Bitcoin is the only coin the SEC Chair will call a commodity
axios.com
axios.com
it didn't address explicitly what all others were
“That’s the only one I’m going to say because I’m not going to talk about any one of these tokens”
https://twitter.com/SBF_FTX/status/1541565079992369155?s=20&...
Securities: Stocks and Bonds
Commodities: Metals, Grains, and Oil
A commodity's defining feature is its interchangeability. One unit is essentially the same as another unit. To an orange juice company oranges are oranges, to an apple juice company apples are apples, and to an oil refinery one barrel of oil is a lot like any other barrel of oil. Commodities must meet certain minimum quality standards and markets do distinguish between different types of the same commodity. But for the most part it's about quantity.
https://www.findlaw.com/consumer/securities-law/securities-v...
A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.
https://www.investopedia.com/terms/c/commodity.asp
> And what does this distinction change for the SEC?
Good question.
This thread is full of suggestions. I couldn’t find a truly compelling one except that Bitcoin could fit the description of a commodity.
Some stable coins fit the security definition pretty well since they come with a right to redeem for dollars. Other cryptos don't really fit either.
Securities use resources to try and generate a return -- companies try to sell a product, bonds generate interest, etc.
Securities generate returns, commodities do not.
The regulation proposals for tokens include a number of different categories: utilities (governance), securities (returns), commodities (holding), etc.
The categorization of tokens influence the amount of regulation they have to undergo: Exchanges, KYC, AML, etc.
For instance if a token is categorized as a security, then it is an investment product. You will need a SEC licence to sell it, perform KYC & AML on clients, have audits, etc.
Not only does this make sense but it also further speaks to the strength of the bitcoin project, specifically Satoshi’s decision to not be a public figure/BDFL. I doubt this security-commodity issue factored in specifically, but it was really a brilliant and largely unprecedented move that aligns with bitcoin’s political philosophy as well: no leaders.
Just like, block proposal?
But the form of influence that can be bought in btc is not voting rights for what happens with the asset, not in any direct way. The distinction matters here.
BTC has no mining. Only rubberstamping.
That's much preferable to proof of stake where early investors can just squat on their coins indefinitely with almost zero cost to maintain their authority percentage forever.
> Moreover PoS can require that the tokens be spent permanently (not just deposited somewhere).
Is that really a "stake"?
If you want a different example that might be more obvious, "put it all on a single number on a roulette spin" and "invest in a big stock index" both have unknown rewards but they're entirely different ballparks too. (And no, those aren't supposed to map 1:1 to the coin scenario.)
Mining machines deprecate and electricity cannot be refunded. It's a production business, and that money is spent.
Talking about whales is just superstition for people who can't find any alpha in the markets. It's an excuse for why you didn't know the price was going to go in a certain direction. You see it a lot in amateur trading Discords and subreddits.
Ah yes, the price predictoor, even more common in amateur trading Discords and subreddits.
SEC and similar are likely granting BTC "commodity" status purely because it is so utterly controlled and unthreatening, completely divorced from its original intent of addressing the central banking charade, that any energy they can push into it is energy they won't have to deal with being directed to a legitimate decentralised cryptocurrency that actually works and over which no such control exists.
Core devs and exchanges do not entirely control the project direction. Non-backwards compatible changes cannot be made to Bitcoin without the miners AND node operators adopting the new client. It takes the cooperation of the devs, miners, and node operators to make a hard fork. "The Blocksize War" by Jonathan Bier documents a bunch of failed hard fork attempts that were backed by a good number of devs, large miners, and large exchanges. They failed because the node operators were not on board.
Look up the historical record. By what metric was the BTC chain allocated to the present by bitfinex? I'll give you a hint, hash power not only had nothing to do with it, it was explicitly said that it would be ignored in the announcement.
And reality flies in the face of what you just claimed, node operators had nothing to do with the metric. It's all just outright rigged.
Can you elaborate or give references to how Bitfinex controls the Bitcoin blockchain in such a way that the gridlock between miners and core devs isn't what keeps Bitcoin conservative?
How is the network rigged in such a way that node operators have nothing to say? You're not referring to miner centralisation?
Special notice to "The incumbent implementation (based on the existing Bitcoin consensus protocol) will continue to trade as BTC even if the B2X chain has more hashing power."
This is exactly the opposite of the way it is supposed to work according to the white paper. Before this announcement the majority of exchange volume was firmly in the camp of allocating the BTC ticker to whichever chain ended up having the most hashing power after the fork. If you work through the game theory afterwards, this means that;
1) if you want to be able to liquidate tokens to cover mining costs as what had heretofore been recognised as bitcoin, you will need to mine what is being rubber-stamped by the bitcoin core node client software as bitcoin, regardless of what the majority of hashpower is mining. What you rationally believe is the correct path is absolutely irrelevant. Want to pay your bills? Rubber-stamp BTC.
2) This is completely the opposite of what was outlined in the white paper and had been the status quo until this point.
3) This allocates absolute power to define the canonical chain tip to the people who have merge access to the official bitcoin core repo, a group no larger than seven people. Disagree with these people about what bitcoin is? You're wrong. It doesn't matter how many nodes you operate nor how much hashpower you have. They choose. You follow or gtfo.
4) A large part of these people had a direct fiscal interest in keeping Bitcoin uselessly crippled in order to promote their own commercial products which relied on that crippling to maintain competitive advantage.
5) Leaked emails from others highlighted the role intelligence agencies played in the campaign to keep bitcoin uselessly crippled. These emails contained unsubtle threats.
6) the power to define what BTC canonically is according to the supermajority of exchange volume was from this point on allocated by fiat to the core devs. Futures in the competitive chain were shorted into the ground on bitfinex and in the sabotaged chain pumped enormously using USDT.
7) Tether who is responsible for the issuance of USDT is just corporate dress for bitfinex. They're the same party.
8) USDT is acknowledged as fake fiat, official court documents highlight that it has nowhere near full backing in actual USD. Prior to the sabotage of 2017 daily exchange volumes of USDT were nearly irrelevant to even just BTC volume letalone the total, roughly five percent was regular. These days it is approaching three hundred percent of BTC trade volume on a regular basis. Just blatant outright wash trading to control the price of BTC using indisputably counterfeit USD.
9) Even with all the above, when BCH forked away from the sabotaged chain it pumped to 0.5 BTC. Plenty of people knew what was going on and how badly broken BTC had been. But in the face of widespread and constant market manipulation, BTC presently maintains a relatively dominant position. Nothing like the 95 percent plus it used to have before the sabotage, but still frequently 45 percent plus. Given it is utterly broken and sabotaged, this is completely ridiculous.
And last but not least bitfinex the party responsible for the above situation across the supermajority of centralised exchange volume is invested in blockstream the party responsible for the sabotage and hijack of the bitcoin core codebase and the forcible implementation upon it of the pants on head retarded idea that the chain ought to be permanently limited to roughly the throughput of a fax machine when the original plan was always for it to be competitive with large traditional payment providers like Visa and Mastercard and the exact mathematics for how this could be accomplished were published in 2009 and unsurprisingly check out just fine and these methods are now active on practically every other non sabotaged and broken blockchain in production usage.
The above isn't even a close to complete record of just how crooked the BTC situation is or its impact on the broader cryptosphere, but it highlights the core problem of fiat allocation of the title to whoever spits out the most counterfeit at the rotten heart of this horrid little saga that most people either aren't aware of or desperately try to ignore.
So there's that.
But yeah, sure, whatever. Definitely don't throw Brer rabbit in that there briar patch. Stick it to the man, use the obviously captured and sabotaged trojan horse.
What could possibly go wrong? Laser eye me up.
I cannot believe how far bitcoin has fallen. Utter clown world madness.
You can always fork it and start your own teeny-tiny forked Bitcoin network and pretend like the Network Effect is irrelevant to liquidity, right?
Who needs liquidity?
The truth is cryptocurrencies are like anything else that is a network: The people who control how people connect to and participate in a network will effectively exert some amount of control over the network.
I’m sorry, but there is nothing magical about crypto-coin networks and blockchains.
If there’s one thing you can learn throughout history, it’s that power in networks have a tendency to consolidate and that networks have a tendency to break down and be replaced with new networks.
There is nothing inherently special about the Bitcoin network or any other crypto network that makes it immune from being controlled by either internal or external influence.
If you think there is: I’d appreciate you sharing what you believe are effective safeguards.
The "managers" were basically able to create a new crypto and give it the bitcoin name.
Got it.
Decentralized.
They "only" participate in the on chain consensus while the switch to PoS is governed by the underlying social consensus of what code to run.
Ethereum has five execution clients, developed by independent teams, and another five proof-of-stake clients, also developed by independent teams, plus an open community of researchers where anyone can participate. The Ethereum Foundation funds some of this, but not all of it.
If the various teams don't agree to do something, it won't get done. You can verify for yourself that no one party is in charge, simply by listening to the public dev calls.
False.
https://river.com/learn/what-is-bitcoin-core/
Since it is the reference implementation, other clients have to follow its lead. And that's the lead of a fairly small group:
> Over the years, the code has had more than 800 contributors. However, only seven people serve the role of “maintainers” nowadays.
https://bitcoinist.com/who-funds-bitcoin-core-developers-her...
Geth is about 80% of ethereum execution layer nodes.
But the bigger difference is cultural - alternative clients are a core part of ethereum's development culture and is actively supported and nurtured. This is complete with social campaigns to get folks to switch away from majority clients to prevent situations where a bug in one client could cause big issues in the network. The same kind of environment is not present in bitcoin land.
There are examples like https://github.com/openethereum/parity-ethereum/blob/55c90d4...
Also, Parity Open Ethereum is deprecated.
It isn't a competition. Some are more suitable for certain use cases, and all those listed are actively in use with real funds on the mainnet network.
The site you linked is interesting, but it can only show public nodes.
Edit: not to mention that a single node can serve huge numbers of light clients, e.g. one of those public btcd instances could be serving hundreds of neutrino clients
A more distributed, equal % amongst all of the different clients would not only decrease the chance of critical issues with the main client implementation, but should also increase innovation, and make it easy for others to signal their support for that. Which is precisely why Core maintainers will likely see that as an "attack" on Bitcoin.
It's designed that way, but it has been attempted before: under the guise of that name, no less. I just saw Charlie Schrem on a live stream a while ago, and he strikes me as the person who best represents those conmen. Many have falled by teh way side, others in to utter irrelevance, and then imbeciles like Bruce Fenton refuse to go away and still clings onto his 'foundation status' as though that gave him any legitimacy as he runs for office.
I'll just say this: Bitcoiners, especially early adopters, don't have any tolerance for these pseudo-thought leader BS, and nothing irks us more when someone tries to speak on behalf of the community. We vote with our hashing power and our nodes, nothing else matters. We may disagree about specific things, like LukeJRs refusal to let go of his smaller block idea, but the truth is this is a cohesive unit it that is bound by self-interest as much as is its about a central ethos: it's the most resilient community I've ever been a part of and I value it most because of it's refusal to be co-opted despite its MANY attempts, even by people who calling themselves a 'chief scientist' and was 2nd only to Satoshi--who I will remind you appealed to the community to not 'kick the hornet's nest' and then did exactly that in regards to using BTC to fund Wikileaks.
> even a good one eg the move to proof of stake
You lost all credibility here.
I expect this will be even more true for crypto. While I believe that some regulation might be a good thing as it makes crypto safer for the wider public I am genuinely doubtful that the SEC has the capabilities or the right incentives to be that regulator.
Most people in Wall Street and the crypto community want clearer regulations so they know what the rules are for specific coins/tokens and transactions. What we have now is a very slow Government trying to catch up with technology coupled with infighting between different regulators defending their own turf.
Fortunately there was a bill introduced in the US Senate (referenced in the article) that would clear up much of this, along with various taxation issues.
Which is good, we don't want to give the government over-reaching powers, but we also want them to do something.
> Ether is a product, NOT a security or investment offering. Ether is simply a token useful for paying transaction fees or building or purchasing decentralized application services on the Ethereum platform; it does not give you voting rights over anything, and we make no guarantees of its future value.
Gensler's comments today suggest the opposite will be true?
The SEC is basically trying to argue that the speech was personal opinion (and the speech said that ETH was not a security), but Ripple alleges that the speech, though perhaps not an official statement, was much more than a personal opinion. We now know the SEC lawyers were involved in writing the speech, which is making life difficult for the SEC. This is also why the SEC is being far more careful now and is saying only BTC is not a security, but that ship may have sailed.
It's being called the Crypto Trial of the Century. A win for Ripple on the SEC's slip-up could mean the SEC is powerless to intervene in most crypto markets. A win for the SEC would result in mass regulation.
For instance, the duly elected Democrats who control the House, Senate and White House like to point the finger at the Supreme Court, but they could easily pass whatever law they want about abortion. There would be no more arguing about original intent or penumbrae etc.
I also wouldn't assume a federal Act guaranteeing abortion access would survive the supreme court. There's a colourable claim that both healthcare and homicide regulation are the purview of the states, and I'd expect five votes for that with the current Court on this issue regardless of its legal merits.
Actions regulating healthcare within one state have at least as much impact on interstate commerce as growing pot or wheat for personal use. Healthcare is not strictly limited to state lines. My insurance does cover visiting doctors in a neighboring state for example.
Reopening Filburn would raise a crazy amount of questions. USDOT regulation of commercial trucking could falter if Filburn was struck down. Until some new clear line on what the limit was, there would be widespread uncertainly about the federal government's ability to regulate things like commercial trucking, flights, drugs, etc, at least for transactions that don't cross state lines.
I doubt they would actually go that far, as the republican party are not actually anti-federalists, despite often pretending to be that way.
The present incumbents have made clear that they're open to reopening settled questions, and to a results-focused jurisprudence. Given that New York State Rifle and Pistol Association has just undercut state power in favour of constitutional interpretation while Dobbs goes entirely the other way, my presumption is that there are no major strictly federalist principles at play and results will be case-by-case. And, as with Bush v. Gore, they can always publish an opinion saying "this decision is confined to its own facts" if they want to signal that they're not intending to displace post-Lochner understandings of the commerce clause.
Rights need a stronger foundation than being a bi-annual political yo-yo.
Procedural and executive questions, on the other hand, are the kind of thing the legislature should either take a direct hand in through legislature, or delegate to the executive (When they do the latter, there is actually more public accountability than the former, thanks to the required public processes behind executive rule-making.)
If the SEC wins, they can define some cryptocurrencies as "securities" which then automatically becomes part of their regulatory authority.
This is why they are being careful to say only Bitcoin isn't a security now. That speech in 2018, centerpiece of the lawsuit, said Ethereum also was not a security. If that speech is found a legally binding statement, it's really hard to find anything smart-contract-powered from Ethereum to XRP as a security.
That seems like a leap. Paper is a commodity, but a stock certificate is (or represents, whatever) a security. A contract may be written on paper, but create a security. A database isn't a security but an entry in the right database, in the right place, might be. It seems to me all it would do is keep smart contracts from being securities simply because they use Ethereum—if they are, or create, securities, I see no reason why those would be any harder to regulate than any others.
This is a fringe theory no administrative lawyer backs. Neither, based on crypto’s lobbying of the Congress, do those with influence in crypto.
Ripple’s case is narrow. This legal theory sounds like it’s being pitched by someone making a “times are about to change” pitch.
EDIT: Administrative agency "rulemaking" is constrained by a fixed set of procedures that an agency must follow in order to "promulgate" a rule. First, they must publish a draft of the proposed rules, allow for several weeks or months of public comment, spend several weeks or months reviewing those comments, revise the rules as needed based on the comments received (or explain why no revisions are necessary), and then finally publish the finalized rules in the Federal Register.
Comments made by a single employee do not convey, or constrain, an agency's position on matters within its scope (unless those comments are made in, and pursuant to, a legal proceeding, in which case they are binding only for the limited scope of that legal proceeding).
A Ripple win would apply to the facts and circumstances of Ripple and XRP, and isn’t expected by anyone informed to set a broad precedent constraining the SEC’s powers.
[1] https://www.foxbusiness.com/markets/crypto-trial-century-rip...
1. Get paid in BTC for a service or a product (or buy BTC with offshore money) 2. Sell to someone for an agreed on price 3. Get cash/local currency/supplies/whatever
Two thoughts:
- Lower hype on bitcoin is a good thing for me, as it will bring less attention to it from goverments. I just need a critical mass of people there are enough buyers/sellers/miners.
- The two things that worry me are: governance of the project, and the fact that bitcoin mining traffic can be detected (somewhat like torrents). So, if govts want, they could force the ISPs to check for traffic that may indicate mining, raid, and eventually kill all mining operations (China probably will). Most likely, some countries will be more lax on that.
Gensler has commented on those specifically in the past [1].
They aren't. Bitcoin's blockchain has a longer proof-of-work than BCH. Honest nodes will only mine the longest blockchain (per Satoshi). Therefore any blockchain shorter than Bitcoin's will ultimately collapse in the long term, making them unsuitable to be considered commodities.
Water and oil are both fungible commodities. No one would claim they're economically interchangeable with each other.
Every point you make doesn't seem to make much sense.
Perhaps try some online learning resources: https://ocw.mit.edu/courses/15-s12-blockchain-and-money-fall...
1. You invest money in
2. Along with others
3. With the expectation of profit
4. Derived from the efforts of others
ETA: (the others in #2 need not be the same others in #4)
Everyone is going to get rich and nobody is going to have to put in any effort, just HODL.
WAGMI! To the moon!
The claim in the article is that Bitcoin is mostly not like that. There's a protocol and a bunch of users, but there's no one who's leading the enterprise and causing the value to do something. Not sure I buy that claim, but it's not totally crazy.
Probably not in the traditional sense. The difference Bitcoin has to most cryptocurrencies is that it was specifically designed with no "premined" blocks and no preordained rewards. In contrast, a lot of projects sold tokens through an "ICO" with a promise of a future project developed against it. ICOs are basically securities, because you're buying the token without actually any guarantee that the project delivers on what it needs to deliver on for the value to change.
In contrast, again, Bitcoin was just offered as a cryptocurrency, from the start. The first block encoded a current event to distinguish the fact that there aren't any rewards already allocated to creators. It was also launched with the complete product available from the start (sans network upgrades).
Note: I'm not saying that Bitcoin is good or anything. I'm just distinguishing between it and most other tokens. Bitcoin has governance systems in place and other systems that make it "more security like" but clearly the SEC chair doesn't seem to believe it crosses that line.
Since when has this ever been true?
Silver is a commodity, is it not?
Silver has a perpetual mining for thousand years, like gold.
Not all of the silver and gold in the ground has been mined, to be sure, but neither has all of the Bitcoin, either.
As far as the IRS is concerned they treat them the same for capital gains.
Nobody is doing that. For all the new techiness of crypto, its popular failure modes of pumps and dumps, rug pulls and promoters lying through their teeth is identical to the pre-Securities Act securities landscape. So for those narrow problems these proven solutions should work.
To the degree we’re seeing a persistent class of winners in crypto, it’s not users. And it’s not VCs. It’s Wall Street. Because this is an old, dirty game. Some folks just gave it a new paint job.
For one set of rails. Wires, ACH, and a number of other payment rails exist and outclass Visa + MasterCard. (Also, technically, Visa and MasterCard are analogous to SWIFT. They process payment messages. Not the transfer of dollars per se. If they chose, they could execute transactions in Bitcoin with the issuing bank and merchant bank then settling the trade on the blockchain or whatever offline.)
A Ponzi over Blockchain is still a Ponzi.
This is just equivalent to 'employers opinions does not reflect my own'
In that capacity it is similar to gold, which in the Golden Age (something everybody talked about in Antiquity and I decided to believe, but I've never encountered anybody else believing in) was openly swapped around as little inventions (you can make all kinds of shit with gold, it's a miracle material, lubricant, any precision, single isotope, list goes on endlessly) and gifts, but then some assholes decided to start hoarding it and enslaving people to mine it, charging interest using it, weigh one gold gift against another saying they balance out, use it to pay for wars to amass more gold. And it became something we just hoard underground. In other cultures it's this stuff, like Kechwa (Inca) it was about worshipping the sun and sure enough it basically is the sweat from the sun because it only is created by stars in supernovas. Idealistic in its origin.
Except in satellites, in satellites it's used for all kinds of shit, the foil for reentry (silver and gold, but only the gold resisted reentry), as lubricant, for welding (4:1 gold to tin), for the electronics of course, as a conductor in some cases so wire, heat foil. And medicine, so dentistry a huge amount but also implants, gold-titanium alloys. And injections for rheumatism in a chemical composition. And anything that must not rust, the go-to is gold.
So all the other coins? They're shitcoins. There is only Bitcoin, everyone else just wanted to get rich quick. Satoshi never cashed out, I divine he committed suicide in 2015 embarrassed not by its success but in how much he owned by being the first to mine it. It was the only crypto that didn't get pre-mined, but he didn't get other people on board fast enough to avoid owning tons of it. So Lycurgus, too, he made the laws of Sparta so they would never be slaves in response to the end of the Golden Age and the constant threat of conquest--basically successful--but was embarrassed of benefitting by then becoming king, so he said "don't change the laws til I return" and left, and starved himself to die. And many say he never existed. Just like many say Satoshi never existed.
If you "game theory" him out, I believe he adds up to being in crypto for idealistic reasons as well, despite the appearance of the methods he's using to get there.
I was wrong in discarding them. I would, in addition to apologizing, salvage my claim in the following terms: bitcoin is the gold standard, the first and foremost, just as every metal is unique and gold is gold and nothing else identical. But there can also be silver, and platinum, and rhenium, and ruthenium, and rhodium, and copper, and many others. Bitcoin was the first, and is unique, but is not the last.
[0]: Article I, Section 9 <https://en.wikisource.org/wiki/Constitution_of_the_United_St...>
Importantly, with agency rules, courts can and have looked at the "intent of the law" authorizing the agency's rules to uphold criminal convictions under newer agency rules that were technically within the scope of the rules at the time the acts were committed.
This happens all the time in the tax world; see for example the Bermudan tax loss harvesting scheme that got a lot of people sent to prison even though the schemes were technically within the rules at the time accounting firms started selling them to clients.
I'm cracking up over here. Are you actually being serious?
The IRS has been giving tax guidance on crypto for years; any US person in crypto with half a brain has been following it.
Well, yes. That's the Howey test. It's pretty simple. A lot of crypto issuers liked to think it didn't apply to them, but the SEC has been saying consistently that it does. There's argument over whether crypto brokers, exchanges, or miners are subject to regulation. But anybody who created and issued a cryptocurrency is clearly making a public offering of a security.
The crypto community got away with a lot during the "line goes up" phase, because the SEC usually acts only when investors lose money. After a 2 trillion US dollar loss in market cap, that phase is over. There will be more complaints and more enforcement actions.
https://www.klgates.com/CFTC-and-SEC-Perspectives-on-Cryptoc...