Topic: New US Ruling deems most altcoins, if not all are securities (Read 298 times)

While my business is probably in the bullseye of this new ruling, I don't have a problem with the notion in theory. My marketplace is a stable one free of BS because all of our coins are treated exactly the same and every coin has the same fixed amount minted, so people can't play games with the coin valuation using share dilution.

In other words, if altcoins are required, as public companies are, to publicly divulge through filings when then dilute their shares, then I'm fine with that and anybody who wants to invest in a stable marketplace free of shenanigans should welcome that.

Heavy caveat here that regulations can be stupid sometimes, but the safer and more transparent they can make things for investors, the more people will invest.

laws are just paper, and code does not have eyes to read paper.. so code doesnt care about laws or borders
however humans and CEO's can
laws are for the peoples use of a product/assets, its not about laws enforced on the product

its for the regulated exchanges to not accept dodgy crypto unless the crypto has been vetted
EG a ICO cant just get listed on a regulated CEX unless the ICO creator registers his ICO, and the regulated CEX files for approval also
(much the same approval process to do ETF shares)

so if some european homeless guy creating a  dodgy crypto wants to have his coin seen on US coinbase market he has to register his crypto as a US security(much like the ETF share process) and then file some papers with coinbase where coinbase then files with SEC and then sec approves the crypto to be traded and launched on coinbase .. much the same as the ETF process

this then also means. filing with other countries (much like we cant just in the UK buy US shares of bitcoin ETF as its not approved in the UK, the UK now need to offer a vetting process for exchanges to offer securities in the UK)

gensler said years ago due to bitcoin not being a product of a company its not a security so gets to skip the hurdles (grandfatherd in)
however now, with most coins declared as security they have to go through a vetting process to appear as marketable products on a CEX

in short, no more anonymous ICO crapcoin's appearing on regulated US exchanges unless ICO creator de-anonymises themselves in the application stage to get approval

..
you may also be aware from january 2024 that companies/trusts cannot stay anonymous via proxy trustee's/beneficiaries being shell companies and must register the real human owner of company/trusts
(ref: federal corporation transparency act(FCTA)beneficiary ownership information(BOI))

..
an example would be if ETH is security(mainnet eth, not subnetwork tokens) then vitalik will need to incorporate and Dox himself fully and go through a process and pay lience fee's and lawyers to get accepted on exchanges in the US

That's a theory which is not practical. Laws on their own mean nothing unless they can be enforced. How are they going to force people to register the garbage they create to scam people? It's not like ICO tokens require identity. Not to mention the creator may not be inside US jurisdiction.
One could be a homeless person pooping in New York sub or Elon Musk in his mansion creating the shittoken, either way it will be anonymous.

the other reasons for calling them securities is that they represent a end product of a underlying ownership of something. meaning when someone makes a crap coin ICO the ICO creator has to register his release/system/airdrop..(much like ETF had to apply to offer shares(securities) of bitcoin)

by gensler saying bitcoin is not security he is not trying to treat bitcoin as a offering thats owned by some company that needs registering. but instead the secondary token/pegged/IOU units/shares are securities, thus bitcoin can escape the registration stuff of releasing new coin, but the secondary offchain stuff pegged to it would need to register their creations to meet regulatory conditions, when services/exchanges intend to accept/trade them

whereby if an exchange is trading an unregistered security the exchange can be slapped with a fine.. as can the ICO/token/iou-peg creator also

On the point of it not really being a new concern, the SEC's position on classifying cryptos has been evident for a while. The story of the SEC treating altcoins as securities goes back at least as far as 2017, and then they just expanded this rhetoric (Bitcoin isn't a security, but other cryptos are) over the years, as is well-described in this article.
I also want to comment about crypto casinos specifically. The SEC's rulings apply only to the US, not the rest of the world. And crypto casinos often didn't serve US customers in the past anyway because online gambling is largely illegal in the US (the details vary from one state to another, but still).

True.  But because people spend money on them and trade them, there still has to be some sort of government-friendly classification which regulatory bodies can apply to them.  Convincing the SEC to officially adopt the classification of 'shitcoin' might be a long shot.  

You're right, though.  It does seem to give most of them a seriously undeserving aura of legitimacy to call them 'securities'.  Arguably, 95+% of altcoins could simply be labeled 'frivolities'.  That feels a more accurate reflection of their true nature.

You do not need a soothsayer to tell you that crypto assets are stores of value, utility and security. Many are only making their own versions of interpretations and that is why such cases are being dragged to the court to ascertain what they truly are. But for me, there is no mistake here, unless maybe some people do not want to accept some facts whether because of their love for crypto or for their hate for it, but indeed, cryptocurrency as a whole has all the qualities/characteristics posted above.

Regardless, it is time for the world government to know that the world is revolving, so it is no longer the time that we believe that securities can't be used one way or the other. Cryptocurrency is beyond what can be restricted to a single function, and as an asset, let it do whatever it is capable of doing without intimidation. Are they not using securities to settle transactions and debts, especially bonds?

Is that not a form of payment? So, I simply do not know what the so-called Michael Saylor is driving towards. Many people will just be running their mouths without even knowing anything.

Securities? Majority of altcoins, specifically all the tokens, are useless garbage. The only categorization that is accurate for them is shitcoin.

Altcoins are alive with pump and dumps. They are always dumping and their dumps is because they are useless not because some government said something about them. Similarly they get pumped because some market manipulators or pumping groups decided to pump them not because that government hadn't said that thing about them!!

There's this thing about US people where they have this tunnel-effect perception that the US is the entire world for some reason. This is the exact same reason why a lot of people in the US think that BTC is useless because the USD is fine — as if 100% of the world's population use the US Dollar lmao.

a)  The US doesn't run the world (despite the fact they like to pretend they do).  There are close to 200 other countries on Earth where US rules don't apply.  Get some perspective.

b)  This has been in the pipeline for a few years and isn't remotely surprising.  Anyone who's been paying attention already knew what the SEC's stance was and what they were working towards.

Title is misleading. The whole article was about insider trading and while some altcoins might end up being securities, some of them certainly are not going to be.

This is from sec.org press release about the coinbase insider trading incident:

How this turned to "New US Ruling deems most altcoins, if not all are securities"?

There were ton of shady icos / token sales, including some famous respected coins out there. And those made stupid mistakes, and i often wondered if they are ever going to be paying for that. And it just might be that wheels of justice have been slow. So i would be amazed if many of altcoins that had token sales wouldn't be securities.

But legitimacy on these coins/tokens varies, and some of them actually managed to be run by professionals. Some of them were private sales, some of them were distributed by airdrops so legitimacy against some public token sales with moon marketing are on whole different level.

Yeah these legal battles in crypto seem never ending. If the SEC ruling sticks, exchanges might stick to safer bets and anything that looks like an IPO could be in trouble. They really should've sorted out these rules ages ago to avoid all this confusion

This has been dragging on for years and will keep dragging on for many more years. Remember the XRP lawsuit which started a few years back and it led to xrp getting delisted on many exchanges?

If this passes then what the coinbase pairs be? I can see Bitcoin, Litecoin, Bitcoin Cash and maybe Dogecoin. Any other token out there which had some type of IPO at one point is considered a security. They needed to make the laws regarding this more clear about 5 years ago.

Look, I'm pretty sure it's generally a safe assumption that 99% of cryptocurrencies are securities in the first place. Do the masses care? I don't really think so as most people don't even know what a 'security' means in the first place lol. People have been calling for the "end of the crypto casino" since forever.

Where do you get that bullshit from? I don't have any money in shitcoins either but first, the market has not suffered after this rulling and second, securities are widely traded in the markets on a day to day basis.


I'll answer that for you: a security depends on a central authority that can issue it at will, just like the bonds of a company or a government.

as long as none of the coins/tokens are deemed security when moved peer to peer (buying goods or services)

the regulator have control of categorisation when used on regulated MoneyServiceBusinesses (CEX)/locked for use on tradfi stock markets..
..but should not strictly classify all use-cases as security or commodity without exception when not used in services that require regulation

The ruling doesn’t declare that most altcoins are tokens, only a narrow set of specific tokens, although this could have implications for centralized altcoins such as Ripple. Previously, Ripple was only considered a security when its issuers were selling tokens directly to institutional investors. Now it can also be considered a security if it is being sold on exchanges like Coinbase. There is still several other lawsuits in progress and the rulings in those cases could end up being in conflict with each other and higher courts will need to get involved to sort it all out.

by them saying "secondary tokens" meaning end product.. those would be securities(when sold in a CEX).. whereby, the "primary" coin, which the secondary tokens are a peg of, the primary coin is classed as a commodity in that case(when custodianed/locked to offer secondary units)

EG ethereum producing secondary tokens makes the token a security and eth becomes the commodity of the token
and thats where regulators get things wrong when trying to overstep and be too broad in classifications in regards to bitcoin vs eth. which both have ability to produce subnetwork tokens.. but mainnet coins should only be treated as commodity if said coin is locked and used as a secondary subnetwork token producer

however, how those end product use cases should not all be blasted as one class, as their end utility may be different. EG not have all utility thrown into the cap gains category, but be adjustable dependant on utility to be in different tax classifications and regulation treatment(when not used in a custodian/cex/regulated service)

(money on FOREX markets is regulated differently than money in retail commerce market of goods/services)

If SEC. Chairman Gensler can not answer the question, is Ethereum a security or a commodity, it does not make sense that SEC. under his term, tries to suit other cryptocurrencies as securities.

We need new laws as the current laws which is already outdated and new laws must be passed by US. government. SEC. should not over use their power and they should try to do their main task on Security, not on cryptocurrency.

Look at Gensler https://www.youtube.com/watch?v=aIcNGfF8FDA

first they came for the uninstitutioned transfers of fiat.. to do crypto swaps
then they came directly for the crypto swaps

technically
when a asset is being used as a end product its a security
when its used as a raw item used to create other end products its a commodity

EG
gold can be a commodity and a security asset depending on which market it sits on(how its used/viewed/treated within a market)

gold sold as a antique ornament at auction can be treated as a security for holders insurance and income/inheritance tax purposes
gold bars sold for industrial use can be treated as a commodity for traders/industry tax purposes

so coinbase trading bitcoin for fiat is a security
coinbase prime custodianising bitcoin to be used as a ETF share makes those bitcoin a commodity, the share becomes the security
other CEX custodianising bitcoin to be used as a peg for subnetwork units makes those bitcoin a commodity, the subnetwork unit is the security

emphasis
bitcoin doing fiat to bitcoin swaps is a security,
but if its locked up to then peg off to a subnetwork or ETF to offer different units of measure
bitcoin is then a commodity and its subsystem pegged unit is the security

however by regulators trying to define all utility no matter the purpose as one variety of class.. is an overstep and a naive oversight.

its like money
if its used to pay someone within family, its treated a certain way for tax purposes (gift/inheritance)
if its used to pay an employee from an employer it s treated a different way for tax purposes (income tax)
if its received by a business from a customer sale it is treated a different way for tax purposes (corporation tax)
when using money as collateral for a loan, its treated differently again for tax purposes(loans are zero tax rated)
when money is locked into a pension fund, its treated differently again for tax purposes
when used to buy goods/services by a customer its treated differently again(sales tax)