[vkou]

Why would the SEC need congressional action to regulate securities (which is what some of the crypto tokens traded on exchanges are)?

Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC?

Just because you've added '... But on the internet' to your business model does not require additional legislature to determine whether or not you are trading securities.

[paulddraper]

Back in 2018, the SEC considered decentralization as an excluding criterion.

https://corpgov.law.harvard.edu/2022/12/06/why-cryptoassets-...

[vkou]

Why not link to the actual SEC guidance, instead of an op-ed by a crypto CEO that is reading what she wants[1] to read from it?

https://www.sec.gov/files/dlt-framework.pdf

It's only a few pages, and nothing in it indicates that decentralization is sufficient as an excluding criterion.

> Although no one of the following characteristics of use or consumption is necessarily determinative, the stronger their presence, the less likely the Howey test is met:

You can't just cherrypick the words that you want to hear in a sentence, exclude all the other words, and claim that the SEC gave the green-light to decentralized crypto! In fact, nearly all of the exculpatory characteristics listed just below that paragraph focus on the utility value of a crypto token, as opposed to its speculative value! The real versus speculative value (Storing data on filecoin, versus trading filecoin around) is what's most important to the SEC, not how decentralized the network is!

... Also, most crypto is ridiculously centralized, and if Coinbase listed even one of the problem tokens, they are... Running an illegal securities exchange.

---

[1] Read the actual SEC guidance, and try to square it with this quote by Jai Massari, the author of that op-ed:

> First set out in a 2018 speech by SEC Corporation Finance Division Director William Hinman, and then described in more detail in 2019 staff guidance,[6] the core idea is that where a blockchain project is sufficiently decentralized, the cryptoasset associated with the project will not be or represent an “investment contract” under the so-called Howey test,

If that's what she gets out of the SEC document (linked above), Jai doesn't have the reading comprehension of a high-schooler[2], let alone one that's appropriate for a 'visiting lecturer' at Berkeley!

[2] What she seems to have is an incredibly motivated reading comprehension. The same kind of motivated reading comprehension that's currently landing Coinbase into hot water.

[paulddraper]

> most crypto is ridiculously centralized

That is true.

IMO Bitcoin is the only crypto is that is legitimately decentralized; no single governing organization.

[MacsHeadroom]

It's not the only one. Dogecoin, for example. I do not mean to defend Dogecoin or lend it any legitimacy. But it clearly does not meet the criteria for a security as it was simply a very early fork of Bitcoin where some zeros were added and "Bit" was replaced with "Doge."

[paulddraper]

True

[rchaud]

> Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC?

They saw Uber and Airbnb steamroll through taxi and hotel regulations successfully. But that was local, and SEC is federal.

[linuxftw]

You're getting downvoted, but you're 100% correct.

[latchkey]

> Why would Coinbase think that it could run a securities brokerage, exchange, and clearing house without registering with the SEC?

Coinbase is a public company on NASDAQ. They are about as registered with the SEC, as possible.

Update: cause I'm getting downvotes. See below. The point that I'm making is that if this company is acting illegally, then why is it still trading?

[twic]

The registration under discussion here is registration as a broker-dealer, or an exchange, or whatever, not as a listed company.

[latchkey]

Tom Anderson, of myspace? Wow. Hi!

Let me direct you to this:

https://finance.yahoo.com/news/coinbase-says-just-no-way-to-...

The whole point here is that Coinbase is acting in good faith by trying to do things "the right way"... including becoming a public company and trying to register in whatever compliance ways they can. All the way to announcing that they will go to court over all of this. All because their existing efforts haven't worked.

Update: the discussion is happening right now around how coinbase is a public company that is being declared that it is doing illegal things. If so, then why is it still trading?

https://www.youtube.com/live/DSsp8Rvh5n0?feature=share

-4:15

[Volundr]

> If so, then why is it still trading?

Because breaking the law does not cause your stock to be delisted?

I'm not informed enough of the SEC complaint to have much of an opinion on how valid the SEC's or Coinbase's respective cases are, but "I can still by stock" is no evidence that Coinbase isn't breaking the law or violating regulations. Companies do illegal things all the time, delisting the stock and shuttering the company is a resolution of last resort, not first resort.

[twic]

> Tom Anderson, of myspace? Wow. Hi!

No, i'm the one from Beavis and Butt-Head.

[ahahahahah]

If what you are doing requires registering with the SEC for it to be legal, and there's no way to register what you are doing with the SEC, then that means that it is illegal to do what you are doing (like how could you think that possibly means you are free to go do that thing?).

[latchkey]

If there is no way to register with the SEC to run a securities brokerage, exchange, and clearing house, then what's the point of the SEC again?

[linuxftw]

No, coinbase is trying to trade unregulated securities and asking the SEC to give them the OK before hand so they don't end up in court. Predictably, the SEC's not going to do that.

[latchkey]

> No, coinbase is trying to trade unregulated securities

And why are those securities (if they are actually securities, which Gensler and the SEC can't even agree on), available to purchase and not regulated? Someone else in this thread just compared this to buying fentanyl. It isn't like there is the FDA giving out spec sheets on drugs.

[ac29]

> cause I'm getting downvotes. See below. The point that I'm making is that if this company is acting illegally, then why is it still trading?

Is your position that no publicly traded company has ever done anything illegal?

[latchkey]

Not what I'm saying at all. I'm saying that a publicly traded company went through all of the due diligence that it takes to become a publicly traded company (if you've ever been through that, it is pretty intense) and then asked for further clarification on their existing practices, couldn't get that, then got served a wells notice and is now having to go to court to get further clarification. All because the SEC can't or won't give clear guidance on things that they are supposed to be in charge of.

[ahahahahah]

> asked for further clarification on their existing practices, couldn't get that,

That's not right. They got clarification they just didn't like the answer.

[latchkey]

https://finance.yahoo.com/news/coinbase-says-just-no-way-to-...

"When we ask specific questions: How do we get to a path to registration? There's never an answer," Shirzad said.

[rchaud]

> Coinbase is a public company on NASDAQ. They are about as registered with the SEC, as possible.

That is not even close to correct. NASDAQ itself is a publicly traded company (quote: NDAQ), that nonetheless has to register separately as a securities exchange.