It feels like your reaction is akin to a group of 5 cars speeding back to back, and the cop picks off the first guy to get a speeding ticket. They're all speeding. It's illegal for everyone. Enforcement resources are limited and they choose one to make an example of. If the others keep speeding they'll get caught afterwards too. Is it unfair the cop grabs the first guy? In a sense. But also so long as it slows everyone down; mission accomplished.
Your analogy isn't very good. Offering a long-term financial product isn't like a one-off instance of speeding where it only last a few minutes. It's more like group A getting ticketed every day for speeding while going with the flow of traffic, and group B never gets ticketed for doing the exact same thing, and, oh, group B makes more donations to the police.
Your reaction is akin to someone who sees that going on, and says it's okay because police don't catch every speeder. "As long there aren't accidents: mission accomplished."
Believe me, I get the concept of not catching everyone. Letting a financial product persist for one company but not another isn't that!
And:
>The SEC didn't say that everyone else could do it.
Yeah ... they did. By not prosecuting the others who have already started doing it, and been doing longer, or clarifying what's different, or at least saying "oh don't worry, they're going down too".
If I'm wrong here, it's for reasons other than not understanding the concept of not catching every violation.
I'm sorry - they know what it is. Any lawyer will tell you exactly what it is. It's the Howey test, it's been the law of the land for 70 years and the SEC issued guidance on how it applies to digital assets. [1] Literally the first page of the Securities Act of 1933 explains that lending products are securities.
Brian is feigning ignorance on twitter while acting indignant that someone told him no. His lawyers told him no. The SEC told him no. He said I'm gonna do it anyways. They said see you in court. He follows up with a late-night twitter rant, roughly "how could the SEC do this? how could a lending product possibly be a security?!"
[edit] The man literally owns an SEC registered broker-dealer lol.
[edit] Even Preston Byrne from Anderson Kill tweeted today that it was obviously a security. That's the most libertarian cypto-sympathizer attorney on the face of the earth.
> Your reaction is akin to someone who sees that going on, and says it's okay because police don't catch every speeder. "As long there aren't accidents: mission accomplished."
Regulators don't act day 1, legal proceedings take time. You're saying "because they took the usual amount of time everyone should be allowed to do whatever they want - or they should sue them all, all at the same time." Nope. That's not how this game works.
They can't stop everyone at the same time, and they can't jump them on day 1. They're not omnipotent, and they certainly don't have unlimited resources.
What Brian wants isn't to work with regulators, its for regulators to let him do whatever he wants on his terms and on his schedule. That's not the same thing.
Did you miss where I said the issue is that they're being treated differently? I spent at least two paragraphs on the concept. Even if it's "obviously" a security by the Howey test, that doesn't explain why others get a free pass, or why they can't confirm that's their reasoning, or why others aren't being treated the same, or a why they can't confirm they intend to treat others the same.
Repeating the same argument doesn't advance the conversation!
See also this comment: https://news.ycombinator.com/item?id=28459949
>Regulators don't act day 1, legal proceedings take time.
Again, I understand this concept, it's just a red herring. they're on day 180 with Gemini and day -30 with Coinbase. Saying it takes time is just an easy soundbite for you to parrot, not an actual explanation for the discrepancy, just like "we can't catch all speeders" isn't an explanation for the patterns in which you let speeders go.
>[edit] Even Preston Byrne from Anderson Kill tweeted today that it was obviously a security lol. That's the most libertarian cypto-sympathizer attorney on the face of the earth.
Which of my arguments is that relevant to?
1. Coinbase Lend is clearly a security.
2. ...because it fails the Howey test.
3. ...for reasons that are clear and self-evident.
4. ...and Coinbase, as a registered broker-dealer would know or be expected to know that in advance.
[note: for 1-4 see Anderson Kill]
5. There's a few people offering similar products.
6. They're all doing crime.
Here's where we seem to disagree.
1. Coinbase should be told by the SEC exactly why it fails the Howey test. No. It clearly fails, and the SEC isn't required to provide their opinion of why outside the court of law. It is up to the SEC and Coinbase to present their arguments to a judge. The resolution will form precedent.
2. Coinbase is being treated differently in some way, and that's bad. The first person charged for anything is obviously being treated differently, until the others are charged. That's not bad, that's bad luck. See the speeding cars anaology.
3. The first person to commit a crime has some obligation to be charged first. No, they don't. Usually police and regulators go after who they have the strongest case against in no particular order. The resolution gives them a weapon they can use against those they have a weaker case against.
4. All criminals committing the same crime should be charged together or at the same time. No, there's no expectation of that, or precedent of that. In fact its usually easier when the cases are separate.
5. This is taking a long time because some other offerings have been on the market for 6 months. The SEC just went after Bitconnect. That was in 2016. The wheels of justice turn slow.
You'll have a point if after Coinbase is convicted the SEC leaves everyone else alone. Until then its safe to assume they're being made an example of, and with that example the SEC is going to come by and knock some heads together.
No, not a point of agreement -- if the SEC is silently accepting a new exception to Howey based on market realities, then what Coinbase is doing isn't a crime. We don't know until they go on record saying what their opinion is. That happens all the time in regulation: they realize, long after the fact that something is technically violating the rules but just grandfather it in since it's become so ubiquitous and issue new clarification. But it helps to know what the case actually is!
That's the problem with stonewalling: You don't know what the other side actually objects to!
You seem to be in some kind of mentality where equality before the law doesn't matter, and if some people are persistently let of off the hook "that's just life, man". No ... that's not how rule of law or ex-3rd world regulation works. Haphazard enforcement isn't just a "fact of life", it actively disrupts the functioning of markets, and you don't look clever with the sage "it is what it is" attitude.
>Coinbase is being treated differently in some way, and that's bad. The first person charged for anything is obviously being treated differently, until the others are charged. That's not bad, that's bad luck.
Wait, really? You're saying that turning a blind eye to persistent violation is "just" "bad luck"?
Okay I just wish you had initially been clearer about your premise of rejecting equality under the law. Then again, that would have made your position more obviously wrong, and your arguments seem less clever, so I can see the tendency to avoid that!
It's probably similar to the reason why you make huge edits to your post long after the fact without noting them.
That's not what they're doing, and yes it is a crime lol. It would work just as well with murder, but you're choosing to look the other way because it's white collar.
> That's the problem with stonewalling: You don't know what the other side actually objects to!
No, that's why I re-stated my assumptions, including any potentially hidden ones, so that you could follow up and respond individually and explain where the gap is. This is a useful tool to resolve conflicts.
> Wait, really? You're saying that turning a blind eye to persistent violation is "just" "bad luck"?
No, I'm saying the wheels of justice turn slow and this shit takes time [edit] and regulators literally have to start somewhere because they have limited resources. So long as it happens within the statute of limitations its explicitly in play.
> Okay I just wish you had initially been clearer about your premise of rejecting equality under the law.
You're obviously either misreading my point or not interested in understanding. You pick one. Get a judgement. Apply that judgement. This is equal treatment.
> It's probably similar to the reason why you make huge edits to your post long after the fact without noting them.
No, I limit my edits to the first two to three minutes after I write a comment, to before anyone can reply. If someone can reply I annotate my edits. This is my workflow.
[edit] My point is it's way too soon to know if you're right or I'm right, we must wait and see a year from now, or two years from now. 180 days is nothing.
The whole point of asking the SEC is to know where they fall, since it's unclear whether they've silently accepted stuff like Gemini, or whether there's a substantively different or whether they will prosecute. Assuming that it's a crime is assuming away the core point of contention!
>>That's the problem with stonewalling: You don't know what the other side actually objects to!
>No, that's why I re-stated my assumptions, including any potentially hidden ones,
I was referring to the SEC's stonewalling there, not your tactics (though they're similarly unproductive).
>No, I'm saying the wheels of justice turn slow and this shit takes time [edit] and regulators literally have to start somewhere because they have limited resources. So long as it happens within the statute of limitations its explicitly in play.
Yes, I heard you say that, and I get that you don't see the similarity; the point was that these are substantively the same thing in that they persistently introduce an unevenness in the playing field; the fact that you can ignore that dynamic doesn't mean it's not a flaw your position or that you aren't effectively endorsing such inequality before the law.
>You're obviously either misreading my point or not interested in understanding. You pick one. Get a judgement. Apply that judgement. This is equal treatment.
And then, learn how judgment is spelled if you're going to use it so often and use confidence and intimidation as a substitute for substantiating your position.
>No, I limit my edits to the first two to three minutes after I write a comment, to before anyone can reply. If someone can reply I annotate my edits. This is my workflow.
No, I saw your comment more than 3 minutes after posting and it had significant un-noted edits, and now you're just mocking me by flooding your comment with [edit].
>My point is it's way too soon to know if you're right or I'm right, we must wait and see a year from now, or two years from now. 180 days is nothing.
No, you've definitely phrased your comments with significantly more (unjustified) confidence than that. See "yes it is a crime lol".
My dude I took your feedback lmao, if you can't assume good faith here this conversations over.
Suing Coinbase first -> "beginning their enforcement actions at Coinbase"
Which exactly fantom argument is 'the first page of the Securities Act of 1933'?
Do I know for a fact they're going to go after everyone else? No, I don't work there, time will tell.
Coinbase may not have known the SEC's opinion on this before they started talking to the SEC since it seemed like the SEC was ok with it happening elsewhere.
I dunno, seems like an obvious interpretation but I could be totally missing it. I could care f.all about the SEC and blockchain coin stuff.
The wheels of justice turn slow but they generally don't stop when they get to ya just because there's a big line of folks behind ya.
Unless either the statute has expired or the SEC issues a written determination that you're in the clear you're not in the clear. And neither is anyone else doing the same thing.
Or you know the SEC is allowed to announce /why/ they are prosecuting. And why they are prosecuting a particular alleged transgressor first as opposed to some other having not done so until now. Seems like a reasonable thing to do to me?
Generally ".. a written determination you're in the clear" is the opposite to how law is kind of meant to work. I haven't got a written determination that I'm not infringing basically any law that I'm aware of and I do _NOT_ expect to be prosecuted for anything either. I genuinely don't understand all the laws I'm subject to in making money to put food on the table, nobody does. I do know that I'm doing things other people do and nobody is getting prosecuted for it. I have other heuristics that I use for this. And so do you, I'm guessing. The great thing is if I get prosecuted I can hire a lawyer and they don't know for sure either and will hedge every statement they make as a part of legal advice about everything while disagreeing with every other lawyer. It's an issue. I don't have a solution for it.
They are, but they don't have to since the law is spelled out.
> And why they are prosecuting a particular alleged transgressor first as opposed to some other having not done so until now.
Gotta start somewhere, and the fact someone else is breaking the law isn't a defense. If it was any two people doing the same crime couldn't ever be charged right? haha.
> I haven't got a written determination that I'm not infringing basically any law that I'm aware of and I do _NOT_ expect to be prosecuted for anything either.
Totally, but the Howey test has been the law of the land for what 70 years? It's prettttty obvious that this is in fact a security. The SEC agrees. Coinbase does not. Ergo, it's up to the judge to decide. This is about as black and white as the rule of law thing gets.
https://corpgov.law.harvard.edu/2019/11/21/regulation-by-sel...
It shouldn’t be a surprise to anyone in this space.
The only other companies that will be able to offer something like that will be mega corps like the big banks, PayPal, etc. If they need to also buy large amounts of Bitcoin as collateral, that’s a win-win for their entire industry (price goes way up).
The name of the game is not user adoption. The name of the game is pump the price, because that’s marketing on its own.
BlockFi's lending product has already been banned by several state regulatory agencies, but if they've been sued or warned by the SEC, I dont think thats been made public.
But when you go public you enter into a whole new level of scrutiny, because regulating public markets is why the SEC even exists.
Kraken offers staking services [3], which are technically not "lending", but are staking rewards gained from staking assets in proof of stake protocols such as Ethereum 2.0, Polkadot, Kusama, Cosmos, Cardano, Solana, etc. These staking rewards could also be earned directly from the protocols, if users wanted to stake via their own hardware, but Kraken takes a fee in this case due to reducing the hassle for users to need to do this themselves (and some proof of stake protocols have slashing which means users would lose the coins they have staked if their hardware goes down or their connection is interrupted), so there is some reduction of risk as well for the user in that case. However, this also means the staking power is more centralized at the exchange level, which is a downside, but that is a different part of the discussion.
FWIW, Coinbase has staking services as well [4], but Coinbase Lend, which hadn't even launched yet, was going to be something different. It looks like Coinbase was going to achieve that 4% interest on USDC in Lend via Compound [5] (which is a DeFi protocol they actually helped launch a few years ago [6]). Assets can already be lent directly to Compound via users, without Coinbase as an intermediary.
Anyway, my point in bringing this up is there is difference between lending assets and staking assets, and actually both lending and staking can be done directly by users, without any of these exchanges as intermediaries.
[1] https://www.gemini.com/earn
[2] https://www.coinbase.com/lend
[3] https://www.kraken.com/en-us/features/staking-coins
[4] https://www.coinbase.com/staking
[5] https://blockworks.co/coinbase-compound-labs-launch-usdc-hig...
[6] https://techcrunch.com/2018/05/16/cryptocurrency-compound-in...
6 months is a long time for back and forth to be had. It's not like they dropped this on Brian Armstrong's desk without notice.
The rule should be applied across the industry in a standard manner, no matter which direction the SEC rules, and it is apparently not being applied consistently currently.