Crypto firms say they need clarity about regulations, but Gensler has said that crypto markets "suffer from a lack of regulatory compliance, not a lack of regulatory clarity"."
Maybe calling it a "field" is being too generous. Crime is crime.
The actual users on-chain is abysmal and frankly, embarrassing.
Current users onchain is in the thousands. Even when the market was raging, the biggest memecoin in the world could only manage about 1M+ wallets - probably about 80-100k real users.
NFT trading volume is down to under 6-7k active users.
At peak bull market, Tornado Cash, despite its notoriety, had about 125 daily transactions.
Arbitrum, an Ethereum scaling solution, gave out literally free money in the form of an airdrop (I got $15k worth). The airdrop went out to about 650k wallets - under 100k real users.
If crypto were to disappear tomorrow, it would affect a population no bigger than a small Indian town.
An absolute mess. No correlation between adoption and hype/valuation at all.
I agree with you on the overhype, but if roughly 16% of active addresses are real users, then active users within the past 24 hours would be around the population of the largest city in Indiana rather than a small town.
Source: DefiLlama
Regardless, NFT platform unique daily users down to ~10-12k across platforms:
https://dune.com/queries/1622348/2688962?utm_source=mintorsk...
Total unique daily wallets for Tether (USDT) down to about 80k unique wallets. This is just unique addresses - doesn't filter out bots and users with multiple wallets. You can't go more mainstream than this coin.
https://etherscan.io/token/0xdac17f958d2ee523a2206206994597c...
There are not more than 20-30k active users on chain at any given point.
As a reminder, this is what original comment was talking about:
> The actual users on-chain is abysmal and frankly, embarrassing.
Which isn't contradictory with most interaction being on a centralized platform.
Big difference! My mistake.
The stats you're referencing appear to be ETH chain only. I'm not really into NFT's, but aren't they more popular on other chains/rollups because of gas cost?
I think the active users might be at least 3x your estimates, but I could be wrong. For example, tether's market cap is >$80b and only ~$30b of that is on ETH.
Isn’t it weird that there’s so much noise around an industry with so few real users then?
Or maybe because its second biggest posterboy (Do Kwon) ran the second biggest ponzi since Madoff...
Crypto fanboys will defend this trash so much that they've already forgiven and forgotten SBF and Do Kwon.
If this industry wasn't filled with scams siphoning off literally tens of billions in real cash, maybe the SEC wouldn't want to regulate it so strongly.
IMO the discourse around crypto is typically poor because it's a shallow proxy to politics/philosophy/economics. But instead of having a meaningful discussion about any one of those topics we get this.
Let's agree crypto is an unregulated digital casino. Why do people care so passionately about code enforcement when it comes to securities? I could possibly see the moral hazard of gambling addiction but given the state of gambling commercials that ship has sailed.
It goes along the same vein as the SEC protecting non-accredited investors from fraud and risk. I appreciate what the SEC does but there's no way to opt-out of being protected? There's no waiver that can be signed to say "I'm totally going to lose my money and that's okay"? Losing money gambling on sports is good. Losing money gambling on private equity will not be tolerated in a civilized society.
Maybe two people can look at the same fence and feel opposite about it. What makes me feel caged could make someone else feel safe
It's like saying "the police spends most of their time on criminals even though they are a really small percentage of the population." Yes? That's how laws work.
I still believe in crypto as a store of value and hence as a possible future global currency, but 10+ years later and it's still almost entirely speculation.
Recently, some big names (Saudi Arabia, Brazil, maybe China) are moving off the dollar and in search of a new global currency. Let us see.
Every single Indian and Chinese household that has any money at all owns at least some gold in the form of jewelry.
To be fair, gold has had atleast 1000 years to gain adoption as money by half the world. Crypto in comparison will probably reach that level of adoption after 30-50 years of existence.
We've found gold ornaments in pre-pottery neolithic sites dating back thousands of years. The % of people who want to own gold was near 100% even thousands of years ago.
If anything, gold adoption rate has declined in the modern fiat age, at least in western countries.
I didn't say it did, you seem to have misread my post.
>It always had the current adoption rate.
>The % of people who want to own gold was near 100% even thousands of years ago.
I dont know how you could possibly make a claim like this and defend it. Source?
While it was the main innovation originally it's not that major today.
Crypto is trading a lot, but on CeFi.
Isn't that a... giant oxymoron? Binance is a centralized third party, BSC is a centralized chain run by Changpeng Zhao and his buddies, and in this thread we are talking about actual, on chain usage off of these centralized platforms.
I'm not ideologically opposed to crypto. I believe in its mission.
But this space needs to a very, very deep clean before it can be taken seriously.
His congressional testimony was a joke. How that man still has the job of SEC chief is quite the mystery. Being CFO of Hillary Clinton’s 2016 campaign is probably a factor.
Maybe it isn’t clear?
In the press, he says that "actors are not complying" but not being able to answer the most simple question (there are others more complex) is *not* playing in SEC favour.
Comply with what? Ethereum is the most used "crypto"-currency and the ecosystem players like Coinbase (a YC company) are right by saying they *can't* comply... they don't know what they are supposed to do despite asking repeatedly for years.
This whole congressional testimony as legal advice for your business makes no sense.
"great! how would they apply to this simple example?"
"lol, no I can't tell you that!"
You can say you don't like these rules or how they are applied but that's how they have been applied since their inception. This isn't new.
After, whatever decades of "the rules", new technologies have come along that have stumped "the rules". Now, the SEC has to deal with that. Instead of being an adult and having a good conversation, they are just kicking and screaming.
What's happening is that SEC is saying that you're breaking "the rules" (ie: Wells Notice to coinbase).
So, coinbase says... "ok, cool... what rules am i breaking?"
The response is: "lol, no I can't tell you that!"
So now Brian is in DC this week talking to regulators trying to get some clarity. He's posting all sorts of pictures of this on Twitter.
Let's see what happens.
If they're not able to argue why they're not breaking the law, then they should hire better lawyers.
Of course they can argue it, that's what is happening. They are going to sue the government. Why? Because the SEC refuses to even have a conversation about things. They've been trying, for years, to do so. This isn't some random small company, this is a public company that the SEC should be supporting with better answers than just refusing to even meet.
Worse off, along this same thread, Gensler doesn't even have basic answers to questions that he was prepared for.
In any case, even if the SEC did give out legal advice, I don't believe it would form any type of legal precedent. Nothing stops the next administration from taking a different view.
If you're a large public company knowingly entering into a regulated industry where your activities are considered by everyone to be a "a bit of a legally grey area", then litigation is the entire ball game. Do the thing, wait to get prosecuted, hope you win.
Alternatively, do some lobbying, get the law changed how you want, then do the activity. Been happening for centuries. Easy as pie.
According to their own site, they aren't that at all.
https://www.investor.gov/introduction-investing/investing-ba...
The U. S. Securities and Exchange Commission (SEC) has a three-part mission: Protect investors. Maintain fair, orderly, and efficient markets. Facilitate capital formation.
The main purposes of these laws can be reduced to two common-sense notions:
Companies offering securities for sale to the public must tell the truth about their business, the securities they are selling, and the risks involved in investing in those securities.
Those who sell and trade securities – brokers, dealers, and exchanges – must treat investors fairly and honestly.
All of this is moot anyway. We know the SEC is bringing a case against coinbase. If that case lists ETH, then we know that the SEC thinks it's a security! Congressional testimony is a weird thing to obsess about, but each to their own.
wait, what? something something about a government official paid by the people of the US...
They are selling unregistered securities.
They can argue that they are not selling securities, but that's what the wells notices is for. Things are playing out exactly as they should.
The fact that they are misleading the uninformed public is what I have a problem with, most people have no idea what the SEC does or how it works so this all seems foreign to them when it's actually perfectly normal.
Comply by not operating at all probably. Just the SEC can't outright say that.
Are you saying that because they said coinbase could list that means that crypto is compliant?
Heck half of the court system from Appellate to the Supreme court is to figure out what is and isn’t legal. Most government agencies won’t tell you if something is legal or illegal because they don’t know unless there clear case law on the subject, in which case your attorney should know, and they’d spend all day guessing.
If Coinbase wants clarity then take it to court and run it up the flagpole.
Show me a country where the government tells whether or not you're breaking the law without actually prosecuting you.
No seriously, I can't answer that either.
He definitely has, or at least he should have. When ETH switched to PoS things changed, but he hasn't officially updated his opinion on it and wasn't willing to go on record about it at this latest hearing.
https://coingeek.com/is-eth-a-security-if-it-wasnt-before-it...
Although, oddly, he's never done a crypto transaction.
He's probably really good at doing standard SEC things, but I'm really starting to question his role in the cryptodigital economy.
As Matt Levine wrote on his newsletter, saying that the SEC must have traded crypto to regulate it is like saying the DEA should have used meth to regulate meth -- if you think the thing is bad, then obviously you should understand it, then ban it, without using it yourself.
Now, people can disagree whether the thing is bad, but it would be foolish to assume that the SEC doesn't know how cryptocurrency works. If you look at the career paths and previous work of most of the top bureaucrats at the SEC, you'll see that they were usually involved in a great deal of legislation or had prominent positions in industry doing real projects.
Have you ever met a botanist who's never touched a plant?
Everyone has money. Not everyone has cancer.
Anyone who takes cancer drugs, is doing research. There is no "cure" for cancer (yet).
A better analogy might be: would you think it strange that someone teaching a C programming class has never compiled a program?
would you think it is strange that someone who's teaching a C programming class that has never used a computer?
'Imagine someone trying to bring a injunction against Liberty Reserve without owning any any stock in the company or having ever used their products'.
I am being entirely serious when I say that I trust a meth addict more than I do the DEA to create or impose any sort of regulation.
That said, the overall conversation about whether ETH is a security, or not, has been going on with Gensler, for years.
That's literally the opposite of what I just said.
On one hand, yes, Ethereum is obviously a security, it raised money from investors to make a thing, and investors expected to get rich off it.
On the other hand, Ethereum is currently regulated as a commodity by the CFTC.
If he says Ethereum is a security, then there's a political mess.
If he says Ethereum is a commodity, then it breaks down the SEC's case for all the crypto projects out there that's basically stock IPOs but with a thin crypto layer on top.
I would not impute his credentials, he was a partner at Goldman Sachs and was chair of CFTC under Obama. He was involved in crafting a great deal of policy after 08 around the new regulations for financial institutions. He's not stupid, he's clearly a better person for the job than most of the people here on HN.
That certainly isn't a good outcome for Coinbase, though, so I can see why the crypto companies wish the SEC had a different suggestion.
Commodities aren't Gensler's job. It would be like someone asking him about the tax code. It's fair for him to say "I don't know." What he knows are securities.
Regardless of how you feel about crypto, if you're at all familiar with law you'd understand that we're simply in uncharted territory here; saying that crypto is super dirty and non-compliant is quite literally as inaccurate as saying that it's super clean and fully in-line. The law simply isn't there yet.
Crypto doesn't have an inherent right to have the laws rewritten to enable it, it needs to make the case for why that would be good for the public. So far it hasn't.
Nearly every white collar crime fundamentally involves some sort of unauthorized communication. (Insider trading, for example, involves receiving information by virtue of a trusted position and then communication information to a broker which causes them to execute trades on your behalf). We can even get beyond white collar: hiring a hitman is obviously illegal even if it involves. communication.
I'm not saying (in this comment) crypto is necessarily bad. I am saying you need to defend it on the merits; it's just info so it's ok isn't how anything in society works.
You don't get to summarily declare crypto verboten and make crypto prove it's okay -- the burden is on crypto's detractors to show specifically why it's bad.
(You can pick which word)
Working-class folks sending money to their families abroad without predatory middlemen like Western Union, on the other hand, is a valid use case. So is making/accepting payments without being subject to credit card processors playing morality police (or payment handlers like Paypal outright confiscating money from individuals/businesses they don't like).
Sorry, your bullshit "but muh African finance!" would have probably worked for less world-aware folks. But not today.
I hope you really are a person deluded by crypto pumper propaganda rather than an intentionally evil pump-and-dumper, and in that case, please take the above anecdote as a real counterpoint to the hopium you've been fed by other pumpers.
Yes.
> And using Wise has been _so much_ easier (5 minutes and money goes from your bank account to their mobile banking account) than figuring out binance's bullshit, and finding a buyer at the other end for the sent cryptocurrency, especially after the "leveraged trading" aka gambling market imploded.
And yet plenty of people figure it out nonetheless. Maybe they're better able to grasp the technology? Or perhaps simply more motivated to do so?
> Sorry, your bullshit "but muh African finance!" would have probably worked for less world-aware folks.
Sorry, your bullshit "but muh pump-and-dumpers" would have probably worked for less socioeconomically-aware folks.
I hope you really are a person deluded by the legacy financial system's propaganda rather than an intentionally evil beneficiary of said legacy financial system, and in that case, please recognize that anecdotes do not meaningfully refute even so much as others' anecdotes, let alone actual facts.
Gensler doesn't get to wave his hand and eliminate crypto. But he does get to bring lawsuits against crypto companies alleging they violate existing law. He will have the burden of proof in those lawsuits. If he wins them he may be able to effectively eliminate crypto through application of existing law.
Edit: I realize "you have to defend it on the merits" was poorly phrased. What I meant was that I predict judges will find crypto against existing law. So if you want it to be allowed you'll need to argue for new laws. But it was a very bad way to put it.
I'm not saying this as particularly pro OR anti, but feels like there's a lot of heads in the sand on the fact that some of this stuff provably works VERY WELL, and its especially odd that even tech folks (who would be expected to understand it) appear to be so "luddite" on it.
Have you considered the alternative hypothesis that these smart people are actually understanding the true nature of crypto very well, and you are stuck in a confirmation bias loop?
Whether the "tech" works is very different question than the social effect of it. A biochemist can be awed by the effectiveness of fentanyl while also maintaining that the average person should never be getting their hands on it.
To me, tech's war on crypto feels more like "the War on Drugs." It's fine to be against, but it's the extreme lack of interest in discussing detail (which if you were anti you'd need to get into to stop it) and they don't do that.
Let's say you wanted to attack crypto on principle? Great. First you'd need to ID and figure out their weak points. Bitcoin kills the environment so you attack there. Now, others don't - but a lot of the post ETH coins are centralized with a small number of founders, so you can get them there. Now, ETH is going to be harder because they've done a better job on decentralization...
ETC.
That little paragraph above is orders of magnitude more detailed than any actual attack I've seen. Which again- SUPER WEIRD for tech folks!
Same reason why you don't see people arguing about the technical details of the slot machine in gambling regulation. However innovative the mechanism is, the ill is social and that's how it should be regulated. Or similarly, the regulation around alcohol are centered around limiting the social ills (like drunk drivers plowing into unsuspecting people). I am perfectly happy with crypto getting a similar regulation, with Coinbase getting similar terms, disclosure requirements, and responsibilities as the sports betting sites. What I am not ok with is Coinbase shilling tokens as "finance of the future" when it's really just the dumping ground of the latest of Anderssen Horowitzs' scam coins.
My strong belief is that SOMEONE is absolutely going to be using this stuff. It's going to be a thing, a big and very influential thing. Might as well get ahead of it and understand it and possibly use it for good?
And the "sophisticated" part is important. This is where Gensler failed hard. You have to make the case.
https://cs.stanford.edu/people/eroberts/cs181/projects/2010-...
That's how unregistered securities work, right? I am allowed to buy half of your small business, even though it isn't registered with the SEC. That doesn't mean you're allowed to sell stock in your small business and advertise that on the internet.
You don't get to declare something is bad first without reasoning your way through it through a tested system like law. That's more or less anti Constitutional / American etc.
For example, suppose a drug cartel invents a new formula. The DEA gets to ban it under existing law.
I'm not saying that's analogous. I'm merely providing a counterexample for your idea that the government always has to create custom laws whenever something new happens.
The cartels exist in the first place specifically because the DEA exists and keeps knee-jerk banning things without bothering to demonstrate actual harm.
If you carve a dollar sign into a Banana, commit fraud and embezzle billions of dollars, the problem wasn't the lack of Banana law.
That's where Gensler failed. He may not be wrong, but he needs to show his work.
Ethereum voluntarily changed its definition since the last time SEC gave it "not a security" status.
> That's where Gensler failed. He may not be wrong, but he needs to show his work.
I am sure he would be very happy to show his work to the court. Thus the Wells notice to Coinbase and the lawsuit against Bittrex. He is just not required to show his homework to Coinbase, much to the dismay of crypto shillers.
We're not. Gensler certainly doesn't think so. With a few exceptions, the overwhelming majority of crypto are securities. In most instances, they are indistinguishable from equity.
Just because some people believe in the promise of blockchain technologies doesn't change the nature of the things that you ultimately store on said chains.
He doesn't "get to say" whether things are securities either. He can claim they're securities but he has to prove cases in court, which isn't turning out to be that easy even for XRP.
Ultimately, Congress decides the rules, and not everyone in Congress thinks the SEC is doing a good job here.
Again, "Crypto is securities" is an interesting proposition, but there are legal tests and crypto doesn't always "pass" all of them. I'm not saying he's definitely wrong, I am saying that there's not enough "homework" out there to prove he's right and he (et al) need to do better about putting up or shutting up.
Gensler doesn't need to prove _all_ crypto is definitely 100% unregistered security, just that some of the ones sold by Coinbase is. How certain are you in the claim that none of the cryptocurrencies peddled by Coinbase is not legally a security?
Gensler makes the rules, and the courts will adjudicate any challenges.
There's no homework to be done: most crypto doesn't pass the Howey test.
2. Even if the SEC were to issue guidance that a certain type of crypto operation is exempt from regulation, instead of proceeding on a case-by-case basis, it lacks the resources to carry out the requisite enforcement against all the crypto operations that are not exempt. From what I have read and heard, the likely reason why Genseler will not go after Bitcoin is because he believes the SEC lacks the resources. BTC has too much of a foothold.
IMO, Genseler's SEC is taking on the amount of enforcement it believes it can successfully manage, maybe more. Time will tell. IMO, just because some crypto operations manage to evade SEC enforcement does not mean crypto is a legal grey area. It means the SEC has a limited enforcement budget and is pursuing actions that it believes have the best chances of success.
There is an extraordinary amount of fraud on the internet. One can argue that lack of enforcement against crypto operations is because "the law has not caught up", but perhaps the more likely explanation is that the authorities have not caught up.
I’d have expected enforcement to practically print money due to fines. (That one of the deliberate design aspects of fines would be that they would cover all the agency’s investigations, successful and unsuccessful.) Is this not the case?
According to this, fines are not allocated to the Commission to finance further enforcement activity except that funding awards to whistleblowers might lead to more enforcement actions. Keyword: might
https://www.marketplace.org/2022/08/12/where-does-money-coll...
"What Does the SEC Do With Money It Collects From Fines?
This will depend on the nature of the penalty. If investors or others were harmed financially due to a transgression, the penalties collected will be used to recover those losses and make those investors whole. Until the passage of the Sarbanes-Oxley Act of 2002, all penalties the SEC obtained were paid to the United States Treasury.
Section 308 of the Sarbanes-Oxley Act, the so-called "Fair Funds provision," permits the SEC to request that certain penalties be added to any disgorgement fund established as part of an SEC enforcement action to return money to shareholders, investors, whistleblowers, or other victims of the defendant's securities law violations."
https://www.investopedia.com/ask/answers/05/secfines.asp
HN commenters seem to pay particular attention to Matt Levine's ramblings. Here he is dispelling the myth:
"It is not literally the case that the US Securities and Exchange Commission is a for-profit business whose goal is to maximize its revenue, and whose most important source of revenue is fining financial services companies for their misdeeds. But that is sometimes a tempting way to think about things."
https://www.bloomberg.com/opinion/articles/2023-02-02/the-se...
From what you've read and heard from whom? Please be specific.
https://www.coindesk.com/layer2/2022/06/28/secs-gensler-reit...
It's not a commodity either.
It's money.
You may not agree with that and you may not like Bitcoin, but that doesn't change what it is.
--- start quite ---
an instrument qualifies as an "investment contract" for the purposes of the Securities Act: "a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party."
--- end quote ---
Bitcoin doesn't match that definition though. Who or what entity is the 'promoter' or 'third party' for Bitcoin? There's no registered entity, no (legitimate) foundation, no company, no CEO, no board, no chair. It's just a protocol.
And now you'd need an electron microscope to find its use cases as money.
https://btcmap.org/map#3/0.00000/0.00000
Maybe try opening them?