Coinbase tells judge that buying crypto is just like collecting Beanie Babies | Hacker News Reader

Coinbase tells judge that buying crypto is just like collecting Beanie Babies

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24 pointsrmason36 comments

This article has an uncharitable framing that confuses the issue. Coinbase is arguing that the definition the SEC proposes is so broad as to define many collectibles as securities as well as crypto. This is obviously not intended and so in their opinion points out a flaw in the proposed regulation.

Honestly pretty decent arguments all around:

> Coinbase lawyer William Savitt said that when a cryptocurrency is bought, the buyer doesn't gain any rights like they do when they buy stocks or bonds.

> "It's the difference between buying Beanie Babies Inc. and buying Beanie Babies," Savitt argued.

> ...

> The SEC argued that unlike collectibles, when a crypto token is purchased, the owner is invested in the network or enterprise behind the token.

> "When they buy this token, they are investing into the network behind it. One cannot be separated from the other," SEC lawyer Patrick Costello said.

It doesn't look like the article specifies what "this token" is but either statement could be true, depending. If one buys Ethereum, they actually do want to see the network being used, not so much with most EC-20 tokens.

If being "invested" in something qualifies it as being a security then buying beanie babies makes you an investor, but maybe only if you "want beanie baby values to go up?"

If I buy a macbook I'm "invested" in the fact that they will send out software updates. Am I a securities holder now because I bought a laptop?

The "network" argument is true for collectibles as well. There is a human network of people interested in collectibles. Putting it on a computer is not a material difference.

Yeah I was concerned at first until this

> It's the difference between buying Beanie Babies Inc. and buying Beanie Babies

I don't think it's uncharitiable, and it was in response to a lawsuit, not regulation. It points out exactly what you said with the quote from the judge.

That's a solid analogy. I would argue the same is true of any currency. Buying Euros gives me no ownership of Europe, unfortunately, and the only way I can profit from doing so is if someone is willing to buy those Euros from me for more than I paid. All of which is true also of Bitcoin and Beanie Babies.

"The SEC argued that unlike collectibles, when a crypto token is purchased, the owner is invested in the network or enterprise behind the token."

Same when I buy Euros, I'm invested in the health of the Eurozone economy. The federal government's definition of security specifically excludes currency. It DOES however include derivitaves of currencies, so if Coinbase sold unlicensed Bitcoin puts (which may be the case, I really do not know) then I think there might be a solid argument that they were selling unlicensed securities.

I'm by no means a crypto fanboy, and I think it'll never be anything more than a ponzi scheme, but to call it a security is ridiculous unless you call other currencies such too.

At least beanie babies are real, crypto isn't real at all.

After 15 years of Bitcoin, nothing of any legitimate value has been made from it.

Drug cartels might disagree with the 'nothing of value' statement

And ransomware deployers!

Turns out things are usually better, easier, and cheaper, overall, if you can trust your peers. You only need stuff like Bitcoin if you have to operate entirely in a very low-trust environment, and for some reason don't have access to better ways to raise the trust level.

If you're working with lots of money and can't rope in one or more trusted peers (a bank, say) to smooth things out, with that trust backed up by a robust & proven legal framework... uh, that sure narrows down the general type of activity you're likely engaged in.

> need stuff like Bitcoin if you have to operate entirely in a very low-trust environment

Which is what we are in. The governments can’t be trusted they have proved that over and over.

The big mystery is why so many collectivists and statists get so worked up and angry with the success of Bitcoin! Not why Bitcoin is working as intended.

That's the problem - the banks are robbing us all, you just don't realise. Look up M2 USD and find a chart over the last 50 years.

Distributed ledgers at scale have no value? I have a hard time believing that.

Bitcoin is an application which is backed by a digital ledger. They didn't say blockchain is not valuable, just that Bitcoin is not a valuable application of blockchain. (Not trying to agree or disagree on the point, just clarifying.)

That is correct.

It's just a regular database you need.

Using overhyped fancy technology like blockchains, DLTs doesn't solve anything legitimately useful.

But if there is a 'usecase' it is only of the worst and illegitimate kind, ransomware payments, speculation, ponzi / pyramid schemes, etc.

> legitimately

You keep using that word. I do not think it means what you think it means.

If you use a regular database for money, then some people can go in and change the digits massively in their favour without doing any work, just as we can see happening with fiat currencies.

I think you meant decentralized. Also, it's questionable BTC etc are really scalable.

"Distributed" means decentralized in this context.

Crypto helped me a lot to store and transfer money in some situations, like moving to another country or being unbanked for reasons beyond my control.

If you're following the law, western union could do that for you except more reliably and cheaper.

I suspect that is completely false at this point but somebody else hopefully can provide some evidence.

Not only is Western Union significantly less reliable and significantly more expensive, as someone who gets paid in crypto the most expensive and painful parts of my finances are those that touch the traditional banking system at all.

> significantly less reliable and significantly more expensive

Going to need a citation on those two claims. You can lookup fees for both, right now BTC fees are about one USD more than a WU transfer. WU is subject to banking laws and if you're going to claim it's "unreliable", you're going to need to provide some evidence of that. It's literally their business, and a heavily regulated one at that.

See my other comment. You seem misinformed to me.

Or you could provide some counter evidence. At the time of this writing, sending $100 to Algeria (it was on top of the list) via WU is a flat $8 fee. Currently BTC transaction fees today are $9.94. So yes, it is literally cheaper and you don't have to guess about the numbers.

BTC transaction fees are greater than WU, it takes longer, and of course you need to deal with BTC. At the US side you're still beholden to all the AML and KYC issues that you'd need to deal with anyway, again unless you are doing it illegally.

Show me the "unbanked" who can use BTC but somehow cannot walk up to a WU stand with cash in hand. It's a preposterous argument.

https://www.westernunion.com/us/en/web/user/price-estimator

I just used this for $3000 to Algeria and I get $14.99 plus an absurdly bad exchange rate of 120 DZD where the bank rate is 134, so basically another 10.5% fee, which means $300 lost.

Frankly I think you have no clue what you are talking about if you somehow believe Western Union is superior in functionality and utility to Bitcoin.

Bitcoin transaction fee is currently equivalent to $7.60 and that is a flat fixed fee for any amount, even $1M worth.

Additionally there are multiple Bitcoin exchanges operating in Algeria, https://www.bitrawr.com/algeria and you won’t lose anything in exchange rates in local currency transactions.

Ever heard of getting debanked? Or being a refugee? Plenty of legal fund raising campaigns came to political ends. Forced conscription is going on in Ukraine and I've personally met someone who's only assets they could leave with was crypto because it wasn't in a bank.

Careful with that FUD! You're going to piss of the believers!

Feels real. And the Vision Pro I’m going to buy using crypto proceeds also feels real too.

On the flipside, crypto value is real whereas beanie baby value wasn't "real"

I don't have a dog in this fight but it's an easy argument on either side.

It’s so strange how I just bought groceries for my family with Paypal debit card instantly funded with this imaginary crypto! Definitely not real … keep telling yourself the emperor has clothes!

'Legitimate' is a weasel word, as you use it. "No true Scottsman" and the like.

Crypto is exactly as real as cash. Both crypto and cash have value because people think they have value.

That's it.

And please don't reply "you need to pay taxes with it", if an economically failed state uses a currency that no one wants, it doesn't have value even if the state requires it for taxes.

And this is true for everything. Things have value because people value them. Even food. A steak has no value if no one wants to eat it.

> Crypto is exactly as real as cash. Both crypto and cash have value because people think they have value.

Except crypto doesn't have value at all as it's being manipulated and wash traded on exchanges, especially when Tether is printing constantly and pumping up the price of Bitcoin.

Crypto is essentially all based on a pyramid scheme at best and a ponzi scheme at worst.

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