The only question here is whether cryptocurrency is a security or a commodity. Securities fall under regulation by the SEC (SECURITIES and Exchange Commission). Commodities are regulated by the CFTC (COMMODITIES Future Trading Commission). SEC Chair Gensler agrees that Bitcoin is a commodity, but thinks everything else is a security.[1] Securities are much more tightly regulated than commodities. The SEC is making it clear with these complaints that they believe certain cryptocurrencies are securities.
A court might disagree. The CFTC could potentially disagree, although yesterday's agreement makes me think they may have given up on that to some extent. But I actually think it's pretty clear that any cryptocurrency project offering a reward for "staking" or similar is a security.
You capitalized the wrong word. The CFTC is the Commodities FUTURES Trading Commission. After all, a commodity is defined as anything traded with a futures contract (except for onions and movie tickets)!
A whole lot of things that aren't commodities in common parlance are within the jurisdiction of the CFTC because they are traded with futures contracts. This includes some securities. A whole lot of things that are commodities in common parlance are not within its jurisdiction, as the CFTC only deals with futures contracts.
Orange juice concentrate is a commodity by any definition. The CFTC regulates futures contracts on orange juice concentrate. It does not regulate its production, sale, transportation, or anything else unrelated to futures contracts. That is the job of the USDA, FDA, DoT, and so forth.
Stocks are securities. As they are traded with futures contracts, they are also commodities. The CFTC regulates futures contracts on securities jointly with the SEC. It does not regulate any trading of securities that does not involve futures contracts. That is the job of the SEC. The fact that people trade stocks with futures has never hampered the SEC's efforts to regulate them.
Curious: is "bitcoin" being used by the SEC as a general term to mean "all cryptos that fundamentally employ a work-based consensus algorithm", or "pure" cryptos or whatever? Or is it not yet clear to the SEC that there are more instances of Nakamoto consensus networks out there and not everything other than BTC is a security?
I agree that staked projects and derivative projects are securities since they are fundamentally a representation of or proxy for the actual thing of value, BTC, XCH, formerly ETH, etc.
Of course not everything other than bitcoin is a security. My private blockchain no one knows about is not a security. It's not a universal law of the universe.
What they mean is every coin/token they looked at. If asked to evaluate litecoin for example probably they'd say it's not a security as well. They don't need to pass judgement on each of the thousands of coins individually because definitions and common sense exists.
I’m just trying to understand the context. I hope it is as you say and it would be my baseline assumption that it is as well. But it’s not unquestionably obvious given history and what relatively little context is present in this thread. The SEC used to think all crypto is a security to the point where honest miners are instructed to declare blockchain rewards as income (I have, and TurboTax even asks you if you acquired crypto in the last year with no nuance as to how you acquired it or which one you acquired). It may be obvious to you and me but my question was more about how far the SEC’s understanding has evolved.
Commodities have real-world uses (e.g. gold, oil, frozen orange juice), securities represent a claim on some productive enterprise. Cryptocurrency is neither.
Gambling happens in real world markets as well, but that doesn't mean that real world markets are casinos.
Beaniebabies were effectively regulated and taxed like commodities. Commodities do not require a real-world use. All they are are tradable non-currency things which can result in capital gains.
The speculative (HODL!!) cryptocurrencies should probably be treated like commodities, and regulated as such by the CFTC. The cryptocurrencies that are actually being used like currencies (e.g. actually used to buy things) should be regulated like foreign currencies, which would also be regulated by the CFTC (this is essentially the same exact thing as Commodities trading, but with simpler accounting rules which reflect the much higher liquidity, divisibility, and likelyhood that a unit changes hands). Neither of these scenarios involve the SEC. The SEC should only be involved when coins are being issued like securities (e.g. as a way to raise funding and sell financial stakes in some kind of enterprise).
Collectibles are just a subclass of Commodities which can't be taxed using Mark To Market rules, but there are a whole host of commodities which are just like that. Precious metals, rare coins, cards, comics, etc., are all collectibles, but they are still commodities for regulatory purposes. For example, here is PR release of a CFTC enforcement action against some fraudulent coin dealers: https://www.cftc.gov/PressRoom/PressReleases/8694-23
IIRC, the IRS and CFTC have already issued rules to treat NFTs as collectibles.
So you built a financial product to convince people to forgo FDIC insurance on their primary checking account? What an evil premise for a company. That's despicable. I'm sure almost none of your customers will understand their inherent cost of repeatedly moving money in and out of a volatile asset, not to mention that this concept would ruin the economy if widely adopted, because the FDIC was invented for a reason. I hope the SEC destroys you.
"When disagreeing, please reply to the argument instead of calling names. 'That is idiotic; 1 + 1 is 2, not 3' can be shortened to '1 + 1 is 2, not 3."
"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."
I'm sure you can make your substantive points thoughtfully, so please do that instead.
I think your criticism is a bit misguided. The FDIC insurance fund only covers a tiny fraction of bank deposits and if a single small bank had a run the fund would be insufficient to cover it's customer base. It also covers derivative losses before balance losses, so it's really more of a psychological tool then anything else.
Also banks are investing all of your money in highly illiquid risky assets (aka mortgages) so I don't see how this would ruin the economy or even meaningfully change the risk profile if adopted at a large scale.
> The FDIC insurance fund only covers a tiny fraction of bank deposits
Isn't it $250,000 per customer?
It wouldn't be enough to save the bank if there was a run (because of accounts with huge balances), but it'd be enough to save most of the customers that need saving.
I wouldn’t say 250k per person per bank per account type is a tiny amount. Moving money from a bank account to the market is a significant increase in risk for all but the most wealthy.
I completely agree that our product could be used the wrong way, and we want to make sure we guide our customers to the investments that will have the best risk profile for them. In particular, we are currently seeking to become a registered investment adviser, so we can make suggestions based on our customers' individual situation (e.g. so we can recommend that people without significant savings invest in lower risk securities like US Treasuries and Bonds).
It's shocking to see the similarity to how you talk about this product compared to the founders of Robinhood. They've been very successful at tricking people into gambling away their money in the name of "investing." This is essentially the same thing at a smaller scale. This is a bad product for most people, who will silently lose money over time by moving money in and out of the stock market. Perhaps you're initial, wealthier customer base will be able to make use of such a service, but if you end up achieving any amount of scale, you will invariably end up wrecking someone financially. I hope you enjoy the moment when someone can't make rent because the stock market had an off week.
I completely agree that we don't want to end up being the next Robinhood. One interesting technical aspect there is that our customers don't manually trade securities, instead they provide us with a strategy that we then execute when we need to automatically buy/sell their investment. I think this will implicitly guide our users toward choosing a long term investment strategy (like mutual funds) instead of doing day trading.
I'd be very careful with that. If you suggest something to a customer that causes them to loose money you can be sued and potentially held liable. Becoming an RIA would likely force your product to become hyper conservative in it's approach which perhaps is good if you're billing yourself as a bank account alternative, but also perhaps not your intention.
wow. what a comment. I think there's a place for this product. sure it's not for everyone, but modern investing apps are already erasing the lines between risk on and risk off money.
Really great move by Twitter. There's lots of amazing programmers in African countries like Ghana and Nigeria, but not enough employers are taking advantage. I suspect Twitter will be the first of many companies to start hiring in the region.
I'm going to give you a longer answer, taking your concerns in good faith, since most of the responses you have so far are fairly combative.
We need to start by recognizing that, although the Constitution is an important original source in understanding how our government functions, we have over 200 years of Constitutional interpretation that lies on top of it. You are welcome to make a Constitutional argument that goes against the existing jurisprudence, and Constitutional interpretation does change over time, but it does so only slowly. One of the most important principles in Constitutional interpretation is that of stari decisis, or issues which have already been decided. In almost all circumstances, courts adhere to precedence. This isn't always the case, but when you are fighting against the current understanding of the Constitution, you need to realize that you're fighting an uphill battle, and frame your arguments as such.
So where are we in our understanding of these issues? First, the Supreme Court has literally ruled that the Tenth Amendment is useless. Specifically, in US v Sprague (1931, SCOTUS ruled that the Tenth Amendment is a "truism" that "added nothing to the [Constitution] as originally ratified."[1] It was later used to create an anti-commandeering understanding, which in this circumstance just means that the federal government can't pass a law that requires states to enforce a federal mask mandate. There might be a public health exception to that though, but that's where the tenth amendment would be relevant.
You also need to understand that SCOTUS has repeatedly expanded the commerce clause to cover basically everything. The federal government can pass pretty much any law they want, say it affects interstate commerce, and win. You don't have to like that interpretation, but everyone follows it. It was only during the Rehnquist Court that a few exceptions were carved out, but they're very, very narrow. The most famous example was that the court ruled that the federal government couldn't ban handguns in schools under the commerce clause. But for anything even vaguely interstate, and a contagious virus certainly counts, the federal government is allowed to pass pretty much any law it wants.
The courts also tend to be pretty generous towards allowing emergency powers to deal with a genuine crisis. I expect that the federal government could do pretty much anything it wants to deal with COVID. I'm sure they'd allow a national lockdown by executive order right now. A legislative mask mandate would be completely non-controversial from a Constitutional perspective.
Nothing here supports the argument that minorities don’t have voting rights, and I think the fact that you’re trying to stretch this to include non-citizens says a lot about how honest the original comment was.
I understand how you could assume that these issues aren't about minorities, but they really all are. Each of these issues barely touches white people while affecting minorities deeply.
- Felony convictions: Black and latino men are convicted of felonies at much higher rates than any other population. In 2016, 7.44% of black people had their voting rights stripped for felony convictions.[1] Over 1% of all black people in the United States are currently incarcerated, compared with about .2% for white people.[2]
- DC in majority minority, with 46% black residents.[3] Puerto Rico in 98.9% hispanic.[4]
- Citizenship: Over 800,000 people have enrolled in DACA, mostly of Latin American and East Asian origin. [5]
They are ineligible for citizenship. Among those eligible to apply for Citizenship, many are from Canada or Europe.[6] Our immigration laws are setup to favor high school immigrants, who are far more likely to be white than the immigrant population as a whole. This isn't necessarily a bad thing, but it means our voting population is far more white than our resident population.
- Disenfranchisement: This is far more piecemeal, but southern states routinely take actions that just so happen to make it more difficult for minorities to vote rather than white people. I recommend listening to [7] if you're interested, which covers a specific recent circumstance in Florida, with a few examples from other states. It's no coincidence when eliminated polling places and dropboxes just so happen to always be in Black neighborhoods.
Remember, the voting rights marches of the 1960s weren't about giving black people the right to vote, that happened in 1870. They were about how certain states had made it so difficult for black people to vote that it was essentially impossible. Sure, many black people vote in these states today, but that doesn't mean that they have an equal ability to vote. The measures aren't as strong as they once were, but they still exist.
This move isn't as radical as I'd like, but I genuinely think it might stick. Having Ford on board is a big deal. Seems like the big auto makers feel like it's a "reasonable" timeframe. Would love to see this take effect sooner, and also include an eventual ban/restriction on used gas-powered vehicles, but it looks like we may finally be making a meaningful change.
Most members of Congress don't care about the perimeter rule (if they are inside the perimeter) or hate it (if they are outside the perimeter). That's why there are exceptions now.
The rule still exists because local jurisdictions really really want to keep it, and getting rid of it is just not worth the fight for anyone else.
Indeed. Uber was clearly able to spin the early reports about this incident; there is little correspondence between those descriptions and this video. Corruption in Tempe.
The victim had absolutely no business crossing that road like that, but the notion that the fatality was somehow unavoidable is pure bunk.
Individual actors all working within the same values system and responding to the same inputs will produce similar actions. There's no conspiracy or "quid pro quo" corruption here, most likely, merely a corrupt values system. In a place like tempe pedestrians and bicyclists are treated as second class citizens, especially in the case of crashes involving automobiles. In this particular case there is a walkway on the median strip which is purely decorative and marked with signs indicating not to use it, which should tell you how pedestrian hostile the area is.
A court might disagree. The CFTC could potentially disagree, although yesterday's agreement makes me think they may have given up on that to some extent. But I actually think it's pretty clear that any cryptocurrency project offering a reward for "staking" or similar is a security.
[1] https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-th...