No that’s not the case. Coinbase wants CLARITY. The SEC does not give any guidance, response, or anything related to this issue. At the same time it’s a laat struggle between the SEC and the CFTC.
The SEC messed up for years but not protecting consumers against fraud. Now they’re trying to prove their reason existence / gov funding.
In one of the (I think MIT lectures 2018) videos, btw? Gensler stated that [probably all crypto except Bitcoin, but including Ether, are moody moody most likely securities].
However, the SEC fails to to provide any guidance and doesn’t have any official position. The reason is that if they make a small mistake or missed sleeping, they might’ve given a free pass.
> Coinbase wants CLARITY. The SEC does not give any guidance, response, or anything related to this issue.
Coinbase's PR machine wants you to believe they want clarity. Their actual legal documents instead indicate that they're aware that they're probably violating regulations. Take their petition to the SEC for example--it starts by asking not "are cryptocurrencies securities under the Howey test" but "should cryptocurrencies be considered securities". For a document that's supposedly Coinbase's grand we're-going-to-make-the-SEC-clarify-regulation strategy, it's very long on asking for changes to the regulatory regime and very short on asking for clarifications on the application of regulation to cryptocurrencies. Which strongly suggests that they in fact know how the regulations apply to cryptocurrencies, they just don't like it.
Did they ever ask? You can ask the SEC for a "no-action letter", where they will officially tell you if what you want to do is OK. Here are all no-action letters.[1]
Here's one for Paxos.[2] They asked for permission to run a small-scale blockchain-based clearing operation without being registered as a clearing house. No more than 7 institutional customers, a limited list of stocks, and a time limit.
They got it.
Somehow, Coinbase doesn't seem to be on the list there. It's a public record.
Can't find the part where everything except bitoin is a security, I think that was said later in public.. But these are quotes from the lecture. Interestingly, lecture 18 is not available (it wasn't either when all of this was published), but it's right in the securities/regulations part. I'd highly recommend anyone to watch all of the lectures, because they're highly informational. Gary is a super smart guy. Many people think that regulators don't understand crypto etc, but I think Gary knows a lot more than many many people.
"Blockchain isn't the-- we don't have regulation because of blockchain, and we don't necessarily need a new set of regulations."
https://youtu.be/l0vD_FBWk0g?t=1976
"So we already know in the US and in many other jurisdictions that 3/4 of the market are not ICOs or not
what would be called securities, even in the US, Canada, and Taiwan, the three jurisdictions that follow something similar to the Howey Test that we've talked about.
3/4 of the market is non-securities. It's just a commodity, a cash crypto.
So you'll hear debates about initial coin offerings. And what's a security? And what's not a security? Relevant-- relevant and important debate, but for 3/4 of the market, it's not particularly relevant as a legal matter, as a regulatory matter. "
>In one of the (I think MIT lectures 2018) videos, btw? Gensler stated that [probably all crypto except Bitcoin, but including Ether, are moody moody most likely securities].
As recently as 2 months ago Gensler declined to say whether or not Ether is a security in front of congress.
> Gensler declined to say whether or not Ether is a security in front of congress
Whether Ether is a security is irrelevant to this case, based on an investigation which pre-dates Gensler’s term at the SEC, which is about whether Coinbase is required to register and operate as a securities exchange on account of having traded e.g. Solana. The entire argument obsessing over his refusing to come to conclusions until facts are established reminds me of creationists picking a tiny, side element of scientists’ arguments and then spending their entire time arguing with themselves over a point with zero germaneness.
Coinbase already has a license, but they're not using it.
If it's not even clear what a security is, why would you register as a securities broker/exchange?
> If it's not even clear what a security is, why would you register as a securities broker/exchange
False condition. The SEC has made it clear that various crypto, e.g. Solana, are securities. If you want to trade those, you must register. Again, if you just want to cash trade Bitcoin and Ether, the SEC has shown zero inclination of messing with you.
In 2017, the SEC issued the DAO Report [1]. It—together with guidance around ICOs—made the status quo per the SEC super clear. Investigations and enforcement take time, but the rules of the game were known; the industry had been working to change the status quo.
If you want to know whether something is legal or not, you talk to a lawyer or (less reliably) law enforcement. When Coinbase asked the SEC if it needed to register, without—to my knowledge—exception, it said yes.
> However, the SEC fails to to provide any guidance and doesn’t have any official position. The reason is that if they make a small mistake or missed sleeping, they might’ve given a free pass.
It also helps when one of your former execs came from Goldman Sachs, and were backed by VC including YC and the Stanford mafia--Balaji's buy out of 21 and being placed as CTO confirmed all my suspicions I had during thier mining days.
Honestly, and I say this with all the malice in the World if you
are reading this, Armstrong: I hope we can finally get rid of you and that cancer that is Coinbase and all the BS it has wrought us once and for all, even if it crashes the market for a while.
The fact that they hold that much BTC is a huge issue, but what is at the core of this is more to do with the real problem with this is centralized systems with directly conflicting ideals to the overall community operates with so much weight in an otherwise decentralized network: they were unfit to be in this ecosystem and they exploited a very clear window with their immense access to resources and VC money and while they made the most of it, it seems the tide has finally turned on them.
I can forgive Mark and MTGOX, that was a case of what happens when gross incompetence and unforeseen immense growth intersect; he paid a price for that, spent time in a Japanese prison and had his entire life ruined in the process.
Brian Armstrong has spent a decade being the bane of the Bitcoin ecosystem and sold scams to unwitting customers with no remorse, sided with the FUDsters during USAF etc... this is the typical corpo with no scruples trying to act innocent when he is finally subjected to the same regulatory body who leave the rest of us in the dark: those who I will remind you he sided with all along because it benefited him.
I honestly wish he gets the Charlie Schrem treatment and gets humbled in the same way.
The SEC messed up for years but not protecting consumers against fraud. Now they’re trying to prove their reason existence / gov funding.
In one of the (I think MIT lectures 2018) videos, btw? Gensler stated that [probably all crypto except Bitcoin, but including Ether, are moody moody most likely securities].
However, the SEC fails to to provide any guidance and doesn’t have any official position. The reason is that if they make a small mistake or missed sleeping, they might’ve given a free pass.
Edit - MIT open courseware 2018