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Author Topic: Securities Laws to be applied to Cryptocurrencies  (Read 69 times)
CryptoHaris
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September 12, 2018, 04:54:31 AM
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“The question is whether the ‘elements of a profit-seeking business venture’ are sufficiently alleged in the indictment, such that, if proven at trial, a reasonable jury could conclude that ‘investors provide[d] the capital and share[d] in the earnings and profits; [and] the promoters manage[d], control[ed] and operate[d] the enterprise.’ For present purposes, we conclude that they are.”

Judge Dearie

Following the Zaslavskiy case, a New York court Judge has deemed laws that apply to securites and the asset classes to be applied to Cryptocurrencies as well.

Upon a challenge, the judge said that the securities laws must be considered to be flexible and may be easily applied to cryptocurrencies as well.

I have three points in mind-

- This will surely protect investors.

- Will this also increase anxiety towards dealings and investment in cryptocurrencies?

- How will Bitcoin get affected?


Source- https://cointelegraph.com/news/breaking-new-york-judge-rules-securities-laws-can-apply-to-cryptocurrencies
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buwaytress
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September 12, 2018, 01:22:00 PM
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Read the text you quoted. The conclusion that securities laws apply to the present case at hand, that is, the Zaslavskiy case.

The judge (and jury) felt that there was sufficient evidence to prove that:
- the business sought profit
- investors provided funding seeking to share profits
- promoters managed the venture

Just because of this case, doesn't mean all crypto, certainly NOT Bitcoin, will ever be treated as securities.

This is why crypto does not equal blockchain, and crypto does not equal Bitcoin. Not all crypto are built the same, and certainly very few are anything like Bitcoin. They are just instruments controlled by an organisation, much as any asset like fiat, and they just happen to be somehow using blockchain.



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September 12, 2018, 01:37:23 PM
 #3

Just because of this case, doesn't mean all crypto, certainly NOT Bitcoin, will ever be treated as securities.

https://www.sec.gov/news/pressreleases

Lots of action there.

Bitcoin itself has long been declared a non security but that's not to say it hasn't been used in abusive practices the SEC will pursue and prosecute. There will be lots of crypto bro sphincters tightening over the coming months as the SEC gets around to nailing them.

They were long warned that just because it's 'on the internet' does not mean they're exempt from the law. They chose to ignore that and will get their bum stretched because of it.

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September 12, 2018, 11:59:46 PM
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How is bitcoin a security?

I feel like this decision may actually be more relevant in terms of ICOs instead of Bitcoin, because of the fact that they are actually offering a crowdfund sale at the start of their project as investment for participants.

That's completely different from what bitcoin is, it does not have an ICO or crowdfund and is decentralized. It is extremely illogical for anyone to describe bitcoin as a security especially when you know that bitcoin does not produce any dividends.

This could see higher KYC requirements which is already present in crowdfunded crypto projects, but bitcoin shouldn't really be affected imho.

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September 13, 2018, 09:42:13 AM
 #5

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“The question is whether the ‘elements of a profit-seeking business venture’ are sufficiently alleged in the indictment, such that, if proven at trial, a reasonable jury could conclude that ‘investors provide[d] the capital and share[d] in the earnings and profits; [and] the promoters manage[d], control[ed] and operate[d] the enterprise.’ For present purposes, we conclude that they are.”

Judge Dearie

Following the Zaslavskiy case, a New York court Judge has deemed laws that apply to securites and the asset classes to be applied to Cryptocurrencies as well.

Upon a challenge, the judge said that the securities laws must be considered to be flexible and may be easily applied to cryptocurrencies as well.

I have three points in mind-

- This will surely protect investors.

- Will this also increase anxiety towards dealings and investment in cryptocurrencies?

- How will Bitcoin get affected?


Source- https://cointelegraph.com/news/breaking-new-york-judge-rules-securities-laws-can-apply-to-cryptocurrencies

The flexibility is what really matters. When it comes to assets or currency, there are always some universal applications that will be valid for all kind of assets no matter the category. For example, there is no law on assets that will allow that someone else converts what does not belong to him for his own benefit the same way no matter there type of tax law, there is no tax law that will encourage tax evasion of tax fraud no matter how that tax seems to be distinct from other tax laws that have been enacted.

On its implication, the moment the intention of any interpretation is to protect the investors then its all fine because investors cannot protect themselves. While I can lock my phone with pattern or password, it does not mean it cannot be hacked which means there is need for another body to ensure that the people responsible for that security are held responsible whenever there is a vulnerability that most times always lead to loss of property.

The concern here is that, the pronouncement is just an expression of opinion which is subject to different interpretations depending on who is relying on such pronouncement which is why I won't place so much reliance on it or thinking its going to affect bitcoin until the is passed by law makers and sign into law by head of the executive.
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September 13, 2018, 11:05:44 AM
 #6

This might only be covering upcoming ICOs particularly security tokens who want to enter the U.S. market and obviously security tokens acting like a stock of a company which also pays up dividends will need to be covered by SEC regulation but the problem I see here is that some companies that have existing stocks still create their own security tokens which I think is unfair because it will almost be like they have 2 existing stocks at the same time. They must focus more in these kinds of  security tokens as they are taking advantage of the market right now.

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buwaytress
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September 13, 2018, 02:30:23 PM
 #7

Just because of this case, doesn't mean all crypto, certainly NOT Bitcoin, will ever be treated as securities.

https://www.sec.gov/news/pressreleases

Lots of action there.

Bitcoin itself has long been declared a non security but that's not to say it hasn't been used in abusive practices the SEC will pursue and prosecute. There will be lots of crypto bro sphincters tightening over the coming months as the SEC gets around to nailing them.

They were long warned that just because it's 'on the internet' does not mean they're exempt from the law. They chose to ignore that and will get their bum stretched because of it.

Can always rely on you for the more colourful analyses Wink SEC Twitter has been really hot lately too, and with the so-called pro-Bitcoin Commissioner sworn in yesterday, there's expectation that this bum-stretching might tone down. I wouldn't bet on it though, lobbyists put him there, and their first order of the day will be to cut down the non-centralised, non-corporate, non-backroom cigar-smoking players who don't want to join the status quo club.

How is bitcoin a security?

That's completely different from what bitcoin is, it does not have an ICO or crowdfund and is decentralized. It is extremely illogical for anyone to describe bitcoin as a security especially when you know that bitcoin does not produce any dividends.

It's not, and has been clarified as such. It's the tools and businesses, means of fundraising, that will be looked at, rather than the currency used. If you're running a securities, don't matter if it's tokens, seashells, sand, or "Bitcoin"... if it fits their descriptions of securities, boom. And the way most projects are managed (in fact, being managed almost definitively means it is, since little outside of Bitcoin is not managed), there's little room to doubt.

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