"Everything is Securities Fraud" - Matt Levine
If a listed firm does something bad (anything, really), but doesn't immediately disclose it (as is usually the case), it can then be sued later - not directly for doing the bad thing, but indirectly for not having disclosed it (that being the securities fraud).
The idea that crypto assets aren't "securities" and thus not subject to SEC regulation is, and always has been, laughable. Virtually everyone trading these things is doing so to engage in arbitrage of fungible assets to make money. I mean, come on.
Commodities are consumable goods that get transformed through usage in industrial or commercial processes. Gold and silver can be transformed into jewelry. Securities, on the other hand, grant holders the right to periodic benefits like dividends, coupons, principal repayments and potential profit shares.
How are you consuming crypto? What commercial or industrial process are being used?
> How are you consuming crypto? What commercial or industrial process are being used?
What rights does holding bitcoin confer to the holder? I get no dividends, coupons, principle repayments or potential profit shares.
We’ve nicely entered why this argument still rages on. It doesn’t fit cleanly into either definition.
> Bitcoin is considered a commodity and is the underlying asset in bitcoin futures contracts… Bitcoin futures contracts — like other commodity futures contracts such as corn futures, market index futures, or gold futures — are regulated by the CFTC and must trade on CFTC-regulated exchanges.
https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/B...
Today, you can spin up your own shit coin with basically a few clicks.
It's the fact that there's an overwhelming number of exchanges that willingly accept crypto from other exchanges coupled with the fact that anyone can mine/produce crypto. The moment that there were two places to get BTC that accept BTC from each other in exchange for money, it was a commodity.
> In economics, a commodity is an economic good, usually a resource, that specifically has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.
I am pretty sure you can get BTC from any exchange and sell it on any other exchange. Whereas, with stocks, you generally cannot as a retail investor.
That is, I suppose, what makes crypto a commodity at its core.
Yeah, I'm gonna say no to that. I don't have numbers but if total trading volume on commodities is anything more than a tiny fraction of stock/derivatives trading on any given day I eat my proverbial hat.
Regardless, "The CFTC needs to sue us, not the SEC" isn't the argument being made by Robinhood either.
It does matter, because they aren't doing anything wrong if these crypto assets are considered commodities and not securities.
Also, just because a government agency is suing you, that doesn't mean it has any legal or moral imperative. I don't see your point.
"The Commodity Futures Trading Commission is an independent U.S. government agency that regulates the U.S. derivatives markets, including futures, options, and swaps."
Also from their official website: 20 quadrillion per week in settled trades. Too lazy to look up the equities numbers, but I would bet everything I own it's lower.
Also from the CFTC's website:
"Bitcoin is considered a commodity and is the underlying asset in bitcoin futures contracts… Bitcoin futures contracts — like other commodity futures contracts such as corn futures, market index futures, or gold futures — are regulated by the CFTC and must trade on CFTC-regulated exchanges."
SEC and CFTC are both claiming jurisdiction over Bitcoin.
Most issuers try very hard to keep their instrument in one bucket to avoid the kind of issues that cryptocurrencies are dealing with.
My point stands: OP claimed that most trading volume happens in securities and it simply does not. I highly doubt securities amount to more than the $20 quadrillion settled in the CFTC's realm last week.
I'm not claiming the jurisdictions of the CFTC and SEC are mutually exclusive. My point stands.
Except, ya know.. the courts.