"To me, it seems odd that people would pay millions of dollars to reserve space on a new cloud storage network, and obvious that they're really paying that money for a speculative investment."
"If you do an illegal securities offering, people who bought your securities have a right to get their money back. If token prices keep rising everywhere, this is not a big concern -- why would anyone want their money back when they have such valuable cloud storage? But if the ICO mania fades, expect a lot of lawsuits from investors who are shocked to learn that they were buying unregistered securities."
Everybody and their brother with a soundboard has stated an opinion about ICOs and the SEC guidance. Literally anyone influential has said something and if they haven't, expect them to say it tomorrow.
The gradient of opinions is just as abstract as the weeks before.
It would be a mistake to take that as canonical just because you respect that particular entrepreneur's non sequitur criticism of existing token sales. When the argument is that not all token sales are securities offerings, not even the SEC has made that mistake, and the argument is that new token sales don't have to be securities offerings, but they can be too.
Here is what the SEC will never get: they will never get investor protection from this asset class. Their entire regulatory framework is around that.
Congress can modify the SEC's mandate to support this. Congress can create a completely new agency and regulatory framework to provide for more applicable confidence and protections in this asset class.
The SEC will never ever ever use the Securities Act of 1933 and the Securities Exchange Act of 1934 as currently written to ensure a fair market of all cryptographic token issuances.
> The SEC will never ever ever use the Securities Act of 1933 and the Securities Exchange Act of 1934 as currently written to ensure a fair market of all cryptographic token issuances
If the SEC categories an asset as a security, it has rule making powers over the trading of those assets provided an American buys or sells the asset, inadvertently or not. Many respected lawyers and lawmakers, as well as the SEC, say many ICOs look like securities.
Note that coins offered in ICOs being securities isn't a death knell to the concept. Just to the scammy elements of the market.
Disclaimer: I am not a lawyer. This is not legal nor securities advice. Don't be a dummy and treat Internet comments as anything but casual banter.
> Many respected lawyers and lawmakers, as well as the SEC, say many ICOs look like securities.
Yes, this is the crux of everything I've said, primarily that "many" has nothing to do with whats possible. Whether a future token sale chooses to register as a security or is completely exempt from securities frameworks because it is a product.
> Whether a future token sale chooses to register as a security or is completely exempt from securities frameworks because it is a product
The "many" I refer to are the people get to decide, legally, whether it's a security or a product. The polite thing for the SEC to do would be to announce a new rule. The less polite route, though still completely legal, would be to prosecute under the Acts in an SEC court [1].
Off-topic, sorry: Levine gets a lot of praise around here, and he does have a great talent for breaking down complex finance topics so that they're easy to understand and often entertaining to read about. That being said, sometimes he is awfully sanguine about bank misconduct and crimes. Edit: from the article:
"A bank that keeps very careful track of how much money it has, and who owes it money and whom it owes money, and sometimes does evil stuff with that knowledge -- that's fine, really."
It's his trademark sarcasm, and the subtle hilarity is one of the reasons I read his daily newsletter. That quote requires more context:
You're supposed to know where the money is! That knowledge and reliability is the central function of the bank; getting the dumb spreadsheets right is more important than moral probity. A bank that keeps very careful track of how much money it has, and who owes it money and whom it owes money, and sometimes does evil stuff with that knowledge -- that's fine, really. A bank that sometimes forgets who owes what to whom is the real menace.
That's an unfair quote, taken completely out of context. His articles frequently cover fraud and illegality in the financial markets, and he's never in favour of it.
The quote in question was pointing out how bad the latest Wells Fargo scandal is. A bank that can't keep track of money is in serious trouble and is woefully incompetent. The banks ripping off customers but accounting for the profits are evil, but at least they are being competent.
I think even with the broader context it doesn't sit right with me, because he could have easily made the completely serious and valid point about banks needing to be competent at their core functions without characterizing "doing evil stuff sometimes" as "fine". Totally possible that my sarcasm detector is broken right now but it seems like he's "only half-joking" here (another of his favorite phrases).
"To me, it seems odd that people would pay millions of dollars to reserve space on a new cloud storage network, and obvious that they're really paying that money for a speculative investment."
"If you do an illegal securities offering, people who bought your securities have a right to get their money back. If token prices keep rising everywhere, this is not a big concern -- why would anyone want their money back when they have such valuable cloud storage? But if the ICO mania fades, expect a lot of lawsuits from investors who are shocked to learn that they were buying unregistered securities."