no, letting a multi-billion-$ financial system develop for years with little guidance & then crashing it with a sudden politically motivated 'crackdown' is a "threat to the financial system"
Enron was an SEC-reporting company
traders saw the 2008 crisis coming before regulators did; regulatory policy directly led to that crisis by manipulating markets to pump real estate valuations & pick winners & losers; Bitcoin was a direct 'power to the people' response
in M&A lawyering, we had a saying 'you can't protect against fraud'

all you can do is punish it after it happens

pile on every sort of compliance tool you can imagine--there will still be fraud and lots of softer, completely legal "there oughtta be a law against it" schemes
DeFi is not completely trustless in all dimensions (yet), but it is already the most inherently transparent & empowering form of money management ever created
crypto & DeFi have inspired two generations to level-up their direct financial knowledge & experience, meaning they no longer have to entrust a scammy SEC-reporting company like Enron with their financial future--they can rely on themselves & code
Madoff was a FINRA-licensed broker-dealer and his firm was an SEC-registered investment advisor
onerous, vague, Orwellian laws & regulations are *proven* failures at anticipating and preventing scams & meltdowns, time and again

proven to *distort* markets & *cause* meltdowns, time & again

crypto & DeFi are unproven but our best chance at holding bad actors accountable
why? b/c it empowers people

& ultimately, the *only* cure to being abused & misled by predators is being as smart, connected, and empowered as they are

corrupt 'regulated' intermediaries and 'SEC registrants' have and will do more harm than any 'shadowy supercoder'

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More from @lex_node

21 Sep
this would indeed be a wonderful thing

but it's not the full story...put simply, if most tokens are securities and AMMs are securities exchanges, then essentially all current token transactions are illegal, whether informed or uninformed
there is no current way to register any smart contract system with the SEC as a securities exchange

even if you could, it would automatically be violating the exchange requirements, as it cannot KYC its users, reverse transactions, etc.
in other words: a government-regulated disclosure regime relating to crypto technology risks would, in my opinion, be a wonderful thing...but it has to work without simply killing the technology...the non-disclosure parts of the securities laws would kill current tech
Read 4 tweets
20 Sep
so far just talking about regular capital markets 🙄
why does he call Satoshi "she"? I could understand "he or she" or "they".
Read 10 tweets
1 Sep
someone asked me 'isn't coding protected by 1st amendment? how can it be regulated?'
the answer is that publishing code is protected by 1st amendment

there is an open issue/question (I think)--is *deploying* a smart contract to Ethereum a form of 'publication', or is it 'operation'?

to what extent are 'results of operation of software' protected speech?
to get an idea of how complex and debatable the line-drawing exercise is, see here: stanfordlawreview.org/online/softwar… Image
Read 4 tweets
1 Sep
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'
Read 9 tweets
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
6 Aug
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

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
Read 4 tweets

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