Topic: A BTC stock exchange for high-risk, unverified securities? (Read 6152 times)

High-five to Nefario! Cool stuff, I'm interested to see how everything will play out.

Just regarding Korbman's comments on the SEC and GLBSE, we're defacto based in the UK now and once we complete registration we'll be a UK company proper, this brings us under the Financial Services Authority(FSA) domain of influence which is a lot more relaxed than the SEC.

We're going to do what we can to make GLBSE and listing on it as legitimate as possible but also keep the paperwork down.

+1

I'm not disagreeing with you, I'm just saying that there aren't any specific securities laws that deal solely in cryptocurrencies. There are definitely generic laws that can be manipulated to cover any form of currency exchange.


Exactly. Securities Law of 1933 is all about pushing transparency, and 1934 is all about giving the SEC broad power to regulate the sale of any security. I'm sure any lawyer worth their salt could use these laws as a basis of attack for taking down GLBSE because it acts as a Security Exchange. The SEC seeks to regulate all types of investment schemes. The question is, is GLBSE that big of a deal to make it worth the SECs time to go after it? By and large, bitcoin is still very much a niche market with 200,000 global active users on Mt Gox (used as my basis since it's the most popular exchange, https://mtgox.com/press_release_20120831.html) trading for normal currencies. Let's say there are 1 million active users throughout the world (which isn't too far fetched I think)...that's a sexy .015% of the total population.


I partially agree with this, mainly since the JOBS Act is all about helping businesses get funding, but a business started within GLBSE and solely based on Bitcoins wouldn't be subject to the same stipulations. This is because Bitcoins aren't a recognized form of currency under the government, it isn't backed by any entity or asset, and the value of the coin is solely determined by users of the coin. The business may have the equivalent of $10 million in funding one week, but $8 million the next..or $12 million the week after that. The regulations would probably come into play when the business exchanges Bitcoins for regulated currency, but I think the IRS would be quite a bit more interested in that than the SEC.

Anyway, Securities Law is INSANELY complex.


Agreed. I came to GLBSE because I had an idea and I wanted to see if I could make that idea come to fruition. Adding tons of requirements and restrictions that bars those of us without an established business defeats the point of GLBSE and Bitcoin.

Your Right But I think there is a posting on another thread from "Deathandtaxes" about using Profit Sharing agreements with a US Based LLC to allow you to get around this issue.

I already have a US Based bitcoin LLC that is becomng public information in the next few weeks, so I'm most likely going to "Dox" myself after that before I have nothing to hide.

I'm most likely going to Setup DBA's for all my Assets on GLBSE to point to my other non-bitcoin LLC, and reorganize the contracts to reflect that.

I already have a provision in my bylaws the forced me to file a motion for approval if I spend over 1 BTC. When I keep assets in BTC, I store them on public addresses so people can follow the coins.

I need more transparency to the BTC going into my asset and going Out VIA GLBSE, Currently I transfer all share sale profits to an IPO-Account Address. So the shareholder can see the money coming into the asset. I have a dividend account where I store the next dividend payment before sending it out. I have a growth account that has a percent of profit. And a weekly Mining Rig account so people can see the money going in.

If GLBSE would have the option of BTC Accounts that I could disclose to the shareholder Via GLBSE this would be great. So all sales of shares woould go Into my IPO-Account. and would be visible showing I have 10 BTC in GLBSE on my account.

I consider it a race with other asset owners to be able to get to the Top by becoming an A Listed Asset.
I consider myself "GREEN" to be the most Open asset because I'm so open about all finances of the company and try to post any detail no matter how small, most people don't see that because my market cap is very small and I don't have any problems being the small guy.

Saying "the medium of exchange is a gray area, so securities law doesn't apply" wont keep you out of court if you are the first one over the hill to test it.  The legal fees just to have your day in court would bankrupt most small companies.  Think of it this way: there is no law that says suffocating someone with a plunger is illegal, but I suspect any judge can apply existing laws to that situation. The fact that is a gray area means it has risk, not that its free from risk.  Which is why some companies would be hesitant as stated earlier.

In the US, the Securities and Exchange Acts of 1933/1934 are legally worded to cover securities that are offered "using the means and instrumentalities of interstate commerce".  Pretty vague.  Using it as the basis of a filing for the prosecution is probably going to get it on the docket.  If it does apply, then Rule 144 alone decimates Bitcoin stock exchanges since direct placement of those securities would have a holding period and resale restrictions (legal compliance opinions, transfer agents, street name registration, percentage sale limitations, etc).

On the other hand, the Jumpstart Our Jobs Act of 2012 makes it much easier to crowd source funding for small businesses without the strict registration requirements.  This is where I would start if I was the defense.  You can make the case that these businesses are exactly covered by the JOBS Act.  Just stay under $10 million in funding and keep less than 500 unaccredited investors (or 2000 accredited and unaccredited investors).  Also make sure you aren't taking more than 2% of someones yearly income or more than $10k from someone making $100k/year.  I'm sure other rules apply.

IANAL, but I do work for a public company that I helped start over a decade ago.  Which means I had to learn a bunch of securities law for the time when my only compensation was stock (during the dot-com crash).  I've also been an active part in a federal trial for the same company and had to learn way more about US legal system than I ever thought I'd have to.

As far as the GLBSE BlueMarket, I think its a great idea.  But the requirements should be simpler than a fully reporting company on the Nasdaq OTCBB or else the cost would be about the same to maintain both listings.  (i.e. expensive).

Let's hope this is true.

There is no such law.

Bitcoins fall in the legal gray area, so there are no laws surrounding it. Given Nefario's (and other's) ideas for what it takes to enter the Blue Market, many small businesses could qualify. They could start an IPO to get funding to help expand their business, or any number of other possibilities. From an accounting standpoint, it would be somewhere on the same plane as when a larger company issues stocks/bonds on the normal security exchanges. The difference is that there's VASTLY less red tape to get through with GLBSE than there is with the SEC and NYSE...and it's cheaper.

Do you have a specific law that prevents it?

I have a sneaking suspicion that companies who can list on blue wont go near glbse as they would be prevented by securities law from doing so.

I agree. The average return of the junk bond is much higher than the TB.

Am I totally missing something or basically this would just be a portal for : send me 1000btc and I will run away because I'm allowed to?

If they are under 18 it is even more important to provide the information by someone who is legally responsible for them.
This is all about accountability in case something goes bad. In many countries a minor cannot be held fully financially accountable.
So ID of parents or legal guardians and their utility bill additional to the ID of the kid should be required when under 18.

Re renting: Back when I was renting, the DMV (Department for Motor Vehicles) requested a signed statement from my landlord to show that I live there. I know that's a hassle and it would be great if there's a better way.

Sent.

Sorry, I should have clarified. 3 weeks ago was when everything was all submitted. My launch date was originally set for September 1st...but then given the work that's going on, I'm looking to move it to October 1st instead. But under the IPO tab where you see what's up and coming, I haven't been posted yet. Once I'm there, then I'll start updating the forum thread I've created with details. I don't want to put myself out there when no one can follow up and check on the IPO on GLBSE because it doesn't exist yet.


This has always been a problem for me as well. I rent an apartment with 2 other people. My first roommate moved in about a week before my friend and I, so her name is on the power and tv/internet bills. My cell phone is bought and paid for by my company...which is awesome since I don't have to worry about those bills, but crappy because it's not in my name.

I am verified on Mt. Gox though, thankfully since I was able to use my most recent tax returns to show proof of address. Maybe that might be something to pursue? I'm always on edge about that stuff though...utility bills are one thing, but tax docs are just a treasure trove of personal information that you definitely don't want leaked. Unfortunately at the time it was the only thing I could use...

There's a lot of things that do have my name on it though. I have bank statements (stemming back for 4 years when I last switched banks), credit cards, student loans, pay stubs from my current job, car loan, and car insurance all 100% in my name and all with my address. I get how you can fake a few of these items, but still...

And what about people looking to get a start on the exchange without any of these things? What if they live with their parents, or are under 18? Chances are, they don't have any docs that would prove their address under the traditional verification methods. Quite the tricky situation indeed!

My public key is on pgp.mit.edu for [email protected], encrypt a high quality scan/pic also showing a little note (on the whitespace) saying your GLBSE username.

Thanks for the response.

I thought about that particular part too.

If you pay the utility bill for a house you might not live there in case you rent it out. But that is just as good, as in that case you would usually be the owner.

I always hated that too, unfortunately I do not see a practical way to prove a physical identity without providing additional information.

With proper security measures, I would be ok with sending you a utility bill.

It normally is, and I've always hated that, for myself I mean, as I've never had a utility bill in my name, utilities were always included in my rent.

But you're right, no one is going to pay the bills for a house unless they live there.

Normally I have seen a fresh utility bill is used for that. (electricity, internet, phone...)

It's not intentional guys, I'm really sorry for the delays.

For new assets I want to wait until after the conference, for a number of mainly policy reasons.

For address verification this is actually a tricky issue. We've been doing it a particular way but I'm worried it could be gamed.

How do you prove you live where you do?

Sending a letter with a code doesn't prove anything, just that you can get post at that address. What can really prove you live at a particular address?