Last night, @krakenfx fired back at the SEC with its final brief in the motion to dismiss the SEC’s complaint.
The SEC had its opportunity to tell the Court what, precisely, is the investment contract that supposedly trades on Kraken.
But they couldn't. 1/🧵
2/ Instead of identifying a contract, the SEC argued there are investment-like “expectations” and “investment concepts” in the air and those should be good enough.
3/ Instead of identifying a common enterprise (required by the law), it said there is an “ecosystem” and that should be good enough.
Last week: You read @krakenfx's motion to dismiss the SEC’s case against crypto.
Today: You’re reading about “a regulatory power grab,” how “the SEC has appointed itself crypto regulator“, and that ”the SEC… puts consumers at risk”
But wait. That’s not Kraken talking. That’s eight State Attorneys General in a new, explosive court filing.
Here’s what just went down.
(Tell your lawyer to read this thread👇)
2/ Kraken has long advocated for clear, concise rules for digital asset exchanges from Congress. There are multiple bills pending right now on both sides of the hill.
3/ Kraken even testified before both the House Financial Services Committee and the Agriculture Committee. We testified that Congress should make new rules that limit the SEC’s jurisdiction in favor of other agencies.
Kraken has published its response to the Treasury’s midnight rule on self-custodied wallets. The response is not short. It is not polite. It concludes with an important message:
Regulating crypto companies punishes the regulator.
Regulating a traditional bank is easy: If a proposed regulation forces the bank to provide the information the regulator wants, then implement the regulation and collect the information. EZPZ. /2
Doesn’t matter if compliance is costly. Regulator still gets the info it wants. Doesn’t matter if those costs are passed on to the customer. Regulator gets its info. Makes the UX cumbersome? Doesn’t matter. Regulator gets info. Risky for users? Too bad. Regulator gets info. /3
Kraken blogged. I share further thoughts in this thread👇 1/
2/ The story of this rulemaking actually starts in 2013, when Jennifer Shasky Calvery (then FinCEN Director) first suggested publicly that a VCTR – a virtual currency transaction report – would be valuable in fighting financial crime.
3/ It was about as well-received by the community as you might imagine. But even then, the proposal was just “A CTR for bitcoin” - not the VCTR you see before you today. What is a CTR and why is the VCTR totally different?
🚨🚨🚨 1/ If true, this is amazing. Unprecedented. This would represent the first ever transmogrification of a token from a security to a non-security, where the journey was explicitly blessed by the SEC.
2/ "Dude I don't care about a new internet or staxxx or whatever"
You should. The question of how a utility token can enter the world a security but then become a non-security has been open - painfully open - for years. SEC just blessed one very specific answer.
3/ @muneeb is really the one who should be doing this thread, since he lived this struggle. But from what I could see as a lawyer sometimes involved in Stacks transactions, it has been a long and complex road to compliance, complete with forks and detours.
1/ 🚨 BREAKING: US Office of the Comptroller of the Currency proposes rule prohibiting large banks from discriminating against "legal but disfavored" customers like oil & gas biz, independent ATM operators and of course...
crypto companies.
2/ Crypto OGs know the single greatest impediment to widespread adoption has been and continues to be the lack of access to banking services.
In its early days, Bitcoin was caught up in Operation Chokepoint, and crypto more broadly is still caught up today
3/ Operation Chokepoint is a long-standing effort by political powers to cripple the growth of industries that were perfectly legal, but that they found distasteful.