[kiklion]

I did read but it assumes people know what a liquidity pool is.

So what is a liquidity pool? Example one indicated that a person could withdraw coins using tokens he got when he deposited coins.

So pools are something you deposit coins into for LP tokens and later can surrender the tokens for coins.

In example 2, they say that coins received from a liquidity pool swap cannot be traced. Why not? When the liquidity pool received the coins could it not associate the coins with where it came from?

Even if not, then the liquidity pool itself is the source of the coins. When it gets coins, it needs to know who sent it, and when it sends coins it needs to know who it’s sending it to.

All of this is possible. Just because they currently don’t track this information doesn’t mean it’s impossible to track. It would just require adjustments to their business to make it in compliance with regulations.

[dboreham]

The key thing to note is that the LP isn't a "legal entity". It's a function running on some set of blockchain nodes.

Transactions on the LP are visible in the ledger, so if you want, you can construct a list of depositing and withdrawing addresses and amounts.

But cryptocurrency is fungible so it doesn't make much sense to try to match up deposit transfers with withdrawals to form some concept of "who paid whom". That would be equivalent to trying to identify who's money I got when I make a cash withdrawal at my bank's ATM.

[meheleventyone]

Then the author/publisher is the legal entity? The code didn’t just publish itself!

[nybble41]

The author/publisher of the smart contract is not the counterparty to the transaction or the source of funds; publishing their information, even assuming it's available, wouldn't satisfy the requirements.

6050l should be repealed altogether, not extended to "digital assets". It was wrong when it was first passed and it hasn't gotten any better since.

[yokem55]

Code is speech.

Edit - To expand this thought: If I exercise my freedom of speech by writing a smart contract and publish the code, how can I be liable if someone else uses that code on an actual blockchain?

[meheleventyone]

Speech still has liability for example libel. But in this case I would agree that the person that published the code on the blockchain has liability. Which is why I included both occurrences in my post.

[nostrademons]

The author/publisher might be anonymous. Also, the code could publish itself - one of the opcodes in the Ethereum VM is "create contract".

[meheleventyone]

The code has still been authored to use that op code. Even if you were using a genetic algorithm or similar to generate contracts and some happened to be useful the authorship is still with the author of the original program. Anonymity protects you from having to defend liability not from actually being liable and obviously in the case of crypto has been defeated in the past.