[mv1234]

The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public. The amount of fraudulent behavior occuring unchecked in plain view is staggering, and as someone who has been following cryptocurrency since the 2017 bubble it's completely erased what little confidence I had left in the federal governmnent. This is far too little too late.

[root_axis]

I'm ambivalent. I think the SEC has done a passable job, all things considered. They have acted slowly but surely, without impulsivity, taking the time to understand the technology while applying a nuanced eye to the evolution and growing sophistication of this shady ecosystem over the years. The SEC has gradually tightened the screws on the grift while not stifling the ecosystem that allows the credulous true believer to pay for their webhosting with bitcoin. Today with the benefits of hindsight from living in a world with billions of dollars in stolen funds, ICO mania, NFT mania, celebrity pump & dumps, a ransomware explosion etc etc, it's easy to say "you should have prevented this", but like with any new technology, the government is gradually catching up. In many ways, the government is much farther behind with respect to other internet technologies, like social media for instance...

[addicted]

You don’t need to understand the technology to recognize the financial scams being run.

Offering 15-20% guaranteed rates of returns to unsophisticated lay people in times of historically low interest rates doesn’t require any technical knowledge to know it’s gonna fail and/or is a scam.

[ProllyInfamous]

>Offering 15-20% guaranteed ... return ... to ... lay people ... doesn’t require any technical knowledge to know it’s ... a scam.

AbsoLUTEly.

I have utilized bitcoin transactions since 2012; I've never really cared for "altcoins," and was on the "losing side" of the Aug2017 hard-fork (BTC/BCH). Your majority crypto asset should be bitcoin, alone (at least 80%+).

Ethereum's decision to go "proof of stake" will lead to an "inverted parabola" (i.e. short-term increase, long-term destruction) of the ETH.marketcap, IMHO.

Any stablecoin (or fedcoin) should be met with Mark K's excellent question: "Do you REALLY NEED A BLOCKCHAIN to implement your idea?" If your idea does not require/MANDATE "de-centralization" as a fundamental core operating principle, USE A DATABASE INSTEAD of a blockchain (hint hint US Fed flirting with digital dollars).

Some of the few things which make bitcoin (alone) so special/unique (IMHO): 1) Founder effect 2) Limited supply of ~21m (†) 3) Simplicity of transactions

†): For the purests: yes, technically if 100% of nodes agreed then supply issuance COULD change (but realistically this would result in yet another hard-fork).

I maintain approximately 1/6th my wealth in bitcoin; I have now been through nine "crashes" (of the bitcoin environment) and only recently began diversifying outside of crypto.

[TomSwirly]

> They have acted slowly but surely, without impulsivity, taking the time to understand the technology

This must be a joke... right?

They've had fourteen years to understand the technology. But more, if they didn't understand this, it was their responsibility to not allow it to happen until they did.

The SEC has an active responsibility to proactively prevent fraud and financial panics. By allowing unregistered, unregulated, unaudited securities to proliferate for 14 years while they apparently did or said nothing, they have allowed this to become a trillion dollar problem. If a conventional investment bank had done anything like this, the SEC would not have allowed this, but they dropped the ball utterly and completely here.

[Georgelemental]

> But more, if they didn't understand this, it was their responsibility to not allow it to happen until they did.

"Everything not explicitly permitted is forbidden" seems like a uniquely terrible legal precedent to set.

[danaris]

There's a difference between applying this in the general case, and applying it in finance, where letting something go unregulated just because it's new is nearly guaranteed to result in rampant scams and people losing their life savings to the unscrupulous who misrepresented their offerings.

[Animats]

Nope. They bring the hammer down on one or two crypto scams each month.[1] This week, Forsage. The SEC generally acts after someone reports losing money, so, like most law enforcement, they're looking at the past.

[1] https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...

[smoldesu]

> it's completely erased what little confidence I had left in the federal governmnent.

So, cryptocurrencies are used to scam people, and you blame the government?

The government had every reason to stay out of the cryptocurrency discussion. Every web3 startup and their mom was racing to get some form of government endorsement; had the floor been opened for discussion, we would have watched as every exchange threw the other under the bus just so they could look clean and make good on their investors. It would have been unmitigated madness, and arguably, their refusal to really acknowledge crypto has had the exact chilling effect they wanted. Hyperbolic speculative trading is on the decline, Bitcoin is almost worth 1/3 of it's peak value, and hackers are continuing to exploit their script-kiddy software stacks. A time-out in the corner is exactly what the crypto world needed.

[TomSwirly]

Absolutely the government is to blame, in just the same way if companies started pumping a new pollutant into the environment and the EPA did nothing about it for 14 years.

[soco]

If someone breaks into my house, should I blame the justice system?

[distances]

Was there a public, premeditated house breaking plan that ran for years? If so, it clearly was a failure in the system to not put it out in its infancy.

[smoldesu]

Not really? Cryptocurrency has never been directly about causing people harm, it's simply an experiment in alternative digital assets. Now, I think that's a horrible idea, but I also don't think it's the government's job to regulate it any more than it's their responsibility to monitor Fortnite's V-Bucks economy.

Why should the government intervene here? It's in the mutual interests of crypto holders, crypto detractors, exchanges and the Supreme Court to not treat all crypto as a security.

[nl]

Why the specific criticism of stable coins?

Seems to me that Tether and USDC are both different cases for one thing, and secondly why are they specifically "gasoline" rather than the incredible (and misleading) returns advertised by some DeFi protocols?

[smoldesu]

Stablecoins have to be backed by something, and pretty much every example I've seen has zero accountability for whatever the asset is leveraged against. Anyone can make a coin that holds roughly the same value, but it's a lot harder to ensure that you have the liquidity for your users to cash out whenever they please. It's a lot easier for a government to handle that sort of thing.

[nl]

Tether reports on what it is backed by: https://tether.to/en/transparency/#reports

USDC reports on what it is backed by: https://www.circle.com/en/usdc#transparency

There is a fair argument that USDC backing assets are higher quality than Tether, but in both cases it is not reasonable to say there is "zero accountability for whatever the asset is leveraged against"

I think this is very different to algorithmic stable coins which are backed by the value of crypto assets. There are dangers there that aren't well modeled.

[smoldesu]

Transparency != accountability. These currencies can put whatever stats they want on those pages, but there's nothing holding them accountable for those figures.

[ufo]

Tether is gasoline they print new tethers out of thin air and use them to purchase bitcoin in the market, propping up the price of bitcoin.

[nl]

I think this was a fair criticism of Tether specifically a few years back (and one of the reasons I said "Tether and USDC are both different cases for one thing").

I don't think there is any evidence this is happening now.

In particular the independent reporting shows evidence of assets backing it[1][2]

[1] https://tether.to/en/transparency/#reports

[2] https://assets.ctfassets.net/vyse88cgwfbl/1np5dpcwuHrWJ4AgUg...

[rich_sasha]

The report is still quite light on details. They list "commercial paper" under cash and equivalent... Which could mean they lend money to apple short term and get 0.5% interest, or it could be highly speculative lending to Colombian agricultural companies.

Either way, what Tether does is essentially banking ("give us money, we'll hold it and, pinky promise, if you want it back, you'll get it no problem"). The bar for bank transparency and regulation is far, far higher than what Tether presents.

[ufo]

Another crucial detail is that these attestations are not an audit of assets vs liabilities. In the past, Tether has been caught borrowing money in the day of the attestation to give the impression that there's more in their bank account than there really is.

[rvz]

> The SEC, and really every related regulatory agency, has been completely missing in action while shadow banks like Tether and USDC act as gasoline for spreading cryptocurrency fraud to the general public.

'Completely?', 'Since 2017?'

Then why have the SEC have already clamped down on 98% of the ICO frenzy of 2017 (First started by Ethereum) by making unregistered ICOs illegal in the US then? [0][1]

[0] https://www.sec.gov/litigation/investreport/34-81207.pdf

[1] https://www.investor.gov/introduction-investing/general-reso...

[dannyw]

ICOs are still happening, it's just on DeFi now (uniswap, etc).

[rvz]

That is why I said 98%. The SEC knows they cannot be banned completely and that isn't the point.

To say the SEC has been 'completely missing in action' sounds very dismissive, especially when one has been watching it during the peak of the hype cycle of 2017 and they did do something about the majority of ICOs back then. After that they have been investigating Ripple over its XRP token, and Coinbase if they have traded 'unregistered securities'.

As always and more generally, regulators will forever be behind this cat and mouse game.

[toolz]

defi ohm clones have been popping up like crazy the past few years that promised things like, and I'm not exaggerating here, 10000%+ apy...the SEC hasn't stopped anything of the sort and they'll never be able to with crypto.

Consumers need education, which the SEC has attempted to educate roughly no people whatsoever about these scams.

[dannyw]

I've been in crypto since 2016. There is more ICO fundraising in the latest cycle than 2018. DeFi is huge now.

[rvz]

> I've been in crypto since 2016.

This has no relevance to the discussion. I have been in since 2012 during the days of Ripple with their XRP coin, which that was before Ethereum was a thing and before the exchanges complied with regulations like AML/KYC.

> There is more ICO fundraising in the latest cycle than 2018.

Where is the source for this?

Even if you have one, there is a reason why ICOs now are doing KYC on their investors and avoiding giving these tokens and offerings to individuals in the US.

My point is, they are registering investors to comply with regulations in order to avoid going on the list of investigations [0] by the SEC and claiming that the SEC is doing 'completely nothing' about crypto since 2017 is dishonest. Especially when there are sources that have been posted that have contradicted the OP's absolutist claim.

[0] https://www.sec.gov/spotlight/cybersecurity-enforcement-acti...

[windows2020]

Early on I had a feeling the crypto crowd would have a meltdown if a gov agency came in and tried to restrict what they were doing.

[ryanSrich]

Why do you want the government meddling in people’s individual financial affairs? Seems like an extremely odd thing to wish for.

[manicdee]

Yes, I want the government regulating the finance sector because far too many people are willing to trust someone who presents a complicated system as a way to take money.

Today the crypto scammers, tomorrow the hedge fund traders.

[ETH_start]

That's the entire premise of liberal democracy: that people have the right to make their own choices, even if they make bad ones, and that all parties are presumed innocent until proven guilty.

The centalized approach you advocate rejects this principle, and instead preemptively restricts an entire class of ostensibly voluntary interaction, with exceptions granted when someone proves to some centralized regulatory gatekeeper that they are innocent.

The result of course is economic power being concentrated at the top. VCs now monopolize early round token sales. In 2015, ordinary were able to get in on the ground floor of the Ethereum token sale, and saw 1000X+ returns as a result. But hey, at least poor people in your centralized paradigm have lottery tickets:

https://www.theatlantic.com/business/archive/2012/03/amazing...

[TomSwirly]

And thanks to that bad attitude from liberal Democracy, we have pumped so much CO2 into our atmosphere that disaster is certain, and catastrophe seems unavoidable.

[nl]

A well regulated and trusted financial sector is the foundation of a strong market economy.

People should be free to make their own mistakes. But companies should be forced to disclose relevant and honest information.

I'm not necessarily convinced by the criticism of stablecoins specifically. But regulation of honesty and risk disclosure in the financial sector as a principle is something that has strong support.

[ShamelessC]

With all due respect, if you actually don’t know the answer to this (misleadingly worded) question, you should probably also know that you sound outstandingly tone deaf to large swathes of the population who learned about Keynesian economics in school and/or are proponents of government spending/regulations.

Are you trying to convince people or just trying to catch someone tripping up on your bizarrely biased trick questions?

[TomSwirly]

Because I have knowledge of history, and specifically, what a shitshow it was before financial regulation occurred.

Consider reading a history book too.

[bloqs]

What is odd about wanting governments to stop criminal and predatory behaviour? Yes, there is a libertarian cost to this, but when clearly defined and monitored, everyone benefits. Do you want people to have the freedom to exploit and harm others? Isn't that somewhat odd?