Cryptocurrencies that were issued via an ICO* might be doomed to waterfall collapse.
I will explain in detail that this is because illegally issued investment securities are illegal to trade (even on registered exchanges). Or even if legally issued, it’s illegal to trade legal securities on unregistered (including decentralized) exchanges, thus (eventually) rendering every “ICO-issued” cryptocurrency (including Ethereum, NEO, Qtum, Dash, NEM, Stratis, IOTA, Lisk, Waves, EOS, Steem, PIVX, Tezos, etc.) non-fungible, effectively not legally tradeable, and thus (eventually) not plausibly functional for use as decentralized cryptocurrencies! 😲
UPDATE: 2 days after this blog was published the collapse was imminent and has now begun as China has declared ICOs illegal and all funds raised thus far must be refunded, with the SEC expected to follow!
As well South Korea, Russia, Hong Kong, and Canada also announced warnings or enforcement against ICOs. The UK is also contemplating regulating ICOs.
Then I’ll posit an idea (other than proof-of-work) for how to issue tokens which avoid securitization. I’ll also debunk some of the illogical theories that claim fungible ICO-issued token sales aren’t investment securities.
Note in the past, I had started afaik the original and most detailed discussion thread about whether ICOs are investment securities.
* The SEC wrote, “…offers and sales of digital assets by "virtual" organizations are subject to the requirements of the federal securities laws. Such offers and sales, conducted by organizations using distributed ledger or blockchain technology, have been referred to, among other things, as ‘Initial Coin Offerings’ or ‘Token Sales’.”.
Warning Shot Across the Bow
From August 28 to 30 the price of NEO plummeted 15% within a “few hours” (and -20% overall), presumably because it was announced that they wouldn’t be issuing tokens to Chinese citizens due to tightening regulations on fundraising in China and the possibility of an executive order suspending ICOs in that country.
However, speculative investors apparently aren’t totally spooked yet, because they probably (incorrectly) presume that the (unregistered?) issuance of NEO tokens in other jurisdictions can be traded on exchanges ongoing.
UPDATE: apparently enforcement warnings have already begun in the USA! And China is reportedly very close to taking action.
SEC’s “Hidden” Warning
I believe the SEC has foreshadowed upcoming enforcement actions and already warned about their methodology.
As quoted below, the SEC has reminded and cautioned that even legally issued (i.e. registered with the SEC or exempt from registration) securities must be sold only on exchanges which are duly registered or have an exemption; and illegally issued securities may not be offered for sale nor sold. Hence I presume decentralized exchanges of securities will be always be illegal, because afaics a decentralized system (i.e. which no one controls) can’t register itself and comply with the SEC — yet cryptocurrency tokens which aren’t securities could in theory be legally traded on decentralized and unregistered exchanges.
I presume based on the following SEC quotes that enforcement will include freezing on centralized exchanges, the tokens which were (thus illegally) issued as unregistered, non-exempt securities. And possibly also highly publicized prosecutions of individuals (especially the market makers who provide the liquidity required for exchanges to function well) who have (thus illegally) traded (legal or illegal issued) securities on (thus illegal) unregistered (including decentralized) exchanges:
SEC’s report on the DAO investigation wrote on page 2:
In addition, any entity or person engaging in the activities of an exchange must register as a national securities exchange or operate pursuant to an exemption from such registration.
And wrote on page 10:
Thus, both Sections 5(a) and 5(c) of the Securities Act prohibit the unregistered offer or sale of securities in interstate commerce. 15 U.S.C. § 77e(a) and (c). Violations of Section 5 do not require scienter.
And wrote on page 11:
DAO Tokens Are Securities
And wrote on page 16:
Because DAO Tokens were securities, The DAO was required to register the offer and sale of DAO Tokens, unless a valid exemption from such registration applied.
Moreover, those who participate in an unregistered offer and sale of securities not subject to a valid exemption are liable for violating Section 5 … “The prohibitions of Section 5 … sweep[] broadly to encompass ‘any person’ who participates in the offer or sale of an unregistered, non-exempt security.”
Section 5 of the Exchange Act makes it unlawful for any broker, dealer, or exchange, directly or indirectly, to effect any transaction in a security, or to report any such transaction, in interstate commerce, unless the exchange is registered as a national securities exchange under Section 6 of the Exchange Act, or is exempted from such registration.
The SEC decided to take no action against The DAO or its tokens on exchanges, “but rather to caution the industry and market participants”, presumably because as they wrote on page 9, the tokens were reverted to ETH and The DAO disbanded (analogous to the resolution of the SEC’s investigation into Erik T. Voorhees after he agreed to return all the investments):
On July 20, 2016, after a majority of the Ethereum network adopted the necessary software updates, the new, forked Ethereum Blockchain became active. The Hard Fork had the effect of transferring all of the funds raised (including those held by the Attacker) from The DAO to a recovery address, where DAO Token holders could exchange their DAO Tokens for ETH.
And as stated in footnote 1 on page 1 and 38 on page 14, the examination of whether The DAO was an “investment company” and whether its participants were “investment advisers”, wasn’t pursued because the funding operations of The DAO never commenced.
My stance is that now the SEC has warned everyone. Thus anyone who continues to offer for sale or sell ICO-issued tokens (unless the tokens were legally issued and are only ever* traded on an exchange registered with the SEC or if the individual is not a US citizen then exchange registered with regulators in his/her jurisdiction) is willfully (even arrogantly) violating the clearly advertised law and can be culpable to retroactive enforcement action in the future.
Tl;dr: never hold nor touch ICO-issued cryptocurrencies. They can destroy you.
* Thus the lineage of the trading of the tokens destroys fungibility because it would need to be recorded in the lineage which registered exchange each token spend was made on, because every spend was potentially an exchange until it is proven it was a spend for goods or services. IOW, the implication is that ICO-issued tokens (even if legally issued) can’t legally function plausibly as decentralized cryptocurrencies! Yikes! 😲
Multi-Pronged Enforcement
In the prior section, I explained that the SEC has provided a warning about the applicable law and the possible enforcement actions that may be coming.
They also stated that the enforcement actions they may undertake will not necessary recover funds for all the afflicted investors:
Law enforcement officials may face particular challenges when investigating ICOs and, as a result, investor remedies may be limited. These challenges include:
Tracing money. Traditional financial institutions (such as banks) often are not involved with ICOs or virtual currency transactions, making it more difficult to follow the flow of money.
International scope. ICOs and virtual currency transactions and users span the globe. Although the SEC regularly obtains information from abroad (such as through cross-border agreements), there may be restrictions on how the SEC can use the information and it may take more time to get the information. In some cases, the SEC may be unable to obtain information from persons or entities located overseas.
No central authority. As there is no central authority that collects virtual currency user information, the SEC generally must rely on other sources for this type of information.
Freezing or securing virtual currency. Law enforcement officials may have difficulty freezing or securing investor funds that are held in a virtual currency. Virtual currency wallets are encrypted and unlike money held in a bank or brokerage account, virtual currencies may not be held by a third-party custodian.
So the above can be interpreted as a warning that when in an enforcement action the SEC freezes illegally issued cryptocurrencies on centralized exchanges and files illegal trading cases against some who traded the afflicted tokens, the resultant collapse in the price can impact investors who hold the afflicted fungible tokens in private wallets and exchanges outside the SEC’s enforcement reach. IOW, the SEC can cause a conflagration in the global market price for afflicted cryptocurrencies, even though the SEC can’t freeze every private key and exchange in the world.
And indications are the SEC’s action will be eventually matched by similar enforcement in China, Russia, Europe and other jurisdictions such as Japan, Singapore, the Philippines and Canada, which are also advancing their securities law and/or exchanges regulation ostensibly in preparation for G20 coordinated actions. Analogous to how the USA was able to effectively force the FATCA, KYC, and AML regulations to be applied globally, similar results will likely be achieved in enforcement of securities regulation. G20 governments won’t willingly relinquish their regulation power over capital controls, seigniorage, money issuance, and finance.
Many cryptocurrency speculators think they’re outside the reach of TPTB of the G20, yet I predict their hubris will be shattered as always for those whose flippant middle finger is more active than their rational due diligence and pre-frontal cortex.
ICOs Are Securities
Every token — issued in exchange for something of value paid to the issuer,* wherein the issuer is involved in the ongoing managerial or entrepreneurial duties which provide for the investors expectation of profit — is an investment security as so defined in the Supreme Court’s Howey Test:
- Investors in The DAO Invested Money
…- With a Reasonable Expectation of Profits
…- Derived from the Managerial Efforts of Others
…
The central issue is “whether the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise.”
Another summarized it was follows:
- It’s an investment of money
- There is an expectation of profit
- The investment of money is a common enterprise
- The profit comes solely from the effort of the seller or third parties
Another explained that marketing arguments about “use value” are irrelevant obfuscations of the economic reality:
“With the expectation that they would earn a profit solely through the efforts of the promoter or of someone other than themselves,” the purchasers of Howey’s citrus-laced acres entered the hazy territory of investment contracts … As such, the ruling birthed the Howey test, a simple criterion to determine the purview of SEC jurisdiction over securities. “If that test be satisfied,” wrote Justice Murphy, “it is immaterial whether the enterprise is speculative or nonspeculative, or whether there is a sale of property with or without intrinsic value.” What matters is whether “the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.” A security has been sold, in other words, when the value of one’s transaction hinges on another’s work.
The term ‘security’ applies because the investors depend (i.e. are secured by) on the ongoing management or entrepreneurial duties of those who were funded by the value transferred to the issuer; thus, forming an implicit “investment contract”. Given there are humans securing an expected outcome, there’s opportunity for fraud and scams which deceive those investors’ expectations. This is why the governments are tasked with regulating the issuers of investment securities, because investors do eventually get defrauded and complain, e.g. The DAO.
The only way to avoid cryptocurrency tokens being classified as investment securities is if at least one of the following applies:
No seigniorage for those who have managerial or entrepreneurial duties that fulfill the expectation-of-profit, i.e. no privileged participants funded by transfer of value to issuers.*
No expectation-of-profit by buyers of tokens for some (not yet invented) reason. Note that issuance on registered crowdfunding sites doesn’t necessarily eliminate the expectation-of-profit, e.g. the Rimbit scam issued on Indiegogo.
Tokens issued by competitive proof-of-work aren’t investment securities, because there’s no seigniorage on issuance transferred to those who have some managerial or entrepreneurial duties that fulfill the expectation-of-profit.
But sneaky (e.g. Dash, Bytecoin’s houdini scam, NEM’s scam airdrop, Decred’s scam airdrop, Byteball’s scam airdrop, etc) or stealth mined (e.g. Steem) issuance which is intentionally non-competitive, is just an obfuscation of the economic reality that tokens are then sold by this exclusive group to investors as securities because the expectation-of-profit depends on that exclusive group’s ongoing managerial or entrepreneurial duties! Sorry but I just realized that Dan Larimer was likely mistaken and STEEM tokens are probably investment securities. Yikes! 😲
More explanation is here explaining in detail why sneaky insta- or stealth proof-of-work mining distribution such as Dash, Steem, etc are investment securities. Additionally, Dash’s masternode scam (also in PIVX) by compounding of the initial pre-mine scam and the ongoing distribution of a significant proportion of block rewards to masternodes, enables the insider group to maintain control over the money supply and thus are effectively administered centralized-control ledgers.
Baseball cards aren’t securities, but ICOs are.
* Issuers who — also redeem tokens or transmit monetary value in exchange for issuance instead of either spending the issuance on goods and services and instead of trading the issued tokens on a registered exchange — are classified as “money transmitters”; thus, are required to register with FinCEN unless an exemption applies. Yet this fact is orthogonal to whether tokens are investment securities.
Afaics, the FinCEN guidelines here and here don’t require an individual to register as a money transmitter when the individual employs unregulated (including decentralized) exchanges to trade between tokens that weren’t “ICO-issued”. In the centralized virtual currency case (e.g. all “ICO-issued” tokens), the individual trader (thus acting as an exchanger who must register as a money transmitter and the unregulated or decentralized exchange by definition didn’t do it for him) sells his own virtual currency and is defined with the prerequisite of a centralized administrator (group) doing issuance. Whereas, in the decentralized case the exchanger is defined as facilitating trade between two other parties. This money transmitter issue is separate from other implications of tokens being investment securities as discussed in this blog.
Pre-mine Without Securitization
Whether a pre-mine is obfuscated (e.g. by a sneaky or stealth proof-of-work) or not, what makes it an investment security (per the Howey Test) is that the tokens are sold to investors who have an expectation-of-profit which depends on ongoing managerial or entrepreneurial duties funded by those who are selling the tokens. I thus logically posit that if the tokens were held back and not sold (i.e. not issued to investors) until the expectation-of-profit no longer relies on such ongoing centralized managerial or entrepreneurial duties, the sold tokens wouldn’t qualify as an “investment contract” and thus not classified as investment securities.
But if the developer needs funding early and can’t wait, I suggest a non-profit corporation could be constituted with shares issued in exchange for investment. The shares (not the eventually pre-mined tokens) are investment securities that may or may not need to be registered depending on if an exemption applies.
The said corporation would develop the software, launch it with a pre-mine of tokens, and hold the pre-mined tokens until the ecosystem became sufficiently diversified such that the investors’ expectation-of-profit no longer depended on the corporation’s ongoing managerial or entrepreneurial efforts. At that point, the corporation could sell the tokens (pay any CGT) and issue the proceeds as a dividend to the investors holding its shares. I thus posit those tokens wouldn’t be investment securities because the tokens were never held by investors with an expectation-of-profit. The investors were dependent on the managerial or entrepreneurial efforts of the said corporation, and they held shares as investment securities for the investment contract. They received as a dividend the profit from the activity of the company.
Note as aforementioned in a section footnote, in an applicable regulatory jurisdiction (e.g. FinCEN), the company would be regulated as a money transmitter if selling those tokens directly (for monetary value instead spending them on goods and services) and instead of trading them on an exchange which is registered as a money transmitter.
Additional tokens to the pre-mine could be issued with some competitive, objective form of proof-of-work (or equivalent), and these shouldn’t be investment securities nor be subject to regulation as money transmitters. If the said corporation was able to earn these tokens as payments in the ecosystem (presuming there’s no coercion), these earned tokens could be distributed to shareholders as dividends without causing them to become investment securities.
Note afaics the said company would not be classified nor regulated as an “investment company” per Sec. 3. Definition of Investment Company on page 17 of the Investment Company Act of 1940.
Refutations of Some Incorrect Logic
Haonan Lin opined:
Contrary to common opinion, this could be good news for the ICO market. The SEC are not trying to kill the ICO model, but rather trying to apply regulation to players in the market that are exploiting consumer ignorance, or launching coin offerings with no intentions to deliver on the promises made.
As I already explained, the problem with that rosy interpretation is that (legally issued) securities can only be legally traded on regulated exchanges.
A token (UTXO) which is a security must have all its trading lineage documented to be sure it doesn’t have illegal trading history that could cause the tokens to be frozen or seized on an exchange by SEC (or securities regulators in other jurisdictions) enforcement action; which is the antithesis of fungibility and ameliorates the cardinal feature of a cryptocurrency: the freedom to transact and spend decentralized without all transactions passing through a regulated exchange. Thus, ultimately (when the SHTF) I can’t see how any token which is classified in law as an investment security can function properly as a cryptocurrency.
Most of the tokens being sold in ICOs today are similar to virtual products. These tokens are designed as a “permission slip” for the use of a protocol. Unlike a pure investment, they have literal functions … Participating in these tokens sales is similar to supporting your favorite program on Kickstarter. These ICOs are less likely to be classified as securities because they are more like selling a virtual product than promoting an investment plan.
Some have incorrectly argued that tokens marketed as only having use value won’t (significantly) have this expectation-of-profit, but the free market of speculators will expect appreciating value for tokens. Any token which the purchaser assumes will become traded on exchanges has an implicit speculative expectation-of-profit regardless of any marketing to the contrary. And since there are 100s if not 1000s of shitcoins that trade on a plethora of exchanges, it’s afaics impossible to reasonably argue that purchasers of blockchain tokens aren’t doing so for speculative expectations of profits. Even if the tokens were sold on a crowdfunding site to people who didn’t know about virtual currencies speculation, the savvy speculators (always scouring for a “hiding” opportunity to buy low and sell high) will find that crowd-sourced ICO and speculate on it.
The second type is purchasing certificates for the future expectation of a functional app coin. The only effort made by the coin’s team is to make sure that the whole network is operating properly. The team did not spend any effort on creating profit.
This is almost analogous to what I proposed in my prior section, but only if the “app coin” is not transferred until after the coin’s team (the issuer) has stopped/completed doing development efforts (or those efforts diluted by ecosystem participation) which the market depends on for the expectation of profit on the appreciation of the “app coin”. And I argue the “app coin” must be sold by the non-profit company which is doing those development efforts only after stopping/completing its development efforts (or so diluted as previously state); and then distribute the proceeds of the said sales as dividends. Transferring the “app coins” directly as dividends instead of selling them may convert them to securities.
After a purchase of NEO tokens through the ICO, a certain amount of NeoGas (app coin) is sent to the designated blockchain address.
As I explained, that doesn’t meet the requirements for not being an investment security.
BitTrust summarized Coinbase’s securities framework document:
The upshot of this framework is that blockchain tokens, if designed properly, should be deemed as a simple contract, equivalent to a franchise agreement. By this measure, the analogy is fitting: holders of blockchain token are granted rights to contribute to a larger system, “rather than through a passive investment interest.” The advantage of classifying Dapp tokens as a simple contract disentangles token ownership from the legal complexities of holding a security.
Tokens which are under some form of contract (e.g. “franchise agreement”) are subject to regulation on disclosures, and will be required to trade on regulated exchanges so that regulators can enforce that the disclosures have been made. This then ruins the fungibility for these tokens as I already explained. That is the antithesis of a cryptocurrency, which much be allowed to transact decentralized when it is spent.
Besides regardless of the intended agreements, speculators will speculate on an expectation-of-profit.
I will react to a few quotes from that framework’s paper:
A white paper defines the network and its use cases. It is critical for buyers to be able to understand the characteristics and functionality of the token they are buying, the challenges and risks of development, and the benefits of using the network.
Irrelevant. Fulfilling disclosure requirements for securities, doesn’t impact the 3 aspects of the Howey Test which determine whether the tokens are investment securities.
A clear development roadmap gives buyers confidence that the proceeds of the sale will be properly used for the project and that the network will be launched, meaning that they will be able to use the tokens as intended.
Ditto irrelevant.
Enabling real and meaningful participation in the network from a diverse set of independent parties may also strengthen the arguments against the second and third criteria of the Howey test, because participants are less reliant on the initial developers.
Agreed, but unless the initial developers cease their efforts to prove otherwise, the presumption is the speculators would have much lower expectations of profit if the initial developers exited. Unless reasonable observers appraise that the ecosystem is sufficiently diversified.
Decide on the percentage of the total token supply that represents a fair reward for the work of the development team and advisors.
Can’t be objectively measured. There’s no way to prove how much of the ICO was insiders buying from themselves.
Principle 6: Avoid marketing the token as an investment
Smoke & mirrors don’t change the economic reality, as I already explained. The Supreme Court stated in the Howey Test decision, that any obfuscations of the economic reality are irrelevant.
We generally believe that a Blockchain Token with one or more of the following rights likely should not meet the definition of security (nonsecurity Blockchain Token):
Tokens which are under some form of contract (e.g. “franchise agreement”) are subject to regulation on disclosures, and will be required to trade on regulated exchanges so that regulators can enforce that the disclosures have been made. This then ruins the fungibility for these tokens as I already explained. That is the antithesis of a cryptocurrency, which much be allowed to transact decentralized when it is spent.
Besides regardless of the intended agreements, speculators will speculate on an expectation-of-profit.
Disclaimer: IANAL so readers shouldn’t interpret this blog as legal advice. This is my opinion shared as creative endeavor for your entertainment and to stimulate discussion.
I've downvoted this post because it tries to equate Steem with an illegal ICO which is inaccurate FUD.
I don't believe Steem should be rewarding someone to FUD it, and as a stakeholder I have voted accordingly.
I believe everyone should have the right to express their views no matter what.. He took time and effort to write this article out and express his view. Although I don't agree with all his views I feel like he should be rewarded for his time/effort. He has also been writing some interesting stuff past few months, wish I had caught it earlier. Interesting to read your stuff @anonymint.
The whole post is not out to FUD Steem this is true. But the way Steem is presented in it is disingenuous. There also appears to be an attempt to nakedly back up his assertion by posting similar things on a Bitcointalk thread (the OP of which simply links to this post, and refers to the author in third person. It's also linked via web.archive.org for some odd reason) under a different nickname.
None of the post was intended to FUD Steem. When I wrote the first draft of the blog, it did not mention Steem. Then as I thought about it more as I was thinking about why Dash’s instamine makes it an investment security, I realized that Steem is also the analogous obfuscation of an ICO.
And there is no FUD. You’re mistaken.
Incorrect. The analysis and presentation is factual and not disingenuous.
Important posts on BCT have to be archived because the mods over there are insane.
P.S. Note I augmented some of my prior replies to you, so you may wish to re-read them.
Please read my further rebuttal of his witless verbal diarrhea.
Also please find the message I sent you in the History of your wallet.
Ty. I think you will be even more interested in the fact that I am going to replace proof-of-work with something that is not proof-of-stake and which is technically sound. Steem’s DPoS requires a whale oligarchy, thus it is not viable for scaling Steem up to the world. I have the solution to that.
@pfunk just made a major blunder in terms of his future share of the crypto pie.
Regarding disagreements, they may be actual disagreements or they may just require more communication for each party to arrive at understanding. Also I found that people tend to come over more to my philosophies the longer they are exposed (or I come over to their astute corrections), because I seek truth, meritocracy, and prosperity. The other witless fall into the woodchipper even though I try to convince them to have a dialogue about truth, meritocracy, and prosperity.
I genuinely wish you luck if you come up with a novel solution to the difficult problem of distribution and decentralization of a smart money network.
Besides luck and some generosity from others, it has mostly required years of R&D and effort. Meritocracy.
Which is where the knowledge about the Howey Test and investment securities originates.
I experienced attempted censorship at BCT and Redditard. And now here it is again from a random dolphin on Steem.
Why is that retards love the buzzword “FUD” when they don’t know the subject matter.
Hey I am a Steemian also. I was blogging here since summer of 2016. You don’t have exclusive ownership here. I am owner/participant also.
I probably brought considerable traffic to Steem, because I was very well known on BCT before I started blogging here. And cross-linked many times from BCT to Steem.
I’m aware there are others who contributed much more than I did to Steem. Yet I am not just some fly on the windscreen.
What irks me is that you come in here with an attitude like you own the place or that you presume the other 105 people who upvoted my blog will appreciate your factually incorrect allegations and attempt to lower the reward they wanted to give me. You actually steal from them by downvoting.
You just subtracted $100 from my earnings by downvoting. Do you realize I put in several months of research into this blog! You fucking idiot.
You’re factually incorrect. I have already refuted you. I’m well researched on this topic over more than a year. And @smooth has disagreed with you (also archived in case the post is deleted by a mod)!
And downvoting is not the correct way to express disagreement. Downvoting should only be to discredit spam and non-meritorious content.
Also this blog post predicted China’s ban of ICOs 2 days before it occurred. Having this sort of highly expert content on Steem is the way to make Steem grow in usership and importance. You’re a fucking idiot when it comes to marketing.
Steem continues to shoot itself in the foot in numerous facets. And you’re a prime example of the witless falling into the woodchipper.
Any way, soon I replace Steem with a Bitcoin killer. So enjoy your nonsense.
The wise speculators/investors understand that it is better to be well informed (because you can easily sell one token and buy another one!), than to deceive yourself by trying to sweep the truth under the rug. I had explained this recently in the context of Monerotards censoring my recent Steemit blog about Monero’s anonymity being flawed.
Essentially what you’re trying to do is censor me, because you’re not going to win a debate with me on the merits of this issue.
Huh?
Childishly calling me a 'fucking idiot' multiple times and not understanding where your rewards are coming from aren't making you look more credible or believable. I encourage you to investigate a little more deeper on why your post value fell by $100 or so.
I agree. His interpretations of SEC rules/language and what he believes happened with Steem are inaccurate. The more I read from him, the more this seems like deliberate FUD.
You’re factually incorrect. I have already refuted you. I’m well researched on this topic over more than a year. And @smooth has disagreed with you (also archived)!
Equating Steem with an illegal ICO is accurate according to the facts. Who cares if the facts are on that platform?
STEEM was not issued via ICO. It was mined. Unless they have a definition of ICO that is entirely inconsistent or not actually an ICO (which is entirely possible, given the government), it doesn't appear that it would apply to STEEM.
I know, but that is an irrelevant obfuscation of the economic reality that it was intentionally stealth mined noncompetitively so that it would only (~80+%) be issued to the insiders. So then when the insiders sell those tokens, they are issuing investment securities just the same.
Mining their own tokens with no competition is economically equivalent to a pre-mine.
I had already explained that (and make sure you click the links):
@ats-david wrote:
The economic reality per the 3 requirements of the Howey Test is the definition. Here is what I wrote about that in my blog:
Yeah, I read those parts as well. I just think you're explaining the mining and "expectation of profits" incorrectly regarding STEEM. There is no "issuer" of tokens - de facto or otherwise. And there is no expectation of profits from any central issuer of the tokens, partly because there's no issuer.
I think your interpretation is based on what you believe was an "insider" mining scheme, but it can be demonstrated that the mining was in fact opened publicly, even though the pool was small.
I think it would also be hard to prove that any "issuance" took place since the selling of the tokens was via exchanges - not through an explicit ICO process by the creators of the token.
It would really be a stretch to include STEEM in this rule. I'm not saying the state couldn't or wouldn't do it, but they would really need to take the broadest interpretation of the rules in order to do so - if not create additional rules entirely.
This was a great write up. Sadly I just saw it.
I do think it misses the point. All of crypto is rebellious vs any legal system and lives outside of it. ICO or Bitcoin token alike are not legal and only work without the existing legal systems. Any form of sec or other legal entity having any influence on it thru law i.e. Without partaking in the economic incentive structure weaken and threathen the system while the crypto currencies threathen the legal system entirely as well.
The legal system has two choices: allow cryptos by ignoring them or fight them. Of course hybrid approaches may work also. However the result by the cryptos is the mirror imagine. If they are being ignored they too will ignore the existence of the legal systems and if fought they will to more parts rely on decentralized solutions for economic interaction, disobeying the laws. Example exchanges: if it is illegal to exchange decentral exchanges must and will evolve.
As such cryptos should from the start try to be as independent as possible.
Afaics, non-deceptively mined proof-of-work issued tokens entirely avoid MLM scam and securities laws and thus are legal. Many major nation-states have declared that Bitcoin is legal. Some nations have declared Bitcoin is currency, others such as IRS in USA declared it is property, and for example FInCEN in the USA has stated that for example Bitcoin mining is legal.
As for ICO issued tokens, please read this further explanation.
I’m going to analyse this aspect more in my next blog.
The mainstream of society has no compelling reason to incriminate themselves unless it's to join a speculative bubble. Afaik, the liquidity of truly decentralized exchanges has been pitiful thus far. Afair, for example Bitsquare is not truly decentralized and the escrow agents are the enforcement Achilles heel.
I've resteemed this article as I believe more steemians should read it before it disappears into oblivion.
Unfortunately when you resteemed, it caused a whale to notice it and downvote it.
This is an insightful, well researched article worth a second, third, fourth read.
China is right now rumored to be banning all its exchanges besides having banned all ICOs. I'm wondering if this will have an osprey dive effect on all crypto-currencies and what next for crypto-currencies in China?
I can't weigh in on whether your views are accurate or not, and frankly I don't care.
I downvoted it because you are using an image of the World Trade Center attacks, which is as low and classless as you can possibly get as you try to get clicks and dollars.
This blog is not a democracy. And this is yet another reason why the voting model of Steem is not appropriate for rewarding a meritocracy.
My motivations for using that image is because it portrays exactly the imminent multiple collapse that was unexpected (which is the same in this case where I predicted the collapse 2 days before it occurred and yet still people think ICOs will not totally collapse yet they will); and also to remind warriors that probably shady elements within our own government slaughtered 3000+ people.
For idiots who ignorantly believe that 9/11 was not caused by explosive charges which were planted in the elevator shafts, then your downvote attests that you are a witless who falls into the woodchipper. Anyone with a brainstem can understand that kerosene fuel can’t cause that sort of demolition.
Why is that you want to sweep under the rug the massive crime that has been perpetrated against the American people? Those who did this crime remain unpunished. And it wasn’t Bin laden who planted the Thermite charges on the elevator shafts. It was an inside job.
Are you working for Israel’s Mossad?
Israel DID 9/11 (Israeli Mossad) Dr. Alan Sabrosky
GENIUS CHRISTOPHER BOLLYN EXPLAINS WITH FACTS WHY AND HOW ISRAEL DID 9-11
Zionist Orchestrated SJWs Protests Against Christopher Bollyn (Larry Silverstein was the owner of the WTC!)
9/11 - Ten Years Of Deception
I had already explain in other comments that the image represents the impending destruction I had expected and which ended up coming true. Even today the SEC has announced enforcement actions, China banned ICOs, and South Korea has said they will start enforcement actions, etc...
I wonder how this works for ico that happen on a token external to the blockchain of which development is paid by the fund rised through the sales of those tokens.
Like eos who made their ico using eth tokens to fund the development of their own blockchain.
The eth token are not supposed to rise based on the value of the tokens on the blockchain.
But its clear those funding are shady, if not scams, and its only a matter of time before regulation start to kick in, and i think it can be expected they paint things with a broad brush, leaving plenty on the bad side of the law.
It appears “EOS Tokens” are a half-baked attempt to be an example of the “shares” I refer to in the “Pre-mine Without Securitization” section of my blog:
The “EOS Tokens” are issued to those who invest ETH. Thus, it’s an investment security.
And some claim it is a scam.
In their purchase agreement, they distinguish the (eventually pre-mined) “EOS Platform” tokens from the “EOS Tokens”:
Note that afaics the above purchase agreement guarantees no distribution of dividends to EOS Token investors, from selling EOS Platform tokens. So I have no idea why investors are investing. The section of my blog proposes how to achieve such distributions providing an incentive to investors, without causing the platform tokens to become investment securities.
Note that purchase agreement erroneously claims that since the EOS Tokens have no utility, then they’re not investment securities. Which is incorrect, because there is still an expectation-of-profit based on apparently greater fool theory which depends on the ongoing managerial efforts of the EOS Token issuers:
We can see they want to simultaneously imply but also deny that EOS Tokens will be convertible to EOS Platform tokens! Daniel Larimer is a lunatic! In any case, this clearly makes EOS Platform tokens investment securities in any future convertibility (because the Howey Test ignores all obfuscations and looks at the economic reality!):
Yes i wonder the same thing with this form of fund rising based just on buying a token on eth.
Maybe investors have other interest in the development of eos ..
I don't think those behind EOS would disagree with you from a U.S. legal perspective, because they are clearly deterring U.S. citizens from acquiring the tokens, although I do find it intriguing how the U.S. has the power to bend the rest of the world to its whims (FATCA perhaps being one of the best examples of this, as you mentioned elsewhere):
Link: Upcoming EOS Token Distribution - US Citizen Restriction - and Other NOOB Questions
Of course, as what happened with Armstrong (and more recently, Martin Shkreli), if you're in the U.S. (or with most govt's for that matter) and they want to target you for something, they can easily come up dozens of reasons to do so.
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ironically, however, this just came out today as well...
Link: IC-NO! CHINA BURSTS INITIAL COIN OFFERING BUBBLE
UPDATE: the collapse was imminent and has now begun as China has declared ICOs illegal and all funds raised thus far must be refunded, with the SEC expected to follow!
As well South Korea and Russia also announced enforcement against ICOs.
Will this ban be temporary until legislation and oversight are in place or is this the final nail to the coffin?
Please read my latest thoughts which are more balanced.
In my reasoned guess/opinion, it is likely the nail in coffin for most of those Xerox copy ICOs created on Ethereum recently. They will have to refund the money. Even the SEC had that policy of leniency of prosecution of the issuers if raised funds are refunded. And reissue in a way that either 1) creates a registered investment security as the token which means the tokens can only be spent on a centralized, regulated exchange; or 2) use a different investment structure as I proposed in my blog in the section “Pre-mine Without Securitization”.
I think other purely ICOs issues such as NEO and Qtum may be forced to reissue and restructure, or maybe not. It is very complicated because global securities regulation appears to be muddled (although note IANAL).
Some people will lose money. Refunding is a mark-to-market event, because if the raised money was already spent on hookers and cocaine, then the investors loose because the tokens will likely be declared illegal on exchanges all over the world.
I wonder about that. I'm outside the USA so that doesn't apply for me I think. I also wonder what will happen to the value of erc20's if Ethereum drops say 50%.
Personal legal culpability might not apply depending on which country you’re in and the state of development of that jurisdiction’s securities regulation (and do note the link I provided to recent news about the EU advancing their regulation to harmonize with the SEC and do note China recently moving to regulate ICOs).
But note the SEC noted that even if you’re outside the USA and you offer for sale or sell illegal securities to USA citizens (even unwittingly and note the SEC wrote “Violations of Section 5 do not require scienter.”), then in their eyes you are have fallen into their jurisdiction and they can prosecute you. And given the cooperation pledged by the G20 for sharing data as of Jan. 1, 2017, it seems that the G20 will honor and aid enforcement of the SEC’s jurisdiction.
They destroy you with legalese because most people have more hubris than diligent study of every word.
Cryptocurrencies are forcing globalization and harmonization of enforcement of regulation.
I’m wary that the market conflagration due to enforcement action presumably coming from the SEC and then eventually other nations will knock the ICO-issued tokens down eventually in price and market acceptance. I predict eventually they will not be taken seriously at all. There is no way I would be buying ICOs (even if I wasn’t a USA citizen) right now with a correction in the cryptocurrency euphoria approaching after this current moonshoot, and then ICOs languishing followed by enforcement actions ongoing incessantly.
If only the G5 do enforcement actions, ICO-issued tokens are dead. Eventually enforcement from G20, and then the rest of the nations falling into harmonization as they did for FATCA. Because the USA and G5 can penalize the other nations if they do not accede to harmonization. C.f. the links I provided in my blog for more details about this.
@Traxo wrote at BCT:
This post foreshadows the collapse of ICO-issued tokens or the collapse of their price? Collapse of ICO-issued tokens would mean these tokens become illegal and non fungible which then leads to the collapse, making them worthless.
Both.
But please also read my recent thoughts about caveats.
Sure, I will do that.
nobody really cares about the USA and their stupid tax laws. US Crypto trading citizens should give up their citizenship and move to other tax free countries..
The USA is still dominant and dictating the (financial) rules in most of the Western World. If you mean that these rules won't stop the cryptocurrency/'decentralised exchange of value' wave, I concur.
Thank you Anonymint for your in depth analysis. It clearly shows how tyrannical and control obsessed TPTB really are. It is fascinating to imagine how the big Wall Street banks call up the SEC and demand immediate action to protect their regulated monopoly on currency issued from the FED, and oligopoly on investment banking services.
National debt and unfunded liabilities are now unsustainable. That's right, it is already mathematically impossible that the debt will ever be repaid. Just wait to see what happens when the US misses a T-bill coupon payment............
I am not sure how they would ever 'miss' a payment (I bet there are numerous tactics available to keep the show going on for quite some time).
Excellent post @anonymint, I agree with what you write, it's very interesting, thanks for sharing that information , I follow you, we must support ourselves as a community, I appreciate it if you I would give me a look at my last post and give me your opinion, greetings and success in everything.
seems bitcoin is safe
Agreed safe from the “ICO-issued” classification (even if Satoshi mined most of the early coins, he didn’t get 80% and apparently his mined tokens have never been sold), but we have potentially a different devastating threat on the horizon for Bitcoin.
Apparently you do come across as a doomsday preacher, but if you're right, we should not touch it and avoid it at all cost. Which also means whatever steem we get here for contributing is up in smoke in reality. This isn't the best way to lose your precious time to if profiting from our posts is the prime reason we contribute. If not, fire on.
Please read my latest thoughts which are more balanced.
Is it safe to invest in crypto at all? I mean is there any way they can shut down ALTcoins? or all cryptos? and just use their tehno for gvrnmnt?
Proof-of-work is launched competitively appears to be legally safe to invest in.
The “Pre-mine Without Securitization” section in my blog explains an alternative to proof-of-work which I posit should be legal.
Very informative. thanks
Thats a real crappy photo to use
It correlates with the theme of imminent* waterfall collapse.
It also correlates with people not wanting to think the unthinkable or verboten thoughts. In this case, most people will go back to “business as usual” and put off making any decision about their ICO-issued cryptocurrency involvement, until later they’re “slaughtered” by their failure to wake up.
When the WTC was bombed the first time in 1993 (when I was your age), I thought to myself that was a trial run for the next time. In 1995, when Timothy McVeigh blew up half of a building, I was reminded of my thought in 1993. I was expecting 9/11/2001.
Why is it crappy to associate the theme of “the banksters (perhaps Mossad agents) slaughtered 3000+ people with demolition of the WTC” in order to enact the Patriot Act which was the precursor to the FATCA legislation which is the methodology they will presumably employ to force USA-style securities regulation throughout the world?
If you’re a man, you can man up to the reality of this harsh world.
* I stated in another comment, “It could be after my blog is long forgotten, the SEC has allowed everyone to incriminate themselves much deeper into the dodo and then they do the enforcement much later. Timing is difficult to predict.”
The principal! He will give me TP! I would hate for my bungholio to get polio....Where I come from, we have no bunghole.
Sorry, but thats a shitty justification in my opinion. Should of used a different image.
This blog is not a democracy. There’s no “should” involved here. It’s my blog and I’ll use the image that I want to use. And if that boils your propaganda controlled attitude, then cry to your sociopath puppet master George Soros.
UPDATE: the collapse was imminent and has now begun as China has declared ICOs illegal and all funds raised thus far must be refunded, with the SEC expected to follow!
As well South Korea and Russia also announced enforcement against ICOs.
This can be seen also as a victory for China’s dominance of proof-of-work mining, since ICO issued tokens usually trade on a non-proof-of-work ledger system.
did you ever thought all the fake ico could be sponsored by those same organisation to promote regulation, like they do with all the security buisness, creating the threat to be shown as necessary ? :)
Hegelian dialectic.
Not really. .
Its more invariants in cia/mi6 tactics to emulate radical offshot of things they want to condamn, while making profits on it to fund their enforcmebt of the security against it.
Like opium war, or the so called false flags.
That is a Hegelian dialectic. It is the creation of the antithesis, in order to gain support for the thesis, i.e. create a false flag such as 9/11 to gain support for the Patriot Act.
Yes this sort of stuff! Lol its not what i would understand as hegelian diaclectic, but maybe it is lol
Are you working for Israel’s Mossad?
Israel DID 9/11 (Israeli Mossad) Dr. Alan Sabrosky
GENIUS CHRISTOPHER BOLLYN EXPLAINS WITH FACTS WHY AND HOW ISRAEL DID 9-11
9/11 - Ten Years Of Deception
Zionist Orchestrated SJWs Protests Against Christopher Bollyn (Larry Silverstein was the owner of the WTC!)
I had already explain in other comments that the image represents the impending destruction I had expected and which ended up coming true. Even today the SEC has announced enforcement actions, China banned ICOs, and South Korea has said they will start enforcement actions, etc...
Comply with the SEC or go to jail? Decisions, decisions...
I'M AN ANARCHIST ... They can't control me haha
Lol. That worked against the Prohibition, but alcohol isn’t a fungible investment with a lineage indelibly recorded on the
blockchaindecentralized ledger.The value of money and speculation about its value is driven by PUBLIC CONFIDENCE, which is usually propped up by the backing of the government. If the governments are attacking that money and declaring it illegal, prosecuting high profile cases, then I doubt there will be much group confidence in that money.
If the government was lying, then perhaps the public would remove the legitimacy of the government’s actions, but I think I have explained the logical rationale for why the government is tasked to regulate investment securities.
Every ICO that has been issued has been a scam. So the public is not going to support them when the government makes it clear about the lack of transparency as I mentioned about the various shitcoins I listed in my blog post.
We as a community need to demand that cryptocurrencies are not issued as scam airdrops, scam sneaky mines, and scam stealth mines.
It could be after my blog is long forgotten, the SEC has allowed everyone to incriminate themselves much deeper into the dodo and then they do the enforcement much later. Timing is difficult to predict.
Dude, that 9-11 picture. Not cool.
I already explained why I think the image is appropriate.
I agree that 9/11 was a horrific event (I still remember it viscerally), and I think we should continue to remember it so that we remain sufficiently enraged at the bastards who did it, because they are probably the same bastards who are driving us towards world war again.
Why do you prefer only warm fuzzy emotions? Do you deny the reality of the war humanity is in against these bastards? Are you not a warrior? Please do not instruct me to tailor my presentation for those who are not warriors. I want men, not faggots. Get all that leftist clusterfuck shit away from me.
Do not try to brow beat me with your values. I have my own values. You are free to write your own blogs. And to associate with those who share your values.
Your feedback is accepted, but I would prefer if you had posted as reply to the comment I had already made on this issue. You replied offtopic to a comment thread which has nothing to do with this.
Are you working for Israel’s Mossad?
Israel DID 9/11 (Israeli Mossad) Dr. Alan Sabrosky
GENIUS CHRISTOPHER BOLLYN EXPLAINS WITH FACTS WHY AND HOW ISRAEL DID 9-11
9/11 - Ten Years Of Deception
Zionist Orchestrated SJWs Protests Against Christopher Bollyn (Larry Silverstein was the owner of the WTC!)
I had already explain in other comments that the image represents the impending destruction I had expected and which ended up coming true. Even today the SEC has announced enforcement actions, China banned ICOs, and South Korea has said they will start enforcement actions, etc...
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I’m positing that if you have been trading (the possibly illegally issued) investment securities (i.e. “ICO-issued” tokens) but doing it on an exchange which is registered with FinCEN and/or SEC (i.e. a regulated exchange which does KYC, AML, and other compliance), then afaics at least you can argue that you delegated the responsibility for compliance to the regulated exchange. Whereas, if you traded on unregulated exchanges (presumably avoiding exchanges which do compliance), then you presumably retained full responsibility for compliance.
Interesting stuff. Thank you for the time and effort.
What is the current impression of a "regulated exchange". I assume Gemini (a bank) and Bittrex (US based embracer of rules) count, but what about Polo or new kids like wings?
As a collective, where do we move if BTC is in trouble and gold sees a major pump with a crypto armageddon like the OP depicts?
This is the prepper portion of the comments section.
Peruse some of my recent writings else where, and hope you can see I do not expect a crypto Armageddon for proof-of-work issued coins as a result of this ICO regulation issue.
If they’re not requiring strict KYC, they will probably end up like BTC-e and Mt. Gox. Lots of bad reports about Polo. I experienced it myself, Polo trades against its own users.
Per my prior blogs, I’m still expecting the possibility of BTC-SegWit collapse with a BCH moonshot. Might not happen, but it might happen.
You can hang on to a safe proof-of-work option such as BCH, LTC, or XMR in a private wallet (not on an exchange). When we get more clarity on BTC, there might be a “real BTC” (Satoshi’s protocol unmodified) to hang on to. If my project has reached launch, you can park some funds there if you want.
Note I don’t think all the more muddled cases of “ICO-issued” equivalents tokens such as ETH, STEEM, DASH, NEM will necessarily be regulated immediately. I think first regulators are likely to prioritize purely ICOs such the Xerox copy ICOs issued on Ethereum. The outcome for other purely ICO issues such as NEO and Qtum is less clear to me. So the Armageddon may be a muddled outcome that meanders for a year, couple of years, or so before eventually all tokens with a scam-like history are perhaps doomed (and not just because of possible securities regulation rather that failure of execution is endemic to scams). Thus, I think the free market might actually kill STEEM, DASH, and ETH before the regulators need to (and I’m thinking specifically of what I know about my altcoin project that outsiders do not, and being the one that potentially kills those what I think are poor executed or some other paradigm shift from some group I may not even be aware of).
Since I know from past experience that a few (not too many) people are going to ask me, I will just answer in advance. Readers can’t invest in my altcoin project now. At launch you may be able to. We’re working to possibly offer that crowd equity second round of financing opportunity so we can broaden the pre-mine distribution before the onboarding phase of distribution begins.
As for gold, MA’s stance is it will likely decline one more time below $1050 before the slingshot to $5000. But he does allow for the possibility that it does not decline. $1367 is the key level of overhead resistance.
P.S. Ethereum is very confusing to analyse from a securities perspective. I suppose ETC is actually the decentralized original block chain of what was launched as Ethereum with an ICO. ETH forked off to steal back a user’s ETH. What an amazing chaos. Is it decentralized enough and chaotic enough to cause regulators to stay away? Will be interesting to see what happens.
SEC settlements. Sia coin pays a relatively heavy penalty but EOS waltzes away relatively unscathed paying only a $24 million penalty.
And both tokens aren’t forced to be registered. But former securities now significantly driven by decentralized market factors no longer need registration.
Remember EOS lawyer-ed up and raised enough money to presumably pay for influence. Also remember I had noted they separated the EOS Token ICO from the EOS Platform token.
But remember it’s unlikely that EOS raised $4.1 billion because much of that can be the issuers buying the ICO sale from themselves to drive FOMO.
Also this is only a settlement with the SEC. It’s unknown whether EOS will have to have to settle with the EU at some point.
Essentially I think what I wrote above 2 years ago remains the primary conclusion:
The altcoins appear to be dying if you look at their price pairings relative to
BTC. Significant dead-cat bounces are possible along the way.This “good news” (settlement without requiring registration) may reignite some dead-cat bounce FOMO for alts, and it appears altcoins have bottomed or nearly so:
https://cointelegraph.com/news/ethereum-and-altcoins-market-cap-flash-bullish-possibilities-as-bitcoin-price-wavers
Nice post @anonymint ...blessings
Dear author, whoever you are, please consider removing the image of the attack on the World Trade Center. It had no bearing on your story and that image itself makes it hard for many to read your post, brilliant as it may be.
I already explained why I think the image is appropriate.
I agree that 9/11 was a horrific event (I still remember it viscerally), and I think we should continue to remember it so that we remain sufficiently enraged at the bastards who did it, because they are probably the same bastards who are driving us towards world war again.
Since when does appeasing the emotions or values of others have anything to do with factual presentation.
Please do not try to brow beat me with your values. I have my own values. You are free to write your own blogs. And to associate with those who share your values.
Your feedback is accepted, but I would prefer if you had posted as reply to the comment I had already made on this issue.
I’m not ignoring your compliment. It’s just that I don’t think people should be so emotional. We need to be more focused on manly attitudes. The political correctness and emasculation in our society is indicative of failure.
"We need to be more focused on manly attitudes." Well, well, well. I was reading your material when it crossed my mind that intellect and personality are entertwined for a reason: one makes the other more pallatable. I was reaching a point in my reading where how you interact with other humans was louder to me than your written thoughts. And, then, I came across your belief that we need to be more focused on"manly" attitudes. Hey ho... and off we go.. says this female who is not happy about PC behaviors but certainly does desire respect for whatever the hell her female attitudes are... manly attitudes? Good grief. You go ahead and have fun building up your sense of self-significance, while making others feel insignficant. Such a wonderful gain.
Are you working for Israel’s Mossad?
Israel DID 9/11 (Israeli Mossad) Dr. Alan Sabrosky
GENIUS CHRISTOPHER BOLLYN EXPLAINS WITH FACTS WHY AND HOW ISRAEL DID 9-11
9/11 - Ten Years Of Deception
Zionist Orchestrated SJWs Protests Against Christopher Bollyn (Larry Silverstein was the owner of the WTC!)
I had already explain in other comments that the image represents the impending destruction I had expected and which ended up coming true. Even today the SEC has announced enforcement actions, China banned ICOs, and South Korea has said they will start enforcement actions, etc...
FYI - Pic of 9/11 feels very inappropriate given the context of this post.
Are you working for Israel’s Mossad?
Israel DID 9/11 (Israeli Mossad) Dr. Alan Sabrosky
GENIUS CHRISTOPHER BOLLYN EXPLAINS WITH FACTS WHY AND HOW ISRAEL DID 9-11
9/11 - Ten Years Of Deception
Zionist Orchestrated SJWs Protests Against Christopher Bollyn (Larry Silverstein was the owner of the WTC!)
I had already explain in other comments that the image represents the impending destruction I had expected and which ended up coming true. Even today the SEC has announced enforcement actions, China banned ICOs, and South Korea has said they will start enforcement actions, etc...
Any updates on this article?
I have followed you on Steemit, please be kind enough to follow me as well.
only way i could reach to you. I need the post that has all the links to all the ideal money articles. aaron w. wants it. cheers!
The way back machine link is broken right now. What happened tot he original post?
https://web-beta.archive.org/web/20170902174641/https://medium.com/@shelby_78386/i-started-the-original-and-most-detailed-thread-about-this-topic-on-bct-9312f32bc33d
https://medium.com/@shelby_78386/i-started-the-original-and-most-detailed-thread-about-this-topic-on-bct-9312f32bc33d
FYI: Lawmakers are introducing a bill to change the SEC’s 72-year old securities definition to exclude cryptocurrencies. Doubt would ever pass....
https://www.cnbc.com/2018/12/20/lawmakers-look-to-change-secs-72-year-old-securities-definition-to-exclude-cryptocurrencies.html
That law wouldn’t change anything:
That is already the case. Once a cryptocurrency becomes decentralized and controlled predominately by the free market, then the tokens are no longer securities. But that doesn’t exonerate those who broke the securities law before that juncture in the development of that project.
That is unless the law means something different by “fully functioning network”.
Anyway, as you said it will not pass. No change to the securities law is going to get through without significant scrutiny by senior members of Congress who will not want to remove the SEC’s protection for investors.
Update.
WELCOME TO STEEMITI appreciate if you follow me !!!
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