Crypto Firms Seek Clearer US Rules on Their Interest-Bearing Products (reuters.com) 12
Cryptocurrency companies said they remain unsure of U.S. regulations governing products that allow customers to earn interest on holdings instead of trading them, months after such an interest-bearing product drew a $100 million fine from a federal regulator and state governments. From a report: In February, New Jersey crypto company BlockFi agreed to pay $100 million in a landmark settlement with the U.S. Securities and Exchange Commission and state authorities who said its interest-bearing product qualifies as a security and should have been registered. Still, many digital asset companies providing such products said this month the rules remain unclear to them and they are uncertain when they should register such offerings, which are growing more popular and which many firms launched within the last year. Most firms have tried to structure the interest-bearing products to avoid the need to register them with the SEC, a process that takes time and entails ongoing disclosure and reporting obligations. That effort might set them up for a clash with the agency as it increases scrutiny of the crypto industry. BlockFi plans to offer an alternative yield product, which it said it would register first. The company and the SEC said the deal should provide a roadmap for other companies.
Kind of telling (Score:3)
Re: (Score:2)
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"Most firms have tried to structure the interest-bearing products to avoid the need to register them with the SEC, a process that takes time and entails ongoing disclosure and reporting obligations."
They're actively trying to avoid having to follow the rules and laws that do exist. That doesn't make the existing rules and laws 'unclear' or 'inconsistent'.
"What can I get away with?" is the real reason. Not "I don't understand the law."
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What they really want is a clear, consistent solution to how to avoid these regulations, specifically created to cover this sort of financial product.
Subtle, but very important difference.
They are moaning because they thought they would get away with it, but failed.
In other words:
Wahhh! it should be clearer how to avoid regulations based on technicalities
simple. Ponzi schemes are illegal. (Score:5, Insightful)
If they can't write out their value proposition in a few clear sentences an adult of average intelligence can understand, it is wise for regulators to be cautious.
As it stands, many of these DeFi outfits are offering unsustainable returns in excess of the interest they charge on loans and these returns are far in excess of what you can earn in the traditional finance market.
Extraordinary claims require extraordinary evidence. These products smell like Ponzi schemes, and wrapping them up in mumbo-jumbo like liquidity staking, flash loans, and so on doesn't help their case. These new players need to explain, in precise terms, where the money is coming from to pay such high interest rates, and how this can be sustained.
The burden of proof is on these new operators.
"DeFi" = "Deregulated Finance" (Score:3, Informative)
As it stands, many of these DeFi outfits are offering unsustainable returns
Hence the reason "DeFi" really stands for "Deregulated Finance".
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These new players need to explain, in precise terms, where the money is coming from to pay such high interest rates
Suckers.
how this can be sustained.
It can't.
Interest-bearing products (Score:2, Flamebait)
Allowing cryptocurrencies to be treated as interest-bearing investments is the very definition of a Ponzi scheme
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Why do you think the Deregulated Finance industry is trying to weasel their way around the rules?