Is that really a punishment? Is that really a deterrent for the next group to start something to run for as long as they can before they get noticed?
No, it's not the Wild West, rather the opposite. These businesses need to be registered when operating in NY. Two that were not registered were directed to stop unregistered operation. Three others were told to "immediately provide information about their activities and products".
To be fair, we're talking about New York State. Which is the center of finance in the US. The regulators in NY-State have an outsized influence on this sort of thing.
It will be a good day indeed, to see NY Fall from that status.
> New York’s Martin Act sets forth a broad list of instruments that are declared to be securities and thus subject to its provisions: “any stocks, bonds, notes, evidences of interest or indebtedness or other securities…or negotiable documents of title, or foreign currency orders, calls or options therefor hereinafter called security or securities.” As courts have stated for almost a century, the Martin Act is a remedial statute, intended to protect the investing public, which means that its provisions — including those setting forth the definition of a “security” — are to be given a broad reading. Indeed, those defined categories of instruments are not exhaustive; other instruments or arrangements can, and have been, deemed securities under the law
Note that this doesn't just impact lenders based in NY, it impacts anybody lending to New Yorkers.
The US in turn, is up there as one of the worst countries for cryptochoice up there with Cuba, Crimea and Sevastopol, Iran, Afghanistan, Syria, North Korea, or Antigua. (Granted the US is there because of 'legitimate' SEC regulations, but ther is no reason NY should be more restrictive than the feds).
[1] The ability of the indiviual to choose which crypto they want to buy and availability of them
[2] https://help.ftx.com/hc/en-us/articles/360042412652-Location...
Edit: Unless you meant all of the thinly traded altcoins they've been adding which, yes, NY State has been correct to forbid. Penny stock fraud but with tire burning as the economic substrate.
Most platforms choose the former, and even if a platform chooses option 2 it takes time, money etc etc. Now, even tough DOGE was widely traded in the entire US it was not allowed in NY at the beginning of last year. So what happened now, did it become a 'better' coin? No! Will SHIB be a 'better' coin magically once it's 'registered'? Of course not. Point is, however much you hate crypto there is no point to this restrictive law.
This misses the point: the financial legwork doesn't make any of these altcoins "better," it just makes their use more transparent to regulators. That transparency is in the public's interest. It's not the AG's job to make cryptocurrency better; it's her job to ensure that the laws of the State of New York are obeyed.
That is because of these burdensome "You-need-us-to-protect-you-because-you-are-not-smart-enough-to-make-educated-choices" crypto laws.
There are lots of different ways to ensure "scam" cryptos don't end up in NY. Being overly restrictive doesn't help NY'ers at all.
Bitlicense isn't a disaster, but it's a huge problem if you're in the space that you really do need to be careful of crossing. Crypto has a meme factory but not a lobbying strategy, and even if it did it's up against two near immovable objects: old school finance lobbying and being an easy target/distraction in the press.
We should just be thankful that Bitlicense wasn't adopted elsewhere and give up on NYC as a hub for this stuff. Until crypto grows beyond finance AND legal combined (legal will lobby with finance if asked) in terms of who makes money in NYC -or- crypto allies itself with another major mover (maybe real estate), don't expect things to ever change for the better.
It's a shame really. NYC would be leading crypto if not for this law. But then again, NYC doesn't care because tech is probably the 5th or 6th largest revenue generator in the city and has few/no generation spanning connections to Albany.
(genuine question that i've thought about)
That's fine. I was recently discussing the American financial system's exposure to Tether [1]. It appears there isn't much. Ceteris paribus, when that blows over, it shouldn't hit us. It will hit the next guy, in the next town or state or country.
People are using DeFi to make degenerate bets on various crypto projects. That typically involves
(1) buying tether, (2) using it in an overly collateralized loan to borrow tether, (3) then using that tether to buy another crypto, (4) watching/hoping the price of that go up (5) selling that corresponding crypto, locking in gains, and repaying the loan
If tether drops dramatically in price due to a lack of confidence, these loans will be affected. Such crypto tokens may be bubbling up only because these DeFi loans are possible.
Which will wipe out those investors. Not anyone else. People are free to lose their own money. It becomes a regulatory issue when those losses cascade, or if someone who didn't realize they were taking those risks is forced to bear them.
I personally know people who have gotten into the GME craze, I know people who are stupid enough to day-trade options, and I know people who spent a paycheck on buying dogecoin. They are all relatively normal people, and while some of them should not have gotten into these transactions, given what I understand of their personal finances, I understand why this happens. They live in America, where nobody's stopping you from spending your rent money on buying dumb meme stocks, and RobinHood has a cool mobile app for trading options, and maybe you win, or maybe you get burnt, it is what is, yolo, etc.
But of all those people, I don't know of anyone who dipping their feet into borrowing tethers to trade crypto on margin, or investing into crypto ponzi schemes. Who, exactly, is getting roped into that sort of thing? Posters on the crypto equivalent of r/wsb? Day-traders? Or is it Joe Average?
Meaning buying and selling the same options contract in intra-day transactions?
Or just retail trading options?
They're two very different things and I think only the former is actually stupid.
A recent fear was Tether holding dollar-denominated commercial paper. If they went under, they'd dump that paper. This happened in '08 with money market funds, and we passed a lot of regulation to ensure that failure mode can't happen again.
Fortunately, to the extent Tether holds anything, it isn't cash or U.S. dollar commercial paper. So contagion vector contained.
Why the huge disparity? From an economic point of view, the bank is just as required to redeem its obligations as Tether.
https://www.prnewswire.com/news-releases/usd-coin-reserves-e...
The better comparison for stablecoins are money market funds. The lockup of those caused the worst of the 2008 financial crisis. They also have much stricter regulations than stablecoins.
Fitch today released an opinion that stablecoin liquidations could cause a similar sort of systemic risk. They need some kind of regulation. No stablecoin has even done an audit! (Attestations are not the same)
Yup. They’ve had attestations. In those, an auditor just looks at an account at a moment in time. So you could, for example:
1. Get a loan
2. Put it in the reserve account
3. Ask accountant to verify the amount
4. Accountant attests to seeing money in the reserve account
5. Afterwards, move money out to pay off the loans
Sound crazy? Tether actually did this, it only came out in the NYAG settlement.
USDC uses a US accountant, but nothing in the procedures they use would prevent such a scenario. The auditor merely relies on management assertions in an attestation.
Tether by contrast is a pretty much an obvious ponzi scheme that everyone is just playing along with because they're making money and hoping they get out with profits before it implodes.
https://www.google.com/amp/s/amp.reddit.com/r/MakerDAO/comme...
In one chart ETH still predominates, but in the second USDC is the largest portion.
With Tether they print it and give it out to their buddies for who knows what, maybe a pinky promise to repay some day.
The US dollar is backed the US. All banks are supervised and insured by that same government. If a bank takes on too much risk, a) there are people watching that, and b) the US can wind it up and pay everybody back. So a single bank failure causes approximately zero currency risk. As long as you stay under the FDIC limits, you'll get back every dollar you put in.
Tether, on the other hand, is backed a bunch of shady characters who have been caught lying about what backs their currency. They claim it's 1:1 with US dollars, meaning that people buying Tether have no risk. But the more we learn about what they're doing, the clearer it is that it's not the case.
Tether, well who knows? Tether has cash + nothing which very likely is less than the redemptions they may face. If people want to get real cash out tether has no one to go to to make sure they have cash.
Most countries that peg their currencies like China buy USD or "cash equivalents" like US treasury bonds. They don't lend out their reserves to a third party.
This is irrelevant. But she* [1].