U.S. SEC sees decentralized crypto platforms as exchanges
reuters.com
reuters.com
If a user sends some ETH to an adress and on some Bitcoin address a balance shows up - how would the SEC want to regulate that?
Let alone exchanges that are just a contract on Ethereum and only exchange tokens on the Etherum blockchain. What is the SEC going to do about those?
And what would happen if some country in the world tokenizes their property. Say a certain token on the Ethereum blockchain means ownership in a company in Sweden. What if a US citizen buys such a token by sending ETH to a smart contract?
So many questions.
Shouldn't these have been kinda answered already in regards to international exchanges? What if a US citizen buys stock on the Euronext Paris, the French stock exchange? Would the Euronext Paris have to be registered with the SEC? What if they are not? Are they committing a crime in the eyes of the SEC?
Dealing in cash means managing some sort of bank or brokerage account, which falls under federal purview.
I certainly won’t pay cash for a token!
I wonder what entices people to execute hundreds of thousands of trades totaling USD equivalent billions in daily trading volume on these platforms then. Would you say that everyone using these platforms is basically out to scam others or get rich quick?
It's sad to see what has happened to crypto. So many scams and people using it as an investment opportunity. It will obviously never be able to replace fiat in it's current conception.
It sucks that this hasn't happened already. Monero pretty much just works, the technology is already there. People insist on treating cryptocurrencies like stocks instead.
The crypto industry is extremely adept at moving across borders, and as power politics between nations dictate different priorities, crypto will make its home base where ever the doors open. Right now China and Russia are in a West vs. East struggle, and anything they can do to reduce the power of the US Dollar and banking system will be supported.
So China is now going to "roll out the red carpets" for crypto exchanges? Yeah right.
The "this is good for bitcoin" crowd never ceases to entertain.
Meanwhile Visa keeps on clearing incomparably more (by “several orders of magnitude”) encrypted transactions per second globally for miniscule energy?
https://ethereum.org/en/energy-consumption/
The energy argument is correct for proof of work, not proof of stake.
One is a streaming service and the other is a payment network. It's like comparing a construction site to a restaurant in terms of fuel consumption.
Anyway, that was the concern. It contrasts with the fee set by percentage of transaction size used by Visa.
https://www.nytimes.com/2023/04/09/business/bitcoin-mining-e...
> In Texas, where 10 of the 34 mines are connected to the state’s grid, the increased demand has caused electric bills for power customers to rise nearly 5 percent, or $1.8 billion per year
> The program pays miners, and other companies, for promising to stop using electricity upon request. In reality, they are rarely asked to shut down, but are still paid for making the pledge.
> From midnight to nearly 4 p.m. on June 23, Riot earned more than $42,000 from the program while continuing to mine Bitcoin. (Overall in 2022, Riot made nearly $9.3 million from participating in the program nearly 85 percent of the time, the data shows, though the grid operator asked companies to actually lower their use for about 3.5 hours.)
> Around that time, the company switched to the second technique: avoiding fees that Texas charges to maintain and strengthen the power grid. It did so by briefly shutting off almost completely.
> To incentivize big customers to conserve electricity, those fees are based on how much electricity they use during several peak summer moments. Riot reduced its power use by more than 99 percent.
> By 6:30 p.m., the company had resumed mining. If Riot had been fully operating all day, it would have incurred an estimated $5.5 million in fees — costs that are largely made up by other Texans. Over the course of the year, this saved Riot more than $27 million in potential fees.
> One final mechanism lets some companies make extra money when electricity prices spike: They can stop mining and resell electricity to other customers. That earned Riot roughly $18 million last year.
It's why I stopped taking late night drives in my car to wind down, instead taking walks. And why I try to drive to maximize fuel efficiency.
It's why I felt guilty every time I flew a plane while a student pilot and never finished a full pilot's license (I never would have started in the first place had I not been pushed to do so by my father).
Yes, some of us care.
Then I realized that I was compromising my own life, making sacrifices, and effectively giving away my power to the people who don't care.
So I changed tactics, and bought a jeep.
I'd have more respect if they just said "I hate crypto and want it banned".
From your own link, PoS Ethereum is 1/30,000 the energy cost of PoW Ethereum. From this link (https://arxiv.org/pdf/2203.03717.pdf ), back in 2021 PoW Ethereum spent 125.36 kWh per transaction, while VISA spent 0.0015 kWh, an 83 thousand fold difference. Depending on how these numbers all shake out VISA is still superior to PoS Ethereum by about 2-3X per transaction.
VISA transactions, with the fee paid by the receiver, obviously pull more off the top in excess of electricity costs (for larger transactions), but they also have purchase protection, customer service, and things such as points built it for particular cards. So not a complete apples-to-apples comparison.
[0] https://usa.visa.com/dam/VCOM/global/about-visa/documents/vi...
In what sense? Credit card companies manage their own fraud mitigation per federal law, which makes it easy for consumers to dispute transactions. If someone gets my crypto wallet PK and withdraws everything, who do I dispute that with? No way to reverse transactions in BTC.
If you want protection against that, get insurance.
Regardless, I’m not sure why it’s relevant to bring up what you like about credit cards. You’re free to use whatever currency you want, we were discussing whether it should be illegal for me to do the same.
That sounds like an implied criticism but I genuinely don't know the answer.
The legal system also exists; it’s British-descended common law unless the CCP decides to use its authoritarian instinct.
I'm pretty sure every city has taxis?
The crypto industry may be adept at moving across borders, but so are seasoned criminals. That shouldn’t automatically qualify them to operate with impunity. Millions of people lost savings in the wake of FTX, and we’re all just supposed to pretend that it was some singular, isolated incident?
Their name was on an NBA arena, they spent millions on celebrity endorsements and ads, and were touted among what many consider to be one of the top tier venture firms in the world. The SEC had every right do this.
FTX...which was a regulated exchange in the US and failed because the SEC wasn't regulating.
The issue with expanding the SEC's reach is that they're refusing to do their job and they're asking for more work that they aren't going to do.
Commissioner Hester Peirce has a great statement on this: https://www.sec.gov/news/statement/peirce-rendering-inovatio...
We also see this statement in the article:
> The officials estimated about dozen crypto firms would fall under the expanded definition, but declined to provide any more specifics about which firms.
Which means that the SEC isn't creating clarity about their proposed changes and the effects that they will have. They need to create clarity before asking the public to comment on something.
If the SEC had been doing their job all this time and regulating the industry which they claim falls under their jurisdiction, people probably would have been saved from a lot of scams and loss of assets while still enabling blockchain products to be built by people who enjoy working on them.
Though, I am unclear why FTX filed bankruptcy in Delaware. Someone please correct me if I'm wrong.
Bail them out then. Why is it OK to bail out the Silicon Valley bank but not this one? These exchanges are literal banks, they even do fractional reserve banking which allows them to offer loans and savings accounts. Might as well bail out Tether too.
1) Because SVB paid at least some money into the FDIC insurance fund.
2) Because SVB's deposits are mostly backed with still viable investments, and do not require an extended clawback process that will only ever get a certain fraction of the funds back.
No. Otherwise people who lose their belongings to theft would be reimbursed by the government.
> What matters is avoiding financial calimity brought by the consequences of people's own choices.
If FTX depositors can show that their losses mean that businesses will have to shut down, then they can probably twist the arm of politicians to make them whole with taxpayer funds. If they can't, then they're SOL like the rest of us.
One of the major advantages of using a decentralized exchange is to avoid the risk that centralized exchanges like FTX expose you to, namely that it's a single point of failure that when collapses ends up taking a lot of people down with it.
With a decentralized exchange, your transactions happen within a matter of minutes and your only exposure to any potential failure is during those minutes.
I thought many DXes operated by people effectively parking tokens in them for long periods of time so that others can come by and trade for those tokens (otherwise you'd need a way to sync up people who want to trade). The credits received for parked tokens can be redeemed for any token at the exchange, but during the possibly extended period of time you're holding a credit instead of holding a token, you can lose it all if the DX is compromised.
EthetDelta was exactly this, and they went after the guy that maintained the contract (plus in this case some ancillary order book matching servers).
You need fully decentralized right up to governance. Those aren't viewed as favorably by regulators.
Is Ethereum itself an exchange or would a website like https://app.1inch.io be considered the exchange? Or would 1inch itself be the exchange and holders of 1INCH be responsible for it?
It makes little sense.