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Comment by benjaminwootton | Hacker News Reader

I don't think I would dare take an executive level role with any Crypto firm. Even if the companies behaviour was exemplary, I wouldn't want to be in a business with such a lack of regulatory clarity whilst having potential criminal and civil liability.

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"lack of regulatory clarity".

There is regulatory clarity now, just not the kind they want. They are no different from other financial institutions, and have to abide with all the same rules. They can't market unregistered securities to retail investors. That it is difficult to comply with because of the distributed nature is irrelevant.

CFTC considers most crypto to be a commodity not a security. The SEC previously agreed with them on a large number of different cryptos, then changed their mind without warning.

What would you call it when regulators can't agree with each other and are prone to sudden major shifts in thinking, if not a lack of regulatory clarity?

Upcoming court cases. The lawyers for the exchanges will have to argue for their interpretation of why it's not securities and the SEC will have to argue why the believe it is. The courts will decide based on the facts. If the courts find they're not securities, then CFTC rules will apply.

The regulatory agencies aren't there to help you find a way to do business legally, that's a job for your lawyers. If there is not established case law, then you're risking very expensive trials.

Firstly the CFTC calls things a commodity to reserve the right to regulate those things. If the SEC also claims jurisdiction that doesn’t actually make the regulation more lax, it means to stay on the right side of the regulation you have to satisfy both regulators.

Normal financial firms trading normal financial products deal with this all the time and are very familiar with jurisdictional disputes between their regulators. For example every US bank is more than familiar with keeping the OCC and their state Fed happy. This is BAU in US bank regulation.

The holding of the student loan case suggests those agencies have no authority to regulate crypto.

Is Ethereum a security or a commodity?

The point here is regulators don’t have to get the court to rule on that to get whatever outcome they want with any one of these exchanges so they probably will go out of their way to avoid pressing that.

Their strategy seems to be to go after smaller fish, governance tokens, ICO tokens etc: things which the exchanges have clearly marketed as investments. Since all the exchanges have traded some of these they don’t have to press the matter about Eth and bitcoin so they don’t run the risk of losing that.

It looks and acts like a commodity but the SEC desperately wants to call it a security. The facts won't matter much here as this is a political issue engulfed in the SEC's regulatory land grab.

https://www.wsj.com/articles/gary-genslers-bitcoin-land-grab...

That's not established by the courts.

I too would probably avoid working with an organization trying to finesse with regulating authorities in order to do what every other firm regulated by these authorities is prohibited from doing.

Even if you successfully finesse your way around regulatory constraints, the reason for these constraints emerges eventually [1].

[1]: https://en.wikipedia.org/wiki/Enron_scandal#Mark-to-market_a...

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