.
Its quite obvious they did this to stop the ICO scams but did not sue anyone so this statement would not be challenged.
Yet if XRP was once a security they would consequently call out the free giveaways and the XRP sold without contracts and even the XRPs that where gifted to ripple.
After all gifted securities would still have to be registered. Non of that is the case because they cant make up any real reason why 100Bn worthless digital nothings gifted to a companies could ever become a security of something or even of that companies.
It just makes no sense at all. So instead they attacked the contracts alone.
It doesn't have to be a security of anything. The Supreme Court established the Howey Test as the legal benchmark of determining security status. You might disagree and believe that is not a good test, that there has to be some underlying asset for it to be a security, but that opinion and all other opinions & definitions of "security" are irrelevant for the purpose of legal enforcement of securities law.
Ultimately if folks believe the SEC has incorrectly interpreted Supreme Court precedent or its own authority, the remedy under the law is to take the issue back to the courts.
I addressed your question: a "security of what" is not a relevant question in this context because you've misunderstood the definition of a security, and I corrected you. You do not need to answer that question for something to be deemed a security. I then gave you a legal test, the Howey test, which contains the question you should be asking. I also explained how it applies in my response. It's pretty cut and dried.