SEC Rules That ICO Tokens Are Securities (vice.com) 96
schwit1 shares a report from Business Insider: On Tuesday, the Securities and Exchange Commission (SEC) said that "ICOs" (Initial Coin Offerings) can sometimes be considered securities -- and as such are subject to strict laws and regulations. For the uninitiated, ICOs are a fancy new way of fundraising enabled by digital currencies like Ethereum -- participants invest money and receive digital "tokens" in return. Thus far, it has been largely unregulated, with some ICO crowdfunding events raising hundreds of millions of dollars -- leading some observers to argue that it is a massive bubble. But the SEC's warning means that this free-for-all may not last forever.
"Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission," reports Motherboard. "This will force companies to comply with regulations that ask them to reveal their financial position and the identities of their management. The SEC also concluded that online exchanges where tokens are bought and traded may have to register as security exchanges."
schwit1 adds a quote from Benito Mussolini: "All within the state, nothing outside the state, nothing against the state."
"Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission," reports Motherboard. "This will force companies to comply with regulations that ask them to reveal their financial position and the identities of their management. The SEC also concluded that online exchanges where tokens are bought and traded may have to register as security exchanges."
schwit1 adds a quote from Benito Mussolini: "All within the state, nothing outside the state, nothing against the state."
Overseas (Score:4, Interesting)
So launch them overseas. Problem solved.
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Depends on the decade and what part of Europe or the EU.
Foreign Account Tax Compliance Act https://en.wikipedia.org/wiki/... [wikipedia.org]
Go full Section 311 of the USA Patriot Act on anymore moving the funds around before, during or after interacting with anything "digital currencies".
Select from never interacting with any bank or international banking network ever again or tell the US about people using any service.
Report accou
Local laws apply. (Score:2)
Depends on the decade and what part of Europe or the EU.
US law do not apply anywhere else except in the US, no matter what some think.
What applies in countries in Europe, are international treaty that the have decided to adhere to and sign,
and local regulation.
Go full Section 311 of the USA Patriot Act on anymore moving the funds around before, during or after interacting with anything "digital currencies".
Select from never interacting with any bank or international banking network ever again or tell the US about people using any service.
It's a US law. It applies to the US. You cannot force - directly through government - a foreign institution to comply.
The only way the US can force foreign institution to comply is by putting a tax on any transaction that they have with dollars.
Or refuse to do interactions altogether with them.
Isolate the service and then any bank or nation that still interacts with that service.
...and some
Local (meaning national) laws apply. Good. (Score:2)
You're missing the fact that the EU also has regulations covering financial services to deter fraud, of course (look up "European system of financial supervision".)
So, basically, the article says that the SEC ruled that regulations to deter financial fraud apply.
This is actually good, not bad.
Except if you're a libertarian, and consider the right to be defrauded to be a form of "freedom"
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The sanctions go after the bank that does the transactions and any bank that deals with that bank.
Then the nation allows the bank to operate.
Nations and banks then have to disconnect from the US and most other banks or just stop doing the transactions.
Report all the users and everything is back to normal.
Foreign institutions have to comply or they cannot get access to the world banking community.
Re "putting a tax on
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Yeah, ask banks in Iran how violations of US law only has consequences inside the borders of the US.
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US law do not apply anywhere else except in the US, no matter what some think. What applies in countries in Europe, are international treaty that the have decided to adhere to and sign, and local regulation.
US law doesn't, but the treaties that have been signed and the effect of the gorilla cutting you off are certainly more than effective to convince many to cooperate.
It's a US law. It applies to the US. You cannot force - directly through government - a foreign institution to comply. The only way the US can force foreign institution to comply is by putting a tax on any transaction that they have with dollars. Or refuse to do interactions altogether with them.
Economic pressure is huge. Do recall the US is 25% of the world's market, and far more in trade and trade related partners. If I had to guess, I'd say better than 70% of all trade is tied directly to or controlled by the US either internally or via US corporations subject to US laws.
Isolate the service and then any bank or nation that still interacts with that service.
...and some bank are completely happy with not doing any dollar transaction anymore and only transacting in Euros, Rubles, etc.
Yep, let's look at Russia, the largest country by area with imm
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You cannot force - directly through government - a foreign institution to comply.
Right, but the foreign banks will choose to comply, because if they don't BACKUP WITHOLDNG will activate against that institution and apply to ANY funds transferred from overseas into a US-based bank.
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Do you honestly believe that statutes can stop people in the US buying things in Europe
The US Government has powerful methods at it's disposal to enforce compliance, up to and including disconnection from the dollar banking system (aka the financial nuclear option). So yes, I have no doubt that the US can stop pretty much whatever financial activity it doesn't like anywhere in the world. The real question is not can, because clearly they can, but rather will they? It depends upon how easy or hard the enforcement is and how badly they want to do it. Anyway, do you really want to be involved wi
Options (Score:2)
The US Government has powerful methods at it's disposal to enforce compliance, up to and including disconnection from the dollar banking system (aka the financial nuclear option).
and some institutions are completely fine with this, having enough other altenative options / big currencies.
Euros, Rubles, etc.
US Dollars haven't been the only internationally relevant money for quite some time.
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and some institutions are completely fine with this, having enough other altenative options / big currencies. Euros, Rubles, etc.
US Dollars haven't been the only internationally relevant money for quite some time.
Euros are directly tied to the US, even though they, the Yuan, and others are bucking for a new internationally based basket. It hasn't happened yet, but with the US being run by an ADD pinhead with the political finesse of an elephant with explosive diarrhea, such a decision is likely to happen sooner than later.
This is healthy (Score:5, Insightful)
I have little sympathy for technolibertarians playing word games to dance around sensible regulation. Particularly when they grumble that sensible regulation is fascism.
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I don't think you appreciate the size of Maddof's fraud.
Or what Maddof's fraud was, in relation to possible ICO fraud.
Maddoff was able to perpetrate his frauds because he operated a Ponzi scheme within an investment black box that hid the mechanics of what and how he was investing funds.
Good or bad, a DAO or any ICO operating directly on the Ethereum blockchain is, by definition, transparent. Anyone who can read solidity can look at its code and understand what it does, and will do in the future.
If a reckless investor nevertheless puts money into a sche
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No, the tragedy is that smart people that are not rich are denied access to startup company funding, and so are forced to remain poor.
Fraud laws are sufficient to go after the bad guys. We need to allow more people to invest, not less. We should be encouraging investment as a society.
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Oh Please, 9 out of 10 startups fail, if not more. If you are poor (or at least not rich enough to not care if the money is gone for good) then you shouldn't be funding startups.
Re: This is healthy (Score:2)
You are basically saying only rich people should be starting a business. How about you fuck off?
Re: This is healthy (Score:5, Informative)
Starting a business is not the same thing as funding a (someone else's) startup.
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As religionofpeas said: financing a startup is different from starting your own business. If you are poor and have no money, you shouldn't be throwing it around as VC capital because there is a 90% chance you'll lose it all and you already had no spare money to begin with.
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No, no he isn't Funding != starting. He's saying you shouldn't start a business and fund it yourself if that puts you in personal risk of bankruptcy. There's a major difference between that and 'only rich people should start companies." I've started one company so far, a year ago, with very minimal capital because we don't need to make heavy investments as a small IT-firm with all of us being able to work from
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especially startups that don't actually have a product or plan except wishes and other people's money.
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I used to think the same way; the threshold of $100k was just there to protect the best returns for the rich. I have reviewed a few second stage funding proposals though (along with running my own business), and have also "lost everything" in the stock market a couple times.
From this experience, I have become reasonably good at cutting through the crap. Sure, an investment in the next GoPro might yield a 5x return over 5 years-- but it is equally possible that it will only have a 5-10% annual return, or tha
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Not really. If you throw good money at startups that don't even have a decent whitepaper, or that will only turn profitable if they somehow manage to take over the messaging world from whatsapp and messenger (the Status ICO) ... that isn't a tragedy. that is stupidity. Like using your life savings to buy powerball tickets.
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I have little sympathy for technolibertarians playing word games to dance around sensible regulation. Particularly when they grumble that sensible regulation is fascism.
So you believe that small investors should never be allowed to invest in a company by mutually agreeable terms with the company, without some parental agency dictating the rules and thereby precluding their consensual activities?
Only rich folks should get to do that?
It's hard to tell "smarter than you" from "you're too poor for equal rights"
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The rights I care about are very differently flavoured than "opportunity to invest in a company", but yes. I think it makes sense to block people off from entirely screwing themselves over, and if that means less well-off people (often meaning people with no background in investment) can't invest this way, that's great.
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No, screwed over like "attended ITT Tech".
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It's easy to praise this when investments go well. But were you to actually treat this thoughtfully and consider the actual "screw yourself over" case, you might reach a different conclusion.
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Well, when the rules that they're dictating are related to being honest about investment, then that is called "Capitalism." It is the very action of the government regulating trust to create a level playing field that allows capital to move freely. Without that regulated trust, established parties or the party controlling the information will conspire to keep new entrants out of the market. That is what Capitalism is all about. Read some Adam Smith sometime.
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Having an office filled with porn addicts isn't paradise either. People keep barking regulation but it also keeps failing us.
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I have little sympathy for technolibertarians playing word games to dance around sensible regulation. Particularly when they grumble that sensible regulation is fascism.
I know, they're so shocked that they're supposed to be honest about investments that they sell to people. How dare we not be allowed to lie about how much money people will make by giving their money to us?!
They don't seem to understand that creating a "new" equivalent thing that is also being marketed for the purposes of investment is already some type of investment instrument. They were playing a word game, but they were doing something regulated all along.
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the US is already 20 TRILLION in debt
That number includes debt owed by the federal government to itself. The bad day for the US is not when we have lots of outstanding debt, but when no one wants it any more. The actual $13.62T of debt is an enormous bet that the US will remain solvent. No informed persons worry about hyperinflation, and the topic of public debt is not particularly relevant. The SEC is attempting to regulate ICO tokens as investment vehicles because people keep trying to use them as such. There is zero reason to believe in the
So we start with Godwin and work our way back? (Score:5, Funny)
It looks like people are investing money to obtain an interest in an item with no practical use other than as an investment
I am reminded of https://xkcd.com/1494/ [xkcd.com]
Cows are already out of the barn (Score:2)
I hope they realize that almost a thousand different cryptocurrencies already exist:
https://en.wikipedia.org/wiki/List_of_cryptocurrencies
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Oh puh-leeze. Mussolini? (Score:4, Insightful)
I understand that many advocates of digital currencies sing the praises of their libertarian, state-independent qualities.
But conflating the SEC with Mussolini? Come on, the purpose of the SEC is to protect investors from unscrupulous companies. Do you really want the kinds of markets we had before the SEC was around?
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". Do you really want the kinds of markets we had before the SEC was around?"
No, but I do want the type of SEC that was in operation before the Clinton(s) were in office. You know the one that required transparent, orderly and fair markets for all buyers and sellers (not just for club members)?
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Clarification: When I say Dodd-Frank passed during the Clinton's, it was when Hillary was a Senator, I'm assuming you are including that as part of the "Clinton Administration". At least when I deal with most people who hate the Clinton's anything done while either one of them was in office that they don't like was a Clinton's fault...
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Clarification: When I say Dodd-Frank passed during the Clinton's, it was when Hillary was a Senator, I'm assuming you are including that as part of the "Clinton Administration".
Hillary Clinton moved from the Senate to Secretary of State on January 21, 2009. Dodd-Frank was proposed by the Obama administration in June 2009, and was passed on July 21, 2010.
So no, Dodd-Frank was not passed (in fact, was not even under construction) while Hillary Clinton was a Senator. She may have been "in office" as Secretary of State, but was not in a role that had any significant influence on the crafting of Dodd-Frank.
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These idiots aren't libertarians... they're just idiots.
There's a big overlap.
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the purpose of the SEC is to protect investors from unscrupulous companies. Do you really want the kinds of markets we had before the SEC was around?
It's irrelevant what the purpose of a law or agency. The only thing that matters is its effect.
Yes, the markets functioned better before the SEC. The real intent of the SEC is to make sure you're not allowed to invest in competing financial instruments and to make investors completely and utterly gullible.
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Yes, the markets functioned better before the SEC.
Yeah, 1928 was glorious. Maybe read the Pecora Commission's report on how awesome that time was for investors.
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It's irrelevant what the purpose of a law or agency. The only thing that matters is its effect.
The only thing that matters? Unlikely. But, um, okay...
Yes, the markets functioned better before the SEC.
FACEPALM. That is all.
The real intent of the SEC is to make sure you're not allowed to invest in competing financial instruments and to make investors completely and utterly gullible.
Wait ... didn't you just claim that an agency's purpose (i.e., intent) is "irrelevant?"
The rest of your statement is hard to disentangle, but here goes.
Unregulated financial instruments are a potential threat to the investing consumer, who must rely on the proper behavior of fiduciaries who are not compelled to behave transparently. Such instruments can "compete" just fine with regulated ones ... by becoming regulated. The effort
Re:Oh puh-leeze. Mussolini? (Score:4, Interesting)
Not to mention the Mussolini quote dates from 1928 - a time when the USA didn't have a "rah rah democracy" foreign policy, fascism was considered a valid style of government and not a dirty word, and Coolidge, Hoover, and FDR were supportive of what they saw as a libertarian progressive Italian government that would resist Communism...
Thanks (Score:2)
schwit1 adds a quote from Benito Mussolini:
Thanks, I wasn't sure if I should be outraged or not: now I know. sharp intake of breath, with fear and outrage.
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Avoiding a Godwin Law ruling on a technicality: Good job schwit1.
Court Challenge (Score:2, Insightful)
I predict a court challenge in 3, 2, 1... Seriously, Etherium, Bitcoin and the like are unique mathematical stores of value, more similar to that rare drop you got in your MMO than a security instrument.
Re:Court Challenge (Score:5, Interesting)
It's funny... all the alt.currency advocates were all about how "cryptocurrency is real money" - until the government started actually treating them as real money. Now they're backpedaling.
Re:Court Challenge (Score:5, Insightful)
If I hadn't already posted I'd have modded you up. Either it is money or it is glorified pokemon cards. You can't have it both ways. Tbh I think it is good if it's going to be treated like money. I'd love for institutional money to flood in. Especially since I am already holding coin.
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I've pointed that out many times over the years... it's a deep flaw in the basic philosophy of crypto-currency - they want it both ways. They want legitimacy, *and* they want complete freedom with no controls or regulation. They don't grasp that the latter is a necessary consequence of the former.
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I've pointed that out many times over the years... it's a deep flaw in the basic philosophy of crypto-currency - they want it both ways. They want legitimacy, *and* they want complete freedom with no controls or regulation. They don't grasp that the latter is a necessary consequence of the former.
Some probably do want exactly what you say. Others recognize that as a financial instrument regulation is inevitable, but still see value because although it's subject to regulation, the supply of a cryptocurrency doesn't have to be subject to any central control, unlike fiat currencies.
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i don't care about governments too much, they have already peaked anyway. bitcoin is decentralized, no money grabbing ICO and fair distribution. works with or without government support.
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Now they're backpedaling.
Not really... it's "Real money" in the sense that you can reliably transact with it.
It's not "Real money" in the sense that it is not a government-issued currency.
Unlike real money, the government didn't make it and retain the rights to it --- so it's "More real" than money in the sense that it is more like tangible property with intrinsic value, and not something that can be arbitrarily manufactured.
Smart Contract (Score:2)
An ICO is just a smart contract software as a service. The company running the SAAS pays taxes on the ICO, those who buy them treat it as a service expense. If they sell their tokens they pay tax on the income.
The Fed is completely over-thinking this.