Take aways from the #blockfi settlement with the #SEC (sec.gov/litigation/adm……) 1. BIA were notes under the Reves test; one factor is that there is "no alternative
regulatory scheme or other risk reducing factors exist with respect to BIAs" Congress can of course, set out a /1
regulatory scheme or other risk reducing factors exist with respect to BIAs" Congress can of course, set out a /1
an alternative framework that would potentially push these sorts of ventures into a different regulatory classification. 2. the offer and sale of notes is an investment contract. Yes, you can be debt and an investment contract; the pooling of assets is the key factor here. /2
3. Blockfi was a 40 act company; 40% of its assets were investment securities - including loans. /3
#blockfi has to either register as an investment company or change its model so it's not an investment company in 60 days (i'm guessing it'll register) and file an S-1 for its investment product (im guessing it'll file). /4
but Hinkes what does it mean for (insert other staking platform/protocol/business here)? The answer is, this analysis is the starting point but not dispositive. #DEFI structural differences may mitigate the 40act issue. Pooling/not pooling is relevant to the investment contract/5
analysis. Congress can act and introduce a new framework that will impact the Reves analysis. Node-level staking looks materially different. Pooling protocols that aren't really #DeFi, however, should look hard.
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