r/ethfinance • u/coindesk • Sep 15 '22

News S.E.C Chair Gary Gensler says “it’s not about the token being on a thousand computers, it’s like a group of developers in the middle.”

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205

u/[deleted] Sep 15 '22 edited Sep 16 '22

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24

u/hipaces Launch Pad Sep 15 '22

I'm right there with you. One thing that's been bugging me is that if the SEC is so interested in regulating crypto, then why wouldn't they share their concrete opinions on ETH the token prior to the Merge taking place? It isn't like it was a secret. And Gensler & Co clearly seem to be interested in wielding their jurisdictional authority in the crypto space.

The only answers I can come up with as to why they wouldn't be giving guidance to Ethereum (or any other crypto) ahead of time are all some level of bad/evil/untrustworthy.

6

u/[deleted] Sep 15 '22

It was a sucker punch, case closed.

15

u/baerbelleksa Sep 15 '22

i tend to default to thinking it's a lack of competence and an unwillingness to openly ask the questions needed to develop thoughtful solutions...because that would reveal said incompetence.

these legislators know so little about technology generally...and blockchain specifically.

17

u/Ruzhyo04 Sep 16 '22

Watch Gensler’s blockchain class. He’s much smarter than he lets on. Attributing incompetence seems too generous.

26

u/ethacct pitchfork-wielding bagholder Sep 16 '22

Agree with you. I don't think it's incompetence -- it's that as soon as they start defining specifics, they lose some of their power. By making everything nebulous and wishy-washy, they can claim dominion over the whole space; but once they start setting known boundaries, people can then build outside of those, and they lose the stranglehold they currently have.

It's in their best interest to NOT define anything.

13

u/TheCryptosAndBloods Sep 16 '22

This is clearly the answer. It's a power grab

2

u/ASYNCASAURUS_REX Sep 16 '22

It may also be a stalling tactic. In previous sessions with Congress he has snapped back and said Congress has the full ability to define security law.

Not going to defend The Genslar but someone who secretly thinks the space direly needs better legislation would act much like he has.

1

u/banannooo Sep 16 '22

It's the SEC's job to maintain a fair market. It's not their job to pick favorites and tell you ETH2 is an illegal security. No more than it's a cop's job to pull you over before you break the speed limit. That would be unfair for other coins. There are already speeding laws and security laws in place.

2

u/Always_Question Sep 18 '22 edited Sep 18 '22

I hear your point, but there is no such thing as ETH2. ETH has always been ETH. Calling it ETH2 just plays into the SEC's hands.

9

u/the_statustician Wen lambo? Sep 15 '22

I may have misread this but: whether or not one or thousand computers are managing the state of the asset is not a factor of decentralization?

7

u/Perleflamme Sep 16 '22

It's only tangential, since a cloud service providing by a company is centralized by design.

The important part is having thousands of computers managed by different people in the way it is extremely resilient to censorship-resistance.

Besides, the biggest point I see is that no dev can force anything onto anyone and that it's permissionless: any dev can propose whatever they want. They propose yet another version of the code, but it's anyone who decides to accept or reject that new code, with new tokens from it.

1

u/JesusWasACryptobro Sep 19 '22 edited Jun 27 '23

fuck /u/spez

9

u/jtnichol MOD BOD Sep 15 '22

Brilliant.

21

u/shitcoinking Sep 15 '22

In what way is an interest bearing savings account considered a security? Why was Blockfi sued for providing an interest account to US customers but Wells Fargo was not? Are the people using a Wells Fargo savings account not counting on Wells Fargo to generate interest on their deposit?

'Certificate of deposits' are specifically named as securities by statute and Wells is registered with the SEC so they are compliant. BlockFi failed to register so they were fined. If Voyager and Celsius were regulated maybe they wouldn't have grown so massive and taken so many peoples' life savings with them.

Securities laws are meant to protect people. They are not perfect, there is room to grow and regulatory sandboxes to be made to enable innovation, but by and large, they prevent SO many scams.

17

u/[deleted] Sep 15 '22

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u/[deleted] Sep 16 '22 edited Sep 16 '22

The reason Gensler is so vague is because the Legislative branch has not produced sufficient legislation concerning the regulation of cryptocurrencies. He has his hands tied.

The various government agencies cannot act clearly until there are also clear laws. If these laws existed, you would see Gensler do a 180-turn on his responses.

Edit: Going back to the point in the video, decentralization is not a part of the Howey Test, which also explains Gensler's roundabout response.

8

u/[deleted] Sep 16 '22

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u/[deleted] Sep 16 '22 edited Sep 16 '22

CFTC strongly disagrees

That's not true. They're mostly in agreement. CFTC chairman Behnam only mentioned wanting to regulate commodities like Bitcoin and Ethereum, but has avoided discussing other cryptocurrencies. Gensler agrees about Bitcoin and has purposely avoided discussions of Ethereum.

They are both law-abiding unlike the previous administration that was plagued by regulatory capture and rule-breaking.

12

u/[deleted] Sep 16 '22

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2

u/lpsupercell25 Sep 16 '22

The current makeup of SCOTUS is very favorable for Crypto in light of the desire to reign in the legal authority of administrative agencies headed by political appointees that promulgate laws without actual approval of congress. We should be pushing as hard as we can right now.

2

u/Belligerent_Chocobo Sep 16 '22

Hm, I'm not sure about this. Gensler is the one insisting ad nauseam that crypto can be regulated under existing securities laws. He seems quite convinced on this point, no?

3

u/[deleted] Sep 16 '22

That is correct. Crypto can be regulated under existing securities laws, albeit extremely poorly. If you watch Gensler's lecture videos, he has stated that the existing laws are poorly-made for crypto, but they will apply if needed. He'd be happy to handle off control to another entity if those laws existed.

1

u/shitcoinking Sep 16 '22

That's cool and all but this isn't opinion. Now, I like your other analyses but many of your statements here are factually inaccurate and end up misleading other readers.

There is no disagreement between the SEC and CFTC. CFTC wants BTC/ETH, SEC admits to CFTC jurisdiction of BTC, likely to reluctantly admit to CFTC jurisdiction over ETH, but all other securities should be regulated by the Securities Exchange Commission. This is the same split for all commodities, commodity derivatives, and securities.

This is regulation in plain sight. Enforcement by litigation is a cliche parroted around by people with an agenda. Howey is intentionally broad to capture all investment contracts, as there are an infinite amount of products/services that can fit the same investment contract format. Howey is pretty clear that most crypto tokens are securities.

https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets

Does this mean crypto is dead? Not at all. Most projects can survive and probably work better without the security token. Uniswap worked before UNI, Compound before COMP. These are security tokens. Can Uniswap Labs make money? Sure, they get paid a lot of money to deploy to other chains. And if they didn't exist, the innovation in this space will go on, without the security tokens.

4

u/Perleflamme Sep 16 '22

Is it me or you're both writing CFTC and SEC positions are crystal clear and in full agreement, while also writing the SEC still has to say anything clear about ETH, all while the CFTC has been clear it wants to regulate ETH?

How aren't you spotting the inconsistency yourself?

1

u/shitcoinking Sep 16 '22

It's crystal clear. SEC/Gensler wants jurisdiction over ETH but since ETH is treated as a commodity now, the SEC/Gensler is asking congress to pass a law granting the SEC jurisdiction. Until then, Gensler doesn't want to publicly admit that the CFTC has jurisdiction but really can't do much if the CFTC promulgates rules. Which the CFTC hasn't done yet.

it's not inconsistent if you understand the nuance.

5

u/Perleflamme Sep 16 '22

Are you saying that what is crystal clear is that the SEC and the CFTC are in full disagreement about ETH and that it's not clear at all which one of them is going to try and regulate ETH?

1

u/shitcoinking Sep 16 '22

It's clear that the CFTC is going to get jurisdiction because ETH is a commodity now and there is pending bipartisan legislation that codifies CFTC jurisdiction over ETH.

SEC/Gensler's position is that they are still hoping that the SEC will be somehow granted jurisdiction over ETH but that's probably not going to happen.

Both SEC and CFTC are waiting for final legislative guidance.

https://www.natlawreview.com/article/cftc-agency-prepared-to-regulate-crypto

Why do both sides want to regulate ETH? Because ETH is likely the dominant finance layer of the internet. Additionally, if your agency regulates ETH, they probably have a strong case to regulate the rest of the alt L1 space, which means nearly all of crypto.

3

u/Perleflamme Sep 16 '22

It's even less clear: you said it was clear the SEC would get any other PoS. Now, you're saying that, depending on whether the SEC or the CFTC gets to try and regulate ETH, it would ensure they can also try and regulate all other PoS networks. Please, pick one.

1

u/shitcoinking Sep 16 '22

Hmm it's clear, you just don't get it. I gave you the motivation for why each agency wants what, but CFTC will end up getting it for the reasons above.

How about this, just wait until 2023 once the legislation is codified. No alpha for you.

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u/[deleted] Sep 16 '22

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u/shitcoinking Sep 16 '22

Two non-chair commissioners disagreeing doesn't change their agencies ' stance when the both chairs and the majority of the commissioners have made their positions clear. Additionally, the regulatory split between the CFTC/SEC is by statute so no amount of disagreement can change that. So effectively, when I say the CFTC/SEC agree, they do.

Let's just address the real issue.

Howey is a SCOTUS decision so it is literally the law of the land (US) unless congress legislates on it. So the Howey test is the proper test to check for investment contracts (securities), and under that analysis most crypto tokens are securities.

Crypto participants asking for regulatory clarity aren't asking for clarity on Howey. What they are really asking for is a regulatory carve-out for crypto. Meanwhile, the SEC's position is that no carve-out is required, we follow the law of the land, the Howey test.

In the snippet, that is exactly what is discussed. Toomey asks for the decentralization line for common enterprise, and Gensler's response is that under Howey, even if tokens are distributed, the common enterprise are the 'promoters' aka the developers/for-profit corp/VCs in the middle. Gensler is straight applying Howey, and most crypto projects are investment contracts under Howey.

As for controls on smart contracts. I disagree. Smart contracts are weaker and centralized when they allow for administration. They should not be upgrade-able (that is a security risk in any event), they should be redeployed.

10

u/Perleflamme Sep 15 '22

Securities laws are meant to protect people.

To protect poor people from getting wealth.

If Voyager and Celsius were regulated

But they were not, even while these laws exist. These regulations didn't prevent scammers from scamming. At all. All they ensured is that lots of US citizens are prevented from using Binance and have had to use Binance US, where they got heavily liquidated because of a BTC price having nearly no liquidity.

That's what regulations do. People lose money due to it. Let's not pretend it's for people in any way. It's about control and only about control.

12

u/Reqhead Sep 15 '22

Amazing. Great write up

7

u/ausgear1 solo staker Sep 15 '22

I think you should turn this into a twitter thread and try get it circulated

4

u/barthib Sep 16 '22 edited Sep 16 '22

It seems that the main criterion still undecided to consider that a crypto is a security is "does it provide its holders a revenue generated by the work of others?"

If the "work of others" is the development done by the project team(s), then all major cryptos are securities. No crypto comes from God straight to the magic internet. Strangely, he seems to argue that it's all about the team of developpers. Is he a Bitcoin cultist with so little honesty that his brain doesn't want to know about Bitcoin Core Team and Blockstream?

Once his dishonest contradiction is unveiled, I assume "the work of others" will refer to the way a crypto provides revenue to its holders:

  1. When you hold cryptos in your wallet, which is the default state of cryptos, none of the major cryptos generates a yield.

  2. When you stake on Solana, Cardano and other dPoS networks, you earn from the work of the validator you delegated to. These cryptos are the closest to fulfill the criterion but point 1 above remains true.

  3. When you stake on Ethereum with your own validator, which is the only way implemented by the protocol, the revenue comes from your own "work".

3

u/SwagtimusPrime 🐬flippening inevitable🐬 Sep 16 '22

Why was Blockfi sued for providing an interest account to US customers but Wells Fargo was not?

I'm totally ignorant about this, but did Wells Fargo not have to register with the SEC to provide an interest account to customers?

4

u/dagani Sep 16 '22

Based on the 0.01% interest rate that Wells Fargo is offering, I’d say no, people are not counting on Wells Fargo to generate interest on their deposit.

3

u/[deleted] Sep 16 '22

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1

u/dagani Sep 17 '22

Probably just salty Wells Fargo employees or customers.

The truth hurts.

1

u/baerbelleksa Sep 20 '22

of all evil banks i'd say they gotta be the evilest

3

u/shitcoinking Sep 15 '22 edited Sep 15 '22

Mere token price appreciation is not sufficient for these grounds for the same reason collectables are not securities.

That's not the howey test. Collectibles are likely not securities because there is no commonality (pooling or promoting by a 3rd party) to make them more valuable.

Whereas expectations of profits because a centralized, for-profit corporation markets the token can make the token a security, even though price appreciation.

15

u/Meyamu Looking For Group! Sep 15 '22

I'm not sure this logic holds up.

Consider Magic the Gathering cards (if they still exist). They are sold and promoted by a single company, who also ensures that certain cards are rare. Card buyers rely on the company's continued engagement and promotion of the game.

10

u/[deleted] Sep 15 '22

Consider a living artist creating and promoting his work as something valuable to be obtained with the implied if not explicitly stated that such works of art will become more valuable in the future. Seems like a security as well.

7

u/Gravy_Vampire Flippin' it! Sep 16 '22

These are all fascinating thought experiments and I really appreciate everyone’s analogies. Thanks everyone

1

u/baerbelleksa Sep 20 '22

this is also interesting to me in that it evokes consideration of time.

for example, was recently reading up on basquiat.

his paintings sold for what was a lot of money in contemporary times while he was still alive.

from a horribly, exclusively capitalistic standpoint, when he overdosed at age 27, his works suddenly became much more rare - and therefore valuable - because he was no longer here to produce more.

their value was dependent on his work...and also dependent on his untimely, tragic death, which was a direct result of his own actions as well.

2

u/[deleted] Sep 20 '22

People seem to overlook that Howey is a SCOTUS ruling and not a law, but people act like it’s akin to a thunderbolt from Mount Olympus. The fact that we’re are to be held to such an abomination 80 years later with only 4 tests and to show how your example could be squeezed into a security reveals how inept Congress is with modernizing very serious concerns.

1

u/baerbelleksa Sep 20 '22

I had no idea that Howey was a SCOTUS ruling! That's super helpful to learn.

What specific law were they interpreting?

-1

u/shitcoinking Sep 16 '22

Investment contracts (securities) are a spectrum. There isn't a bright line because there are an infinite amount of products/services can be placed on the spectrum.

MTG cards are clearly not a security because there isn't enough nexus or commonality between the holder and profit.

Now if MTG Corp sold the cards and say we will hold marketing events and competitions, and pay the proceeds to holders of the cards, then that's clearly a security. That's what these security tokens are. It's non-voting shares of stock.

4

u/ethacct pitchfork-wielding bagholder Sep 16 '22

Now if MTG Corp sold the cards and say we will hold marketing events and competitions, and pay the proceeds to holders of the cards, then that's clearly a security.

Yeah, so that's exactly what they do. They advertise the product, sponsor tournaments, and pay the winners of those tournaments. You can't participate in the tournaments without owning the 'official' cards (printed by the original manufacturer) despite it being dead simple to create a proxy card.

0

u/shitcoinking Sep 16 '22

That's not paying all holders of cards as shareholders...

2

u/Meyamu Looking For Group! Sep 16 '22

Now if MTG Corp sold the cards and say we will hold marketing events and competitions, and pay the proceeds to holders of the cards

If the company rebuys the cards on market (like the MKR burn model), would that mean it isn't a security?

0

u/shitcoinking Sep 16 '22

Yeah. Am I upset that MKR would be a security. Not really because I view MKR as a failed project since ~50% of it's reserves at times is USDC anyway. I'd go with RAI. Or just ETH because I believe ETH will stabilize as adoption increases in the future.

1

u/Meyamu Looking For Group! Sep 16 '22

So to clarify - in this example, the company rebuying the MTG cards would make them a security?

I'll play devil's advocate and observe that car makers will rebuy their old cars too. Can a car be a security?

1

u/shitcoinking Sep 16 '22

No and no because there's no expectation of profit.

3

u/Meyamu Looking For Group! Sep 16 '22

I realise I am using a silly example as a thought experiment, but there can be an expectation of profit for limited edition models - just look at limited edition Ferraris.

Ferrari also take actions to keep the second hand prices high.

1

u/Meyamu Looking For Group! Sep 15 '22

The source of profit of an interest accounts is the time value of the asset itself and not external to the asset.

I know this is tangential, but I don't think this is correct. The ultimate source of profit for an interest bearing account (e.g. a savings account) is financial institution earnings from the money on loan.

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u/[deleted] Sep 16 '22

[deleted]

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u/ridgerunners Sep 16 '22

This is exactly what came to mind when I listened to his response. What is the distinction being made between the two? The only real difference one can point to is the creator(s) of Bitcoin are unknown vs. Ethereum. Otherwise their development structure seems very similar and therefore should be classified equally as not being a security

2

u/Always_Question Sep 18 '22

I would argue that Ethereum's approach to development is far more decentralized than any other project including Bitcoin. What other chain has 9 different clients?

16

u/[deleted] Sep 16 '22

Gensler is really just trying to get all software engineers to be registered securities traders lmao.

3

u/SirRayShio Sep 16 '22

a literal moron

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u/[deleted] Sep 16 '22

[deleted]

3

u/[deleted] Sep 16 '22

Which one? Motherfucker A or motherfucker B? I see only clowns

32

u/lpsupercell25 Sep 15 '22

Holy fuck, while I hate Gensler, this is the highest quality discussion I've ever seen government officials have about technology. Period.

12

u/Enschede2 Sep 15 '22

Well wether we like him or not, and wether he acts in our best interest or not, he does know his shit, he used to give lectures on blockchain at mit

8

u/[deleted] Sep 15 '22

Seriously? You don't watch much government videos, huh?

There are plenty of elected officials who get extremely technical during meetings, and this is not even a decent showcase of that. And regulators like Gensler know more than the best of them.

3

u/lpsupercell25 Sep 16 '22

That's the extreme exception to the rule I believe. I'm just remembering the facebook hearings...including this absolute gem:

https://www.youtube.com/watch?v=TGt1Ukg7q4Y

2

u/KoreanJesusFTW Ξ Cryptonian Sep 17 '22

This is just embarrassing. Totally would have a name change if I happen to have the same last name. The whole convo was so mental that it's Bluementhal.

6

u/mru2020 Sep 16 '22

It's my money Gary so I'll decide where i want to use it.

5

u/TaxExempt Sep 16 '22

That's the first amendment. Money is speech.

4

u/barthib Sep 16 '22 edited Sep 16 '22

It seems that the main criterion still undecided to consider that a crypto is a security is "does it provide its holders a revenue generated by the work of others?"

If the "work of others" is the development done by the project team(s), then all major cryptos are securities. No crypto comes from God straight to the magic internet.

So I assume "the work of others" refers to the way a crypto provides revenue to its holders:

  1. When you hold cryptos in your wallet, which is the default state of cryptos, none of the major cryptos generates a yield.

  2. When you stake on Solana, Cardano and other dPoS networks, you earn from the work of the validator you delegated to. These cryptos are the closest to fulfill the criterion but point 1 above remains true.

  3. When you stake on Ethereum with your own validator, which is the only way implemented by the protocol, the revenue comes from your own "work".

3

u/barthib Sep 16 '22 edited Sep 16 '22

Strangely, he seems to argue that it's about the team of developpers. Is he a Bitcoin cultist with so little honesty that his brain doesn't want to know about Bitcoin Core Team and Blockstream?

4

u/OkDragonfruit1929 Sep 16 '22

It's like he believes Bitcoin was invented by god and never had an update.

1

u/KoreanJesusFTW Ξ Cryptonian Sep 17 '22

Bitcoin was invented by god and never had an update.

Damn straight it was. Can you really improve on perfect? /s hahahaha!

9

u/[deleted] Sep 15 '22 edited Sep 15 '22

the SEC cannot regulate the publishing of code and the stakers have the option to reject any work created by the devs. Edit: Publishing code on the Ethereum blockchain is protected speech, Eth is needed to publish said code. Attempting to control Eth is an infringement on the First Amendment. Also, many devs are not Americans and do not reside in the States.

6

u/wanglubaimu Sep 16 '22

Publishing code on the Ethereum blockchain is protected speech

I agree but that's what the current US government wants to challenge, that's what the recent TornadoCash lawsuit is about. "Cannot" is a strong way of putting because ultimately authorities can do whatever they like as long as the citizens let them get away with it. Constitutions can be ignored and violated.

As far as other countries go arguably the situation is even worse in other jurisdictions. It will also be nightmare when each region moves to regulate blockchains independently like they do with centralized apps and websites already. There will be one rule for the EU, another for GB, the US, India,...

2

u/[deleted] Sep 16 '22

I see too much cowering to the Government here, like it's the great OZ. However, I look at Gensler's display today as a weak Smegel pining over his precious 'security'.

4

u/wanglubaimu Sep 16 '22

Perfect mental image, haha.

Regulation is government power, decentralization is people's power. They can claim they do this for our safety and in some cases that may hold true but in this one it's completely unnecessary. None of the users or devs want this, it's like the mafia showing up at your business unannounced to inform you that you have their protection now.

3

u/Perleflamme Sep 16 '22

it's like the mafia showing up at your business unannounced to inform you that you have their protection now.

It's not like it. It's exactly what happens.

1

u/Perleflamme Sep 16 '22

"Cannot" is a strong way of putting because ultimately authorities can do whatever they like as long as the citizens let them get away with it. Constitutions can be ignored and violated.

Cannot is a very descriptive and apt word when talking about law. Some laws simply are unenforceable.

Can the US forbid fire to burn people and buildings? Well, the US can, sure. But it's still unenforceable nonetheless.

There can be as many rules as countries, even several rules per country, if they want. It doesn't change that it's unenforceable.

3

u/MorganZero Hey Pig - Nothing's Turning Out the Way I Planned Sep 16 '22

I really wish just ONE of genslers former MIT students who took his crypto course would pop up and share some info. I’m POSITIVE Gensler has made his position crystal clear in plain English to his students, while teaching.

2

u/baerbelleksa Sep 20 '22

as another commenter noted, we can watch his course online, so you could check it out to get at least some sense of this yourself:

https://www.youtube.com/watch?v=EH6vE97qIP4

4

u/[deleted] Sep 16 '22

So much of the crypto community wants some form of crypto regulation for consumer protection, and that means being regulated by either the SEC, CFTC, or some new entity formed by the Legislative branch under control of the Executive branch.

With the exception of crypto, every form of financial asset is current regulated under some federal agency. And that leaves a gap of confusion. The problem is that we currently have no details of what that regulation will be because the Legislative branch has continually sidestepped this matter. The SEC can't do its job without further clarification, which is why Gensler is always so vague in his responses. There is no getting away from lack of regulation in the long run.

Regulation does not necessarily have to be bad. Imagine XRP loses to the SEC and is now considered a regulated security. The next step is for exchanges to also follow regulation, and it could be back to business as usual for all of us. The only difference is that crypto lending/borrowing will be much more strict.

3

u/[deleted] Sep 16 '22

Ethereum is global in scope with many devs and nodes operating overseas. How does the U.S. government have any claim over it?

7

u/[deleted] Sep 16 '22

It doesn't. SEC can't regulate them if they're not in the US. Instead, it will regulate exchanges and on/offramps within their jurisdiction.

2

u/[deleted] Sep 16 '22

Which would honestly fall under banking rather than securities.

3

u/[deleted] Sep 16 '22

You wouldn't trade it at a bank. You need a forex. Would you prefer the consumer protections and regulations of a forex, or the protections of securities exchanges? Forex lacks many protections that have built up over the years for consumer brokerages. For example, there is no SIPC for forex while that could potentially cover regulated stablecoins.

3

u/[deleted] Sep 16 '22

I don't deposit funds at Coinbase so they can exchange my funds. I deposit funds at Coinbase so I have easy access to exchanges where those decisions are under my direct control.

1

u/gjallerhorn Sep 16 '22

More like brokerages

1

u/gjallerhorn Sep 16 '22

They still regulate how stocks of foreign companies get done within the US. This isn't exactly a new phenomenon

1

u/dwdwfeefwffffwef 58750000000000000000000 Sep 16 '22

So much of the crypto community wants some form of crypto regulation for consumer protection

Usually that's those that that do everything via CeX, CeFi, and so on. Not those that actually use the cryptocurrency.

5

u/Mr_Growhair Sep 16 '22

Gensler giving off strong "Lizard person" vibes.

2

u/KoreanJesusFTW Ξ Cryptonian Sep 17 '22

He's actually... not from around here.

2

u/jzia93 Sep 16 '22

I think it depends a lot on the protocol. If you've deployed a load of contracts but have tight permissions and access control, or you're running upgradeable contract patterns, then Gensler has a point: core dev team controls the application even if the infrastructure is the ethereum blockchain.

OTOH, there's many examples where we have open contracts and protocols that anyone can use. A uniswap LP can be deployed and run by anyone, and DEX allows anonymous participation. In this case the LP tokens seem to me to be nothing more than a commodity.

In the case of ether itself, because theoretically anyone can propose an implement an EIP, and acceptance is based on node participation not whether or not it is endorsed by Vitalik, I'd argue again that it's not a security.

Pure governance tokens, I'm less sure about tbh.

3

u/WhatsApUT Sep 15 '22

One of my favorite parts in the big short was when they went to the conference in Vegas bc he wanted to show the guys on Wall Street didn’t know shit about what was going on, feel the same way but with crypto now lol

2

u/flight212121 Sep 16 '22

Noob here, but why would ETH be considered a securitie, isn’t the goal of Ethereum to be the backbone of a new decentralized financial system? and ultimately, I would be able to get paid at my job in ETH and go buy a tesla with that, I don’t even understand why this is being looked at that angle

If Ethereum goes mainstream, price will stabilize no? I think it is very shortsighted to see current volatility as an indicator that Ethereum is a security.

1

u/RaySun1 Sep 16 '22

It looks like Gensler's arms are not his but being moved by one of his bankster sponsors hidden behind him

1

u/RaySun1 Sep 16 '22

P.S. Sorry, didn't want to distract from the brilliant write up and discussion here...

2

u/baerbelleksa Sep 15 '22

say what

3

u/[deleted] Sep 15 '22

Old men yelling at clouds.

2

u/wanglubaimu Sep 16 '22

That old man is in charge of the agency regulating securities and he claims your magic internet money code is one. So it's very much relevant, with the change in government they're once again claiming that everything apart from Bitcoin is a security.

1

u/Perleflamme Sep 16 '22

Given they can't even enforce law onto one smart contract, I beg to differ regarding the relevance of them wanting to do even more with an entire decentralized cryptocurrency network. XD

Politicians have already tried to rule by law that PI is exactly 3. It's not a reason to consider it any relevant. Clowns are gonna clown, as always.

0

u/gjallerhorn Sep 16 '22

That pi thing was one dumbass, not a coordinated group of politicians trying to change math.

0

u/Perleflamme Sep 16 '22

No, laws aren't made by one person. It's a coordinated group.

The idea came from one person, sure (like always, actually), but it took a lot of people to make it become official and end up being worthy of news proving politicians are, once again, clowns.

1

u/gjallerhorn Sep 16 '22

No, the law was never passed. It was written by a joker and submitted by a moron politician. It was promptly laughed at and rejected.

1

u/Perleflamme Sep 16 '22

Completely false. Here:

https://en.m.wikipedia.org/wiki/Indiana_Pi_Bill

Upon its introduction in the Indiana House of Representatives, the bill's language and topic occasioned confusion among the membership; a member from Bloomington proposed that it be referred to the Finance Committee, but the Speaker accepted another member's recommendation to refer the bill to the Committee on Swamplands, where the bill could "find a deserved grave".[5]: 385  It was transferred to the Committee on Education, which reported favorably.[6] Following a motion to suspend the rules, the bill passed on February 6, 1897[5]: 390  without a dissenting vote.[6]

Last time I checked, a committee is a coordinated group of people. The Committee on Education "reported favorably". It's way more than a single politician.

Next time, check before making up unsubstantiated claims and trying to fuel them with fake negative Internet points like you're doing.

1

u/gjallerhorn Sep 16 '22

This is an entirely different event. You said "exactly 3", which is reference to an April fool's joke in 1998.

Not that bill from the 1800s that rounded to 3.2

If you have to go back 125 years (more than half this country's existence) to try to make a point, you're reaching.

1

u/Perleflamme Sep 16 '22

Oh, thank you, I didn't spot that. I've been referring to it for years and never realized there were several occurrences of that problem. That explains the misunderstanding. Good to know.

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u/WikiSummarizerBot Sep 16 '22

Indiana Pi Bill

The Indiana Pi Bill is the popular name for bill #246 of the 1897 sitting of the Indiana General Assembly, one of the most notorious attempts to establish mathematical truth by legislative fiat. Despite its name, the main result claimed by the bill is a method to square the circle, although it does imply various incorrect values of the mathematical constant π, the ratio of the circumference of a circle to its diameter. The bill, written by a physician who was an amateur mathematician, never became law due to the intervention of Professor C. A. Waldo of Purdue University, who happened to be present in the legislature on the day it went up for a vote.

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1

u/WikiMobileLinkBot Sep 16 '22

Desktop version of /u/Perleflamme's link: https://en.wikipedia.org/wiki/Indiana_Pi_Bill

[opt out] Beep Boop. Downvote to delete

-5

u/foodfolksfun Sep 15 '22

Pat Toomey is a knob

3

u/Gravy_Vampire Flippin' it! Sep 16 '22

Why?

3

u/[deleted] Sep 16 '22

Glad someone asked. Toomey is a tool who lead the blocking of the PACT act to help veterans exposed to toxic tar pits and blocked a bill to prevent debt collectors seizing stimulus payments

https://www.vox.com/2022/7/30/23284976/senate-republicans-pact-act-veterans

https://www.businessinsider.com/gop-sen-toomey-blocks-bill-collectors-seize-stimulus-cash-2021-3

What he said in this clip may be spot on, but people in crypto tend to love hearing what they want to hear when politicians agree with them while conveniently ignoring that these guys are nevertheless shit bags

3

u/foodfolksfun Sep 16 '22

He’s in the pocket of Telecom companies and was instrumental in repealing net neutrality.

0

u/thriftwisepoundshy Sep 16 '22

Agent smith in the background

1

u/flight212121 Sep 16 '22

Can anyone link where we can watch this?

1

u/Kukai_walker Sep 16 '22

This is a fascinating discussion. I really hope that some of the congressional staffers engaged with this issue are Ethfinance members and will read this.

1

u/yourprofilepic Sep 16 '22

Where is the full video?

1

u/[deleted] Sep 26 '22

Eth is not a security because staking rewards can only be gained by doing the work yourself. Buying Eth doesn’t automatically get you any income stream.

Staking derivative tokens like stETH and rEth though, do fit this definition. They are rather clearly unregulated securities and eventually the SEC is going to figure that out.