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On Tuesday, the SEC announced that tokens that are sold off in crowdfunding events known as Initial Coin Offerings (or ICOs) in ethereum may be considered securities in some circumstances, and are therefore subject to US securities law. Tokens are digital assets that investors may purchase during ICOs, and they usually have some sort of bespoke functionality—in some cases, voting rights or profit dividends—in the app the investor is buying into.
[...] As for which tokens constitute securities, the SEC concluded that the tokens people bought in 2016 to participate in the DAO—a crowd-directed investment fund that imploded after being hacked that same year—were securities. The SEC notes in its report on the DAO that token-holders purchased the tokens with the expectation of profit "derived from the managerial efforts of others," which qualified them as securities.
Since the people behind the DAO didn't register its token sale with the SEC, it was technically illegal, but the commission stated that it has decided not to bring charges against them.
Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission. This will force companies to comply with regulations that ask them to reveal their financial position and the identities of their management. The SEC also concluded that online exchanges where tokens are bought and traded may have to register as security exchanges.
[...] Needless to say, things are about to get very interesting on the lawless digital frontier.
Source: vice.com
(Score: 2) by Snotnose on Friday July 28 2017, @05:33AM (5 children)
They can't be traced..... Isn't that kinda the whole point of digital currency? If it can be traced then why not use a Cayman bank?
When the dust settled America realized it was saved by a porn star.
(Score: 2) by Fluffeh on Friday July 28 2017, @05:55AM
Yes, but if there are rules and laws governing it, it allows investors to take the company to court - if they do not appear, they can then request default judgement against the party and all that sort of thing.
Lets face it though, it's about taxes and it's about power.
(Score: 2) by tonyPick on Friday July 28 2017, @08:19AM (2 children)
They aren't anonymous - they're pseudonymous. Every transaction is traced to a Bitcoin wallet address, and *all* the transactions are publicly traced, so if one of your transactions links a bitcoin address to a real world identity (by being linked to a physical transaction detail like a bank account, delivery address, personal email, phone, IP node, whatever) then your entire transaction history on that wallet is traceable directly to you forever and always.
There are ways to limit the impact of this (single use address-per-transaction for a start) but AFAIK that's relatively uncommon.
From here: http://bitcoinsimplified.org/learn-more/anonymity/ [bitcoinsimplified.org]
(Score: 3, Informative) by Lemming on Friday July 28 2017, @10:13AM
All current wallet software uses a newly generated address for every transaction by default.
(Score: 2) by JNCF on Friday July 28 2017, @04:36PM
ICOs can be on other blockchains. The DAO, which the SEC mentioned directly, was on Ethereum. There's nothing to prevent you from starting an ICO on Monero, Zcash, Ebitz, or whatever new theoretically "anonymous" ring signature cryptocurrency the world has come up with. The SEC might have a very difficult untying those knots.
*tumble-tumble-tumble*
Satoshi recommended this. It would be silly if people didn't do it, but then, people are silly.
(Score: 2) by rigrig on Friday July 28 2017, @08:35AM
No, the point of blockchain currency is that every transaction is public and irreversible. That means if someone sends you some, you know they *really* paid you, and they won't e.g. chargeback after you send them Stuff you think you sold.
If you want untraceable currency, use cash: every Ethereum transaction is publicly recorded in the blockchain forever.
Sure, all wallets are anonymous, right up to the point when you use them to buy anything that can be traced back to you. (That is assuming there wasn't a traceable transaction where you bought your ether in the first place, and someone hasn't been monitoring all internet traffic to figure out which IP-addresses belong to which wallets)
No one remembers the singer.
(Score: 3, Insightful) by MostCynical on Friday July 28 2017, @05:41AM (1 child)
so you have to abide by our rules"
How very Lewis Carroll.
'Humpty Dumpty smiled contemptuously. ... "When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to mean- neither more nor less."'
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 4, Informative) by tonyPick on Friday July 28 2017, @07:10AM
Actually it's a security because, to quote the report...."Investors in The DAO Invested Money With a Reasonable Expectation of Profits Derived from the Managerial Efforts of Others", which is pretty much one of the textbook definitions of a tradable financial asset, and
It turns out "but it's on a computer, and there's cryptography. Woooooo cryptography" is not a valid exemption for your Dunning-Krugerrands.
The idea that the attempt to create a tradeable financial asset might fall under the law governing tradeable financial assets, and be noticed by the people who have the job of regulating tradeable financial assets, should really not have been a surprise to anyone. The notion that this is some kind of government overreach wanders off into plain old deluded, especially since the SEC appears to have (rather generously) let them off with a warning on the grounds of cluelessness.
(Score: 1) by jb on Friday July 28 2017, @06:12AM (3 children)
...to ensure that all future crypto currencies first spring into existence somewhere other than the USA...
...which in the end is a very good thing for everyone.
(Score: 1) by YeaWhatevs on Friday July 28 2017, @02:22PM
Well yes, that does seem the correct workaround. The tradeoff of not being governed by SEC rules is, well, not being governed by SEC rules. I like the part of the rules that says you have to publish your investment materials so that the investor knows your company is more than just a fart in the wind. The part where before your IPO you can't publicly (bulk) advertise and may only solicit "sophisticated investors" with $X to get in the door, not so much. This means you can't leverage the internet the way you might hope to, and it limits how much you can use your wallet to vote for the technologies. On the other hand, those rules were designed to help protect the public from unscrupulous and incompetent businesses as well as ponzi schemes that *ahem*, seem to be associated with digital coins all to often, so on balance it is probably the right set of rules.
(Score: 0) by Anonymous Coward on Friday July 28 2017, @05:34PM
I am pretty sure that the SEC merely said DAO are securities, the Etherium (currency) wasn't addressed as it is NOT a security.
Basically, they said, that investing Etherium in a company is no different than investing dollars in a company, and that "DAO tokens" are basically no different than a stock.
Personally, this seem completely acceptable, as in, this is the SEC asserting that their job includes securities sold off wall-street as well.
(Score: 0) by Anonymous Coward on Friday July 28 2017, @10:12PM
I am pretty sure all of the major banks are looking at crypto currency. They also do not see it as anything more than a secure ledger. The banks do not really care what type of cash you deal with. Just as long as you keep it with them. If you think you are safe with crypto currency you are also dreaming.
There are no real laws against making your own. There are laws saying what you can pay your taxes in.
(Score: 2) by deimios on Friday July 28 2017, @07:32AM (1 child)
1. Embrace
You know the rest.
(Score: 2) by JNCF on Friday July 28 2017, @04:40PM
Microsoft isn't the government... right?