It's hilarious that after years of calling for the government and regulatory bodies to stay out of crypto, the house is finally collapsing and it is still somehow the government's fault. People with this mentality need to grow up and accept that there's no global conspiracy targeting them. They just got suckered into a scam.

A month ago the head of the SEC said every crypto other than Bitcoin is a security. Now they are suing Binance on the basis that ETH and LTC are actually commodities. What changed in the last month, other than a bunch of banks failing?

The CFTC and the SEC are two different government agencies, and they legit disagree about what is a security and what is a regulated commodity with regards to crypto. The law is super unsettled here and both agencies are staking various claims to regulatory territory

Yes, that's the explanation. It still does not make the US legal system look very good. There is a total lack of legal certainty. Even some members of the SEC find the way crypto is handled by the US authorities questionable:

https://www.cnbc.com/2023/02/09/sec-commissioner-breaks-with...

> It still does not make the US legal system look very good.

Why?

People can disagree on their opinion about something. Usually that gets settled in court unless new legislation is enacted that addresses the matter specifically. This is how each and every societal change is dealt with and around the change itself you'll see a bunch of institutions either wash their hands of it or claim it as their own depending on their mandate, understanding of the matter and capacity.

For instance: the oil crisis led to the creation of the Department of Energy. Prior to that there wasn't a really big need but if something threatens the economy or the stability of the USD then you can expect legislators to react. Sooner or later this will be settled and then the transition period is over by definition. And it's very well possible that some or even all of this will be declared illegal.

A good legal system provides legal certainty. It has clean and concise laws that are straight-forward to apply. In case of uncertainty, the responsible authorities should provide guidance on what they believe is the right interpretation. None of this has happened in the case at hand. The applicable (?) laws are not clear and the responsible authorities refused to provide guidance. This is poison for innovation and entrepreneurship as it makes doing business in the US unnecessarily risky. Resolving these questions in court should only be the measure of last resort as this process is slow and costly.

There is a good reason that these things don't move on a dime: you need to get them right. And as the underlying tug-of-war between the two main agencies shows: it isn't always clear-cut or simple. Not everything can be solved by a pull request or an over-the-air update, legal systems evolve and this is by design not a fast process.

Effectively this means that technology will always be able to outrun legal systems, for a little while anyway and that no legal system is ever a perfect match for the society it models and governs. This is not normally considered a problem.

No, a good legal system cannot be outrun by technology. A good legal system provides sound foundations based on principles. Fraud is fraud, regardless of whether it is committed offline or online. Just like source code, legal code can be more or less well-designed, and it can yield more or less desirable outcomes. And in this case, the outcome the US legal system produced was much worse than "not perfect". The law failed to provide legal certainty and the authorities failed to provide clarity as well. Let's hope the courts will do their job -- a process that unfortunately can take many years.

> No, a good legal system cannot be outrun by technology.

This is not a productive line of thought.

No, it is very productive. From this principle, one can derive many important properties of an optimal legal system, most notably that laws should be technology-neutral. If a law needs to be changed every ten years, then it is not a very well-designed law.

I don't really have a horse in the race here, but I'll note that SEC commissioners are appointed by the president, so it's not surprising that they have different opinions if they're appointed by different parties. Gary Gensler is the chair right now, he is very anti-crypto. Hester Pierce is a republican and the republican-led SEC had a much more wait and see approach than Gensler does. (Arguably, you could say "we saw" after the latest crypto crash, but I still have a feeling they'd be less adventurous legally)

public sentiment, for starters

I wondered what he thought was so special about bitcoin. From https://nymag.com/intelligencer/2023/02/gary-gensler-on-meet...:

> “Everything other than bitcoin,” Gensler told me, “you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth.” In other words, there are people behind these cryptocurrencies using a variety of complex and legally opaque mechanisms, but at the most basic level, they are trying to promote their tokens and entice investors. (Bitcoin, because of its unique history and creation story, is fundamentally different from other crypto projects in this respect.)

I imagine Monero might similarly not count as a security? The complete lack of scripting helps that argument at least. And the raison d'etre isn't "make money" but "privacy so good even the police can't track you". Not a legally nice raison d'etre but not something that passes the Howey test either.

i wish the government would have stayed out of it, it probably would have already collapsed by now if they had.

Crypto is not collapsing though, all crypto loans are fully collateralised on chain & a bank run is not possible in the same sense

Crypto collapses when demand for it collapses, not in the sense that it becomes inoperable, but in the sense that anyone who was trying to store value will lose it once the fad abates.

I mean the prices are public, and are basically unaffected by the daily exchange drama: https://coinmarketcap.com/

It's fine to have a theory, but it's kind of silly when the theory is so easily disproven by where people are willing to put their money.

It's possible if the money isn't actually there anymore, like what happened with FTX.

The one redeeming quality of crypto is that you can only lose your holdings if you give them to someone else.

Sure, or if your wallet gets stolen, or you forget your password.

But even if you can keep your holdings forever, they won't be worth anything if there isn't a market for them. All it takes is enough people freaking out and dumping their investments to make yours worthless too. You'll still own everything you bought but it could be worth zero.

>All it takes is enough people freaking out and dumping their investments to make yours worthless too. You'll still own everything you bought but it could be worth zero

Every speculative asset ever

Zero is vanishingly unlikely given that there’s at least a sizeable minority of people, myself included that believe that a form of digital money/value storage that cannot be taken from me without my cooperation and is outside the control of any state (and, ideally, private) is not only a right but unbelievably important.

If the VC backed token projects all fail, the gambling sites shut down, and the only way to trade it for real money is to swap cash in person (this is also how it started), it’s still important like Tor, strong encryption, open source.

The business case for crypto is an interesting aside, as it was/is for Linux, PGP, etc. The long run human and social case for the underlying tech (ignoring what happens to be flavour of the month for scammers) is what’s interesting.

And yet people shared your opinion when bitcoin was under a dollar, so that alone isn't enough to get to the valuations we have today.

> Feds are desperately trying to cut off any exits from the mess they've created in the banking system

Do you have any evidence to support this large claim? Or do you simply wish for it to be true?

Mostly circumstantial evidence. Regulators/feds have taken down one of the largest and most crypto friendly bank, Silvergate. Federal Reserve Board unanimously denied Custodia to be a member of Federal Reserve System.

And the latest Economic Report of the President[1] has a full chapter (Chapter 8) in which they make their stance clear in no uncertain terms.

[1] https://www.whitehouse.gov/wp-content/uploads/2023/03/ERP-20...

A 1 line throwaway designed to give you such a mountain of effort required as a response that a lack of response insinuates that what precedes it is untrue or a conspiracy

You can get your own evidence for his claim, starting points to look: previous banking crisises, why the latest banking crisis happened, how banks buy bonds/treasuries, how they are valued in relation to interest rates, how the fed controls interest rates & therefore bond valuations & therefore bank collateral, what a bank deposit from a customer really means for a bank, what fractional reserve is, how the COVID rules meant bank reserves had no minimum, why banking cannot possibly be solvent at a single point in time, what money is backed by, what happens if a bank breaks the rules, who decides if they break the rules & what incentive does that regulator have to actually crack down on crime (because their employees have higher aspiratations), how many US banks are consistency & constantly fined for fraud, how banks relied on fed interest rate guidance & how that relates to their duration mismatch of depsosits/investments

Exactly this. The financial system is designed to extract wealth globally and funnel it to well connected elites and the organizations they control. It’s not even a secret or a conspiracy, since all of the information is in the public domain. Rather the strategy is to maintain social stability, since for most people as long as their standard of living is stable or slightly improving, they won’t bother to take actions to defect from this system (such as buying assets that are not primarily in USD)

Crypto gave fed regulators a long line of easy targets who inherently were resistant to following the Wall St written rules of the time. It’s like fish in a barrel.

The long storied history of these regulators preferring going after these (relatively) small new/outsider fish vs the big firms with teams of lawyers who spend all day following 90% of the laws, designed with them in mind and often written by them, in order to make hundreds of billions off the grey areas + 10% vaguely written laws… continues to remain well in-tact and as emboldened as ever.

Whether Wall St finance provides any real long term value to the wealthiest society in history given such a highly regulated market we’re all supposed to trust is an open question.

Yet every time big financial panics happens the reply is: Surely the solution is more moral hazard inducing fed messaging to maintain status quo + regulations (written/enforced by their ex employees) to exclude any completion replacing them… instead of reforming hiring of regulators, looking at the obvious suspects, and enforcing existing law.

If an American citizen trades crypto on a foreign exchange, AFAIK any gains are still taxable. If an American citizen withdraws fiat to a foreign bank, those banks still report to the IRS. I understand how Binance evading reporting is an issue for the US GOV, but I don't really see how it matters as an exit strategy for US citizens. If I want to open a bank account in another country and just wire money there I can do that without jumping through the hoops of opening a crypto account.

It's not that easy. European banks for example, don't accept us customers or you have to deliver extensive documentation. Even in switzerland the u.s. were able to enforce it.

It's trivial to open a foreign bank account. Yes, they all report to the US. What I was saying to the parent was, there's no way to avoid taxes just because you go through a crypto step.

> just wire money there I can do that without jumping through the hoops of opening a crypto account

If you do this to hide gains from the IRS, it's tax fraud.

My whole point being that you cannot not report it... you have to, and the foreign bank reports it too.

> FYI this is the same guy who praised FTX.

I'm unfamiliar. Is there a source to this claim?

Well Binance was a partner of FTX and invested 20% in them, so I'd say they were friendly at some point.

yeah i also want to know if he's a fellow ftxbro