most people involved in DeFi do more than write, publish, deploy or run code--they also promote & brand the code, employ & manage other coders & (directly or indirectly) 'make money' from the code--so, regardless of 1A issues, these activities will be regulatory targets
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Gensler speaking at @EP_Economics on crypto:
-repeats they are very focused on "platform" (exchanging, lending), "whether centralized or decentralized"
-repeats crypto can be a "catalyst for change";
-repeats he is "technology neutral"
-repeats that tech innovations in finance do not thrive unless brought under "public policy goals" incl. "investor protection"
-notes that DeFi platforms remove broker-dealers, therefore it is incumbent "on the platform" [?] to provide broker-dealer-style protections
-notes they are also very focused on "stablecoins"; says primary purpose of stablecoins is to 'sidestep public policy goals. . .such as AML and tax reporting'
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
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
okay, so I went through @DonBeyerVA 's proposed 'Digital Asset Market Structure and Investor Protection Act' more carefully, and here is the obligatory thread
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)
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)
@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