And you think the SEC is going to do that over some unregulated stock exchanges? You guys are seriously over-estimating the power and motivation of the SEC.
You also seem to think that the US government cares more about people playing around on virtual stock exchanges then they do about terrorists and drug dealers, which again, is totally delusional.
Why do you think btct.co had a 1-month grace period to shut down, while the silkroad had it's server hacked, all bitcoins seized, and it's owner thrown in jail? It's because the government takes that far more seriously, and bitcoin can already be used for drug dealing and money laundering. They take that stuff way more seriously then stock exchange nonsense.
Pirateat40 got shut down because he was running a Ponzi scheme, not because he was issuing unregulated securities.
Should any of these exchanges become fairly successful
and host a few ponzi schemes/scams you can guarantee that the SEC will eventually try to do something about it.
Exactly. But we're talking about the possibility of a distributed exchange, or whether or not using colored coins will result in the SEC somehow shutting down bitcoin, as if they had that kind of power.
They don't. Not even close. In fact, right now they're incredibly weak. Only an act of congress could get bitcoin banned, and at the moment Congress is about as ineffective at everything as Sam. In fact, it wasn't the SEC that shut down Pirateat40, it was the FBI/DOJ. ANd that would have happened if he had been issuing "legitimate" securities as well. Just look at Bernie madoff. His prosecution has nothing to do with the fact that his securities weren't
properly registered.
Clearly both the silk road and these unregistered exchanges are illegal but there is a huge difference between them. Obviously as you said the silk road (with USD millions of illegal trade) is more of a priority than exchanges that hardly reach 1 million USD but i think they will eventually show up on their radar.
Sure, if they host outright scams. Some people did speculate that labcoin caused the downfall of btct.co, and that could be right. Burnside might have worried they were a scam and that people might go after
him if they lost a lot of money.
Colored coins provides no central place to attack so that would force SEC to go after the scams themselves.
Exactly, just like the DOJ went after the silkroad itself, rather then trying to shutdown bitcoin. But, the point is that if coloredcoins are used as virtual stocks, the reality is that it wouldn't, by far, be the reason the government would try to shut down all of bitcoin. Drug dealers, terrorism, tax evasion and money laundering in general are far bigger issues for the US government, and all of those things can be done on the current blockchain now, without the use of colored coins.
I don't think colored coins are a good way of dealing with virtual stocks, because people can get scammed out of colored coins just as they can be scammed out of bitcoin. You can ask to buy 100 colored coins for 1 btc, get the 100 colored coins, and then not send the btc.
But the idea that the colored coins could cause the downfall of bitcoin, or that the SEC even has the power to ban software is totally bonkers.
