super simple fix to token securities laws:

*adapt section 13 and section 16, and call it a day--they would give all and only the needed disclosure

*don't regulate the tokens themselves as securities (unless that comes with a special version of secondary rules that works)
*a business developing software a deployed instance of which has native tokens valued at $1B+ must have its "insiders" (execs and token whales) file section 16 insider trading reports regarding that token (like insiders of public companies)
*a 10% plus holder of the token must also file section 16 reports

*any 5%+ holder (even if not in the biz of developing the software) must file section 13 reports

no financials, no CD&A, no executive comp disclosures, etc.--none of these things matter
all that really matters that we don't know about publicly is insider trading and whale accumulation that might be manipulative, collusive or fraudulent
for those who don't know, this is s. 16:

for token purposes it would need to be adapted to avoid metaphysics over equity securities etc., but basic idea is just get whales & those with info asymmetries re: software upgrades to disclose their "short-swing" token profits
and this is sec. 13--it evolved from M&A greenmail wars & gives transparency when whales accumulate with a potentially manipulative purpose
adapt these two rules, make centralized exchanges and OTC desks liable to snitch out non-compliers, and see how that goes for a while before trying to impose all the rules for totally different investments like stonks onto tokens that have no debt or equity rights
I threw a $1B threshold on there, but maybe that's too high, or maybe that should only apply to the section 13 stuff and not the section 16 stuff--IDK, just trying to make the point that no one discusses ideas like this which could do a lot of good & be fairly lightweight
& this would only apply to projects that either don't take investor $ or all investor $ are held in a DAO and transparently governed (DAOs also need some help with tax stuff, that's for another day to discuss)
credit to paul hastings' solid overview of section 13 and section 16

paulhastings.com/insights/clien….

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More from @lex_node

26 Sep
@MoneyGodRAI deserves to be at the top here--a non-pegged but volatility-resistant store of value fully collateralized with only cryptonative assets (currently ETH). But here are my broader legal-ish thoughts on the stablecoin space:
Pegged stablecoins are either collateralized or un-collateralized.

Collateralized pegged stablecoins (like DAI, not RAI) are probably all securities & regulation-vulnerable. Even if some are not securities, they require too much trust & pose too much systemic risk.
Un-collateralized 'algo' stables have failed repeatedly, but in theory can be non-securities & reg-resistant because not 'governed' or 'backed'--they just rely on a native incentive for arbing to peg, & 'hope' that people sufficiently respond to that incentive to hold the peg.
Read 15 tweets
22 Sep
😭
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
Read 11 tweets
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

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