Is a loss for Coinbase a company-ending event? Or is being forced to register all the coins that aren't BTC or ETH a costly regulatory burden?
What are the implications of registering all these coins as securities? Does it affect whether they can be offered to non-accredited investors? How expensive is it? Who bears the costs?
The issue is that if most coins are securities, then that means in order to operate, Coinbase has to become a registered securities exchange in order for it to do what it does. The regulations for securities exchanges are onerous, but also many of them aren't possible to comply with for crypto because of how it works.
So the SEC is saying "You are an unregistered securities exchange"
And coinbase is saying "Please give some kind of route by which we could possibly be compliant given the nature of cryptocurrencies"
And the SEC is saying "We have no obligation to give you such a route, just as we have no obligation to provide such a route for criminal black markets"
Who you interpret as being unreasonable here depends on if you think crypto is closer to the black market example, or if it's closer to being like regular securities but with a few tweaks to the rules to make it work.
Here is only one such brutal squeeze: registered security brokers must maintain control of all securities [0]. In practice, this means brokers use custodians[1]. Regulators have been working on making holding crypto harder for custodians [2].
The SEC expects the disclosure of various types of information which are impossible to create/state in the case of a decentralized security/commodity/currency like crypto.
Yeah, I'm not an expert here, but I believe it might be the reporting rules. This is the law that governs it, though it delegates a lot to the SEC and the particular requirements could be in the rules that the SEC puts out itself
And the SEC is also saying "you don't get to ignore the rules just because you don't like them". Whatever the rules should be, it's clear Coinbase is on the wrong side of what they are now.
We don’t do that kind of thing in America except for the occasional Enron when extreme levels of fraud are involved and someone takes out California’s electrical grid to boost profits.
IANAL but these SEC violations don’t seem to fit the bill.
Even if they loose they could probably still work out a way to broker btc and eth for Americans (as commodities). And also operate in other countries with different regulatory approaches.
The stock price would seem to suggest it's a long way from being a company-ending event, otherwise it would be $5 instead of $50. one of the nice things about the EMH is it gives a good heuristic of assessing how important or serious something is, just by looking at how the stock price reacts, without having to understand the actual details. much of the problem has to do with staking.
Is a loss for Coinbase a company-ending event? Or is being forced to register all the coins that aren't BTC or ETH a costly regulatory burden?
What are the implications of registering all these coins as securities? Does it affect whether they can be offered to non-accredited investors? How expensive is it? Who bears the costs?