Why is it so difficult to just recognise crypto currencies as it's own new asset class?
If you open that can of worms I think the question will very quickly be whether such an asset class should just be outright banned.
To me it’s still an open question if cryptocurrencies are inherently a (distributed) scam. At least the ones based on proof-of-work.
Both cash and securities are regulated in a way that ties them to the creation or storage of (real-world) value. Proof-of-work cryptocurrencies ties both the creation and trade of the asset with destruction of value (energy). Which inherently makes them toxic. Regulating cryptocurrencies to become non-toxic might make them de-facto illegal.
Did we go back to the gold standard during the writing of this comment? Last time I checked there wasn't any backing of fabricating new dollars except for the sheer trust in the US government.
This is not a problem when the promises of a nation state only need to last as long as the nation state itself.
I’m not sure how that’s useful. The capability to produce goods and services seems a whole lot more real to me in terms of value than gold (the value of which would collapse anyway if modern economy did).
In theory can have currencies directly backed by oil, wheat or copper if you don’t want fiat for some reason. Would still be more ”real” than gold.
> only need to last as long as the nation state itself.
1$ from the 50s is not worth much in the 80s and even less today. Seems like that should be a much bigger concern than the longevity of the state itself.
That is to some degree what USD is ("Petrodollars"):
https://www.investopedia.com/articles/forex/072915/how-petro...
Wow that’s compelling.
> except for the sheer trust in the US government
Oh, you mean “except for” the single most powerful entity on planet earth
Most cryptocurrencies are just token offering schemes that meet those criteria, a few like Bitcoin can make the case they're not securities. the crypto 'industry' wants a new asset class to avoid scrutiny, don't see much reason to give them one.
https://policy.paradigm.xyz/writing/secs-path-to-registratio...
>"Paragon Coin Inc. (“Paragon”) was a Delaware company that raised $12 million from their 2017 ICO of “PRG Tokens” as part of a scheme to integrate blockchain technology to the cannabis industry."
The "PRG Token" is just a share in the company. This is a security you should only be able to buy on a registered exchange. The business obviously failed because blockchain in the cannabis industry is utterly useless, the company went broke, and the actual plan off selling their worthless tokens on a random internet platform didn't work out. So the SEC literally just did its job.
None of the companies mentioned on that site has anything resembling an actual business model, the point is merely to defraud public investors on opaque exchanges. In every single case the SEC almost certainly prevented harm being done to the public. This article makes an excellent case for maintaining the status quo.
The problem is that securities trading is regulated, and the coin base model of playing multiple roles itself is illegal
If we are to look at the postulates of the Howey test it would probably pass them. I don't see them Trying to force record labels to register with the SEC.
Large record labels do of course have stock in their companies which is a security and is traded.
There is actually alot of need. The propositions that Crypto caters for would become worthless if we applied securities laws to them.
Crypto is a dead ringer for 1920s securities fraud. Whether it's a new asset class is irrelevant. It's plagued with the same problems as unregulated securities shilling, which means they will share a common solution.
There is no such thing as a free lunch/currency/...
Human society is hierarchical because otherwise we have chaos. Or worse, completely self-appointed, unaccountable hierarchies.
Human society abhors vacuum.
“Doing X on a slow distributed database” is not a get-out-of-jail ticket if X happens to be already illegal or heavily regulated.
The only technical innovation of cryptocurrencies is that you can now create a new unregistered penny stock at the press of a button and spam the regulators with violations. There's ~7000 equity stocks (you know, just stocks) in the US and there's somewhere >1,000,000 defi tokens.
This did not in fact achieve regulatory escape velocity.