Crypto Faces Legal Reckoning as SEC Prepares Action Against Coinbase

As such in new areas it does act to stifle innovation because people who are risk averse have to wait until someone else does something, the regulator enforces, it goes to court and the court decides.

When I worked at a fintech I actually was in a meeting with the OCC[1] and a prospective bank client we talked them through our plans and they said "when you get big enough you'll need to register with us and we'll have some requirements for you". We said we wanted to start that process right away and so asked for the requirements so we could start baking them into our software and they literally said "We'll call you when we think you're big enough. Until then we'll call you if we think you're in violation". They wouldn't tell us what the regulations were or how to proactively avoid breach.

This is entirely unlike other jurisdictions where you can generally find all the regulations on the regulator's website and in some cases (eg Singapore) the regulator will actively work with you on developing new regulation if they think what you're doing is innovative and valuable.

For example, here is the German crypto asset regulation. It's incredibly straightforward and easy to find. There is no grey area about what the regulator does and does not consider a security, what you can and cannot do and what existing national and EU regulation they consider to be included. [2]

[1] I should say this was not crypto related but this is a playbook that US financial regulators seem to adopt broadly

[2] https://www.dechert.com/content/dam/dechert%20files/knowledg... or https://www.nortonrosefulbright.com/en/knowledge/publication...

Other than Bitcoin, which the SEC recognizes as not having an "issuer", crypto currencies would have to be registered by their issuer as securities. This means filing an S-1 form. An S-1 form tells who's behind the issue, their backgrounds, where the money is going, the business plan, and balance sheets. All filed under penalty of perjury. Every publicly traded company in the US has been through this process.

Any US registered broker can trade any registered security.

There are lots of restrictions that crypto companies don't like. You can't self deal. You can't wash trade. You can't clear your own transactions. Issuers, brokers, clearing services, and exchanges are different organizations. FBX argued to Congress that they didn't need all that separation of function. Now we know that was because it would have interfered with stealing the customers assets.

[1] https://www.howeycoins.com

Was it related to XRP and trying to trick you into being the first N user to sign up for some staking thing?

I got that too, even if the email I received it on is not associated with Coinbase, and somehow that email managed to break through the spam filter although it was clearly spam.

If Coinbase’s shitcoin listing operation were shut down by the SEC, the VCs would lose their primary dumping endpoint to retail crypto buyers in the West. There’s an urgency to both pump up prices now and to pretend that the SEC action is nothing.