what still seems odd to me is that mere functionality of the token / network takes it out of the securities laws; I do think that's inconsistent with current U.S. securities law, so unless Congress approves that, I would delete clause (ii) of the definition of "Network Maturity"
we need something though, so, one again, @HesterPeirce deserves our gratitude for continuing to push for progress
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Here is a new @iearnfinance governance proposal by @tracheopteryx and me. We worked on it on & off for months, with @tracheopteryx putting in especially heavy time.
I will say a few words about my own thinking on it (speaking only for myself).
there are a lot of ideas & narratives out there about DeFi/protocol/DAO/community governance, but they often don't match up to the reality of what happens on the ground:
narrative: if there is a governance token, that means the token holders are in control of 'the protocol'
reality: governance token holders lack off-chain authority & thus rely on a fragile deference-by-rough-social-consensus upheld by devs & users who help define the protocol
An interesting response from LBRY to the SEC's lawsuit. LBRY tokens might be securities, but it's been almost 4 years since the DAO report and there is still no viable compliance path for launching a cryptonative token--truly unjust and unfair.
The context from the LBRY team shows that at least some SEC staff see LBRY tokens as being securities and essentially all transactions in LBRY tokens as being securities transactions. The SEC's filed complaint is more narrow and focuses on capital-raising LBRY sales by LBRY Inc.
The SEC is not helping the crypto industry figure out a way to comply with the securities laws. Recent SEC settlements have required the team to abandon the project & essentially make the token worthless. It seems LBRY was offered a similar settlement, but declined.
The hard legal problems with DAOs are not entity formation. They are:
*getting states to grant limited liability to anon members of stateless unincorporated DAOs
*establishing norms of contractual code deference
*taxation
*carving DAO shares out of securities laws
In order to be doing good legal innovation in the blockchain area, you have to honor its roots & purposes, which are fundamentally libertarian and anarchist.
Lawyers should not be coopting & repurposing anarchist concepts to preserve the lawyers' relevancy.
As for DAO/entity mashups, the best shot at getting states to recognize & enforce them lies not in badly drafted prescriptivist technophilic legislation but in experimenting with private contracts in jurisdictions with high respect for freedom of contract.
1/ I shared some thoughts with @nikhileshde on XRP delisting.
I believe XRP is a security & that Ripple's years of dumping on brainwashed retail investors is way overdue to be stopped. But the SEC's approach is pain-maximizing to XRP holders, who are exchange *customers*....
2/ The best customer experience would have been to listen to more conservative securities lawyers (& technologists who flagged XRP is trash) and never list XRP in the first place. We shouldn't easily forgive that mistake, to be clear.
3/ Second best to that though, you want to understand what's happening and not decide rashly. Unlike some previous settlements, the SEC's complaint does not seek to make Ripple comply with the Exchange Act re: XRP (i.e., it does not seek to make Ripple become an SEC-reporting co)