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> everything not BTC/ETH is a security, please register them

Coinbase tried repeatedly to register them with the SEC and was turned away, which seems to be lost on your point.

From the article:

> The SEC will not let crypto companies “come in and register” – we tried.

> The Wells notice comes out of the investigation that we disclosed last summer. Shortly after that investigation began, the SEC asked us if we would be interested in discussing a potential resolution that would include registering some portion of our business with the SEC. We said absolutely yes. Specifically, the SEC asked us to provide our views on what a registration path for Coinbase could look like – because there is no existing way for a crypto exchange to register. We developed and proposed two different registration models. We spent millions of dollars on legal support to build these proposals and repeatedly asked for the SEC’s feedback. We got none. We also reiterated that we stand by our listings process – we don’t list securities today – and repeatedly invited the SEC to raise any questions about any asset at all on our platform. They raised none.

> Coinbase tried repeatedly to register them with the SEC and was turned away, which seems to be lost on your point

My entire point is that the SEC doesn't like them, to them saying "please register" is the same as saying "get bent". I specifically mentioned that those registration papers are going straight into the trash.

If that was your point, then wouldn't the correct conclusion be that calls for SEC clarity are genuine, not disingenuous?

Saying "please register" when you really mean "get bent" doesn't count as SEC clarity in my book.

The SEC stonewalled Coinbase at every attempt to submit a registration. It's not like Coinbase registered and was declined.

I think "all these crypto projects are securities" is a perfectly clear stance. Coinbase clearly disagrees, so their calls for clarity are actually calls for "please change your mind". People then go ahead and launch public offerings anyways, and act all surprised when SEC files enforcement actions.

Some call it regulation by enforcement, but really I see all along the SEC has been clear in saying that it's all securities. Now, enforcement actions go in front of a court and the court may disagree with the SEC, which then clarifies regulation by setting a legal precedent for the SEC being wrong.

Edit: this is how I think about it: there is a gradient from "clearly under SEC jurisdiction" and "clearly not". The SEC says "most of this gradient is under my jurisdiction", crypto projects say "no it's not". Clarity in this situation means drawing lines in the gradient, and when enforcement actions get filed then a court gets to weigh and draw lines for them.

> I think "all these crypto projects are securities" is a perfectly clear stance.

That's not the part of their stance that's unclear. The unclear part is the part where they say "please register" when they really mean "get bent".

> their calls for clarity are actually calls for "please change your mind"

Coinbase's calls for clarity are actually calls for "you asked us to register, so let us submit a registration application already".

> really I see all along the SEC has been clear in saying that it's all securities.

Again that's not the part of their stance that's unclear to me.

> Now, enforcement actions go in front of a court and the court may disagree with the SEC, which then clarifies regulation by setting a legal precedent for the SEC being wrong.

The SEC's job is to write clear regulations, not to invite corporations to pay $1000/hr lawyers to conduct mind-reading sessions in court.

The calls for clarity are firstly clarity about registration. Failing that, clarity about jurisdiction to work around the lack of clarity on registration. Nobody gives a shit about whether or not their dogcoins are technically securities or what the gradient is.

The SEC is considered by many to be acting in bad faith by not clarifying regulation, which in effect is an abuse of a pocket veto of sorts over crypto.

Other jurisdictions do not have this issue. The SEC stands alone.

It's not clear because their words don't match their actions. The SEC says they are securities but then refuses to regulate them like securities. If they are securities then they should allow Coinbase to register them. If they are not securities then they should not allow Coinbase to register them. But instead they say yes, they are securities and you have to register them, but no we won't let you register them, and we are going to take legal action against you because you didn't do the thing we told you to do and you tried to do, but we didn't let you. The SEC is clearly acting in bad faith.

It's not really the SECs job to just decide that Americans cannot own many crypto assets, which is de-facto what they're doing by refusing to regulate crypto assets that look like securities. That ought to be a legislative decision - instead the SEC is making it by refusing to engage with the crypto industry

"Please register" is disingenuous bureaucrat speak for "get bent" in the same way that calls for "clarifications on the SEC's policies" are disingenous bureaucrat speak for "get bent".

I don’t think your guess is correct. Working with regulators means you fill out a form, then 3–6 months later they send some questions. You spend one day to answer them and ask a few of your own, then send it back. 3–6 months later you get another list of questions. Some of those questions are identical to the last pass. You spend one day answering and… rinse and repeat for a few years.

From what I gather the SEC just ignored Coinbase’s questions in this back-and-forth.

Do you have anything pointing to the SEC giving actual guidance around BTC and ETH because i have never seen it.

Seems strange kraken would stop supporting the ability to stake ETH if your claim was true. Thats a ton of money for them to throw away just for fun.

SEC rarely does it’s job until it’s too late and only after someone else has done all the work for them.

The SEC is kind of relying on these appeals to authority to pile up so nobody really questions anything

Basically

A) Kraken’s staking service was a little different, but

B) Kraken didn't fight it and the CEO resigned. Jesse was just over it and not willing to fight. Jesse grandstanded against New York’s bitlicense for nearly a decade, continued Monero support in Europe while dropping it in the UK, he’s had his fight and wants to do other things with his life.

On the UK Monero stance “Unfortunately, we have to pick our battles and look out for the broader business in the country.”

Spot ETH trading is not a security, but staking ETH may be.

The only way validators who have staked eth make any earnings is if they perform their validator duties. If they don't do the work, they get penalized. If they abuse or attack the network, they get slashed. Since a validator's earnings come from their own work, the whole 'To be derived from the efforts of others' prong completely fails.

There are pretty decent arguments why the other prongs fail as well.

What can be a security, is if a provider offered a managed yield service promising a certian return and guaranteed instant liquidity and then used staking in the background to generate that yield. This is what got Kraken in trouble. And why they settled so easily. Where Coinbase falls is going to heavily depend on the specific facts of their service.

> The only way validators who have staked eth make any earnings is if they perform their validator duties. If they don't do the work, they get penalized. If they abuse or attack the network, they get slashed. Since a validator's earnings come from their own work, the whole 'To be derived from the efforts of others' prong completely fails.

Validating by running your own node is a-ok. Sending your tokens to Coinbase, a registered public company, who is pinky-promising you they will give you 8% returns every year, without registering this product with SEC, is not a-ok. How is that hard to understand?

From the linked page on the Howey Test

> "The U.S. Supreme Court's Howey case and subsequent case law have found that an "investment contract" exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.[5] The so-called "Howey test" applies to any contract, scheme, or transaction, regardless of whether it has any of the characteristics of typical securities."

So I guess they are arguing they are not securities since their is no "effort of others" even if there could be a reasonable expectation of profits? Similar to art I guess? This seems like a plausible case on a strictly by definition basis, regardless of the way people are actually acting.

If the case is that the SEC just doesn't want to let them register the any of it, is there really no way they could be more straightforward? It seems like post FTX they would have a lot of leeway for this kind of thing. Unless maybe they think enforcement is a better path to lead to eventual regulation?

> If the case is that the SEC just doesn't want to let them register the any of it, is there really no way they could be more straightforward? It seems like post FTX they would have a lot of leeway for this kind of thing. Unless maybe they think enforcement is a better path to lead to eventual regulation?

Part of it is political capital imo: when crypto was going up, saying "none of this is legal" costs political capital and nobody wants to listen; when it's going down and FTX is collapsing, saying "none of this is legal" is free and suddenly Congress/courts are much more partial to the message.

It's the nature of such regulatory agencies. The path to career advancement is often shouting "this is bad, we should regulate" after a disaster occurs, not before. Before the disaster, <thing> made money, and putting a stop to it is hard; after the disaster, <thing> lost people money, people are angry, so putting a stop to it is much easier.

No, it's not like that unfortunately. They won't say which cryptocurrencies are securities and are very deliberately vague.

> everything not BTC/ETH

What's special about BTC and ETH that sets it apart from other cryptocurrencies?

Probably that they have been registered with the SEC.

Regardless, the phrase indicates that they’re not securities. How are they not?

"If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract. Moreover, when the efforts of the third party are no longer a key factor for determining the enterprise’s success, material information asymmetries recede. As a network becomes truly decentralized, the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful.

And so, when I look at Bitcoin today, I do not see a central third party whose efforts are a key determining factor in the enterprise."

https://www.sec.gov/news/speech/speech-hinman-061418

They are fully decentralized networks that no one controls. A security requires some issuing company or person.

Almost every other cryptocurrency has one or a small group of person that can take control of the chain / app.

I don't think that's how it works.

A business registers with the SEC to gain a license to trade securities. Securities themselves don't register.

Happy to be educated if above is wrong.

Securities do have to register using form S-1. This is required for IPOs, for example.

Uh who would have registered BTC? Satoshi?

they have not been registered with the SEC. both are leaderless and therefore lack the ability to register with the SEC

BTC is leaderless, which seems to be a large part of why the SEC is convinced it is not a security.

ETH is not leaderless to the same degree, and to my knowledge has not been declared "not a security" by the SEC in the same way BTC has.

well the CFTC says that it is a commodity https://decrypt.co/123032/cftc-chair-says-ethereum-is-a-comm...

and in 2018 an SEC commissioner gave a speech in which he said eth was not a security, but the SEC is doing all they can to muddy the waters on that https://cointelegraph.com/news/sec-seeks-to-keep-hinman-docu...

It's farcically absurd that the crypto industry built its brand on avoiding government rules and now they are asking for regulation to protect their interests.

There's nothing absurd about a company seeking to legitimize a component of their business.

The crypto industry is not built around avoiding government rules, that's a myth propagated by its many detractors. It was born to address a failure of the banking system that hurt regular people the most.