Is that supposed to be sarcastic?

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.

> Both cash and securities are regulated in a way that ties them to the creation or storage of (real-world) value.

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.

The ability of the US government to tax any companies or individuals residing in the US seems pretty “real” (more-so than gold anyway..)

Let’s keep it at “real” with the quotation marks. Gold tends to last longer than your average nation state.

This is not a problem when the promises of a nation state only need to last as long as the nation state itself.

> Gold tends to last longer than your average nation state.

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.

> In theory can have currencies directly backed by oil, wheat or copper

That is to some degree what USD is ("Petrodollars"):

https://www.investopedia.com/articles/forex/072915/how-petro...

You can’t redeem them for a fixed amount of oil so I would say this is quite different.

> there wasn't any backing of fabricating new dollars

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

You need only to trust that the US government has 11 aircraft carriers and thousands of nukes.

Trade creates value. A toxic asset is an asset with a frozen market. Ironically, banning crypto would make the asset class toxic.

Because it's not a different asset class..

because there's no need to do that. Most cryptocurrencies meet the Howey test which is used to judge if something is a security. It needs to require investment, be a common enterprise, and the expectation of profits.

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.

Sure, regulate them as securities, but the problem is the SEC has made it nearly impossible to actually register a cryptocurrency as a security.

https://policy.paradigm.xyz/writing/secs-path-to-registratio...

Seriously. Crypto people might be some of the most dense idiots. It is not the job of the SEC to provide guidance on how to fill out the forms. Your lawyers can easily do this. There are lots of costs associated with offering financial services, especially lawyer fees.

The real issue is that to legally do it, someone has to put their name on it, and that's not something many want to do for their pump and dump scheme.

Doesn't seem that way to me. all you need to do is to file an S-1. The issue is an entirely different one which is obvious when you look at the case studies in the second post.

>"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 beacuse 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.

It’s trivial to register as a security it’s done countless times a year.

The problem is that securities trading is regulated, and the coin base model of playing multiple roles itself is illegal

What about the investment of record labels in Music contracts with musicians?

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.

Because they are not passing those investments to retail? Everyone involved is either (1) accredited investor (2) involved in the running of the business.

The contracts themselves are not traded directly. If they were they’d obviously be a security.

Large record labels do of course have stock in their companies which is a security and is traded.

You can buy shares in music royalties.[1] Those are investments registered with the SEC, and the issuer is an SEC-registered broker/dealer with FINRA regulation and SIPC insurance. Your song portfolio may be a dud, but the company behind this has to account for the money they collect, and people will be held responsible if it goes missing.

[1] https://www.songvest.com/how-it-works

The page literally says they aren’t registered. The copy is made to look like they are.

No, they registered their offering. Here are all the documents filed with the SEC.[1] There's a prospectus, and annual reports.

[1] https://www.sec.gov/edgar/search/#/q=SONGVEST

Filing stuff on EDGAR isn't registration under the Securities Act.

>because there's no need to do that

There is actually alot of need. The propositions that Crypto caters for would become worthless if we applied securities laws to them.

I think having broad disclosure about a thing you’re trying to collect money so that you can make more money is a good thing, even in crypto.

Would tax-sucking regulators and governments who want power to dominate the public want something decentralized and free?

> decentralized and free

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.

Because they are not. There’s no inherent value so classing them as securities makes a lot of sense- just like derivatives and other financial instruments

Why should they, if they’re just reproducing essential properties of existing asset classes?

“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.

Because it's all been reimplementations of extremely well known and understood financial instruments which are regulated for excellent historical reasons.

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.

> Why is it so difficult to just recognise crypto currencies as its own new asset class?

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.