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_gabrielShapir0 Profile picture
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6 Aug, 4 tweets, 2 min read
pretty sure this is the first SEC action holding 'governance tokens' per se to be securities (unless you count the DAO report)

needless to say, the platform at issue here is *not* 'decentralized finance' and I am disappointed to see it described thus

sec.gov/news/press-rel…
one takeaway from Gensler's recent remarks as well as this action is that the SEC is going to argue APYs / APRs are "promises"

every single DeFi front-end would do well to adjust how it is talking about them & add in-your-face disclaimers and nuance
a lot of us (@collins_belton, @propelforward, et al) discussed for a long time that there are securities other than investment contracts and tests other than Howey; SEC is now broadening its approach to encompass tokens-as-debt-securities for DeFi
if you want to add a disclaimer about DeFi yields / APRs / APYs, this might be a good place to start--I am not your lawyer, your circumstances may differ and please consult your own counsel

github.com/LeXpunK-Army/O…

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_gabrielShapir0 Profile picture
7 Aug
been talking to a lot of DeFi teams lately

some are even more decentralized than I thought & rapidly decentralizing more

don't know what regulators will argue; that it's illegal to create an incentive system that gives rise to a transactional network as an emergent phenomenon?
or maybe that a website can itself be a securities exchange, futures exchange, etc.?

but you realize what that means right?

you can perform the same transactions and get the same info from etherscan

is a block explorer website also a securities exchange?

makes no sense
I think all regulators can do is:

(a) argue governance tokens were securities at some point & get Section 5 liability from founding team

(b) use 'cui bono' logic to say someone who benefits a lot should be liable as an exchange operator, even if they don't operate the exchange
Read 5 tweets
_gabrielShapir0 Profile picture
30 Jul
okay, so I went through @DonBeyerVA 's proposed 'Digital Asset Market Structure and Investor Protection Act' more carefully, and here is the obligatory thread

beyer.house.gov/news/documents…
the good:
*this should be a low bar, but the definitions/drafting are non-circular and reasonably technologically accurate--more than I can say for other blockchain legislation
the good (cont'd):
*reasonable approach to securities laws:

-->token is security if it carries equity-ish rights in the issuer or was sold for risk capital (sorry @NYcryptolawyer)

-->can 'de-securitize' Howey tokens

-->3-year grace period prior to desecuritization
Read 29 tweets
_gabrielShapir0 Profile picture
29 Jul
Damn, pretty comprehensive.

beyer.house.gov/news/documents…
there's going to be a lot of controversy here but I just want to say that while this bill could be evil af it at least is drafted coherently--for example, it doesn't call tokens "representations of value"
it also enshrines logic similar to @HesterPeirce 's proposal by introducing the notion of a 'desecuritization certificate' for tokens that begin as securities (in this case likely meant for tokens which are tied up in Howey transactions rather than being 'inherent' securities)
Read 6 tweets
_gabrielShapir0 Profile picture
29 Jul
good thread from @adamscochran rebutting points from @angela_walch

that miners & other ecosystem players have *some* discretion does not make them TradFi-like intermediaries/fiduciaries

miners compete; one miner will gladly get paid to mine a tx censored by another miner
@adamscochran @angela_walch much of political FUD around blockchain also ignores the natural checks/balances that have arisen in the blockchain ecosystem

sure, core devs have power, but that power is checked by miners, investors, non-mining node runners, app (wallet) providers, DApp teams, etc.
likewise, miner power is checked by the power of core devs + those other constituencies

the resulting system is more robust & trust-minimized than any set of TradFi laws / contracts / regulatory watchdogs could have made it
Read 6 tweets
_gabrielShapir0 Profile picture
3 Jun
Cryptolaw should be done in the crypto spirit. The 6 lawyers involved here are great but already lobby through other closed opaque orgs, and no 6 people can 'represent DeFi'. DAOs paying millions to non-incentive-aligned biglaw lobbyists is not the cypherpunk way.
to be clear, I am not calling the 6 lawyers who would be in the nonprofit 'non-incentive-aligned biglaw lobbyists', but it certainly sounds like they would be using a chunk of the funds to pay other lawyers, and likely those lawyers would be non-incentive-aligned biglaw lobbyists
Whatever permission you gain by playing legacy games with legacy people is fragile, corruptible & easily lost through regime change. Funding an opaque, closed lobbying org staffed by members and alums of other lobbying orgs--this is not crypto! We need a better way.
Read 18 tweets
_gabrielShapir0 Profile picture
28 May
no time to write something long, but don't be fooled by the fact that Bitconnect was a fraud--this case could become a blueprint for action against non-fraudulent DAOs

N.B.--Bitconnect was an "unincorporated association"
in this thread @collins_belton echoes conversations we have been having with DAOs for a while--they need to start thinking about indemnification structures to protect the core devs & others involved with the project

the SEC is smart. . .their theory on this case seems novel & susceptible of being challenged in several ways, but these particular defendants are un-sympathetic & will probably not have top-notch defense counsel; SEC will get a precedent it can then use against DeFi teams...
Read 6 tweets

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