ac04 said:

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staking is an investment contract where individual investors contribute crypto to staking pools with the expectation of receiving a reward while relying on the efforts of the pool's node manager.

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Where's the common enterprise/entity? The node, the network, the pool???

Staking serves a similar function to mining, in that it's the process by which a network participant gets selected to add the latest batch of transactions to the blockchain and earn some crypto in exchange.

The reason your crypto earns rewards while staking assets is that you are putting your crypto to work in exchange for a payment from the blockchain itself.
I you choose to stake your crypto, it becomes part of that process, but it remains your crypto at all times.

When someone stakes some of their crypto, they aren't giving up one thing to get something else they own exactly the same thing they did before. Crypto holders retain full ownership of their assets at all times, as well as the right to "unstake" those assets consistent with the underlying protocol.

Stakers are only connected by blockchain technology and they validate transactions through a community of users, not a common enterprise. The fortunes of users are not tied to those of Coinbase or IOG because staking rewards are determined by the protocolnot by anything that Coinbase or IOG does. Therefore, this does not meet the case law definition of common enterprise.

""" Staking fails to meet Howey's "reasonable expectation of profits'' element. To determine this, courts look at whether a customer is attracted to an asset based on the prospects of a return on investment or a desire to use or consume the item purchased. Staking rewards are simply payments for validation services provided to the blockchain, not a return on investment. They are set by the blockchain protocol and are the same whether the customer stakes on their own or through an intermediary.""

Staking pools do not pay rewards based on the "efforts of others." Staking pools are not entrepreneurial, managerial, or a significant factor in whether customers receive staking rewards or the amount of rewards received. The relevant blockchain protocol governs which validator nodes receive rewards and the amount of rewards paid for each token staked by that node. Pool owners simply use publicly-available software and basic computer equipment to perform validation services and do not perform any managerial efforts, pools act more like IT services, not investment services.

there is so much misinformation in there i'm not even sure where to start.

hopefully i am wrong and so is the SEC. but if i had a significant position in one of the coins that was explicitly named as a security in these lawsuits i would probably try to steelman gensler's position instead of dismissing it.

ac04 said:

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there is so much misinformation in there i'm not even sure where to start.

hopefully i am wrong and so is the SEC. but if i had a significant position in one of the coins that was explicitly named as a security in these lawsuits i would probably try to steelman gensler's position instead of dismissing it.

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Provide your counter argument and please highlight the misinformation. Perhaps you don't understand how blockchain and ecosystems actually function.

And, please explain why ETHEREUM is not labeled nor has ever been considered a security by Gensler.

i already explained my position as simply as i possibly can. ethereum is next, these lawsuits are establishing precedent.

in the US an investable asset is either a commodity or a security. if you honestly believe ADA is a commodity then everything will be fine. but consider why you are so vehemently against it being classified as a security. what does that imply and why would that be such a big problem?

i am not your enemy, just an objective/disinterested observer. again, i hope i am wrong.

I am vehemently against a test conceived 80 years ago for agriculture, and having new technology forced into its parameters without new clarification and legislation . I am vehemently against one man's crusade against good actors in a new industry by regulating through enforcement, especially after having allowed bad actors from his industry to cause harm.

Gensler never wanted to be transparent. He wanted to pick winners and losers.
Binance put a stop to the schemes perpetrated on people by FTX. FTX was wanting to be a single player with control of the industry and was working on an crypto registry that favored them. Gensler was along for the ride so that TradFi could control regulated crypto from the inside. Their plan was to have power amd control but now he wants to do a reset.

Agree that Ethereum Foundation/Consensys is another battle for another day. It's coming though.

Also, it's not that Latinaggie's case is incoherent. It's an altruistic but reasonable way of describing how PoS works. Granted there's room for debate as to how his description of PoS alt token mechanisms should weave in or out of SEC regulations. At this localized level, I don't have a huge dog in the fight.

The issue is more when you roll the discussion up to the macro $40+ trillion US securities market. It's not the first (or last) time an industry has come up with an "innovative" investment product that puts some remote intermediaries and obfuscating definitional terms between the centralized entity issuing it and the investing public. The "indirect" way the investor receives their yield/return isn't different enough than conventional/regulated ways investors receive yield/return to warrant a separate regulatory structure.

The entire $40+ trillion US securities market would be turned on its head if entities could get around securities law using PoS issuance schematics. Some might argue that's a good thing and fair enough. There's a separate debate to be had on the merits of castrating the SEC. IMO, it's a be careful what you wish for situation.

But under current laws and interpretation, the centralized entities behind each of these PoS alt tokens should have an obligation to disclose critical investment information to the investing public. I know I'm in the minority, but that doesn't really even seem that controversial or burdensome to me. It's just doing the right thing.

With that said, we're likely still early in this fight. While I tend agree that PoS alt coins are securities, it doesn't matter a ton to me one way or the other and my inclination to argue about it further is very very low. I mostly just state my opinion so people on here can read an alternate viewpoint to LatinAggie.

-The XRP verdict is still hanging out there. It sounds like the SEC is going to win but if XRP does, that could change things.

-I don't see inertia behind any congressional attempts to pass laws clarifying treatment of digital assets. I'd be shocked if anything happens before the next election. If Republicans sweep in 2024, maybe we see something in 2025.

-To the extent PoS alts are deemed securities in the US, I suppose they could still trade on a black market or international market sans disclosures and be ok. Guessing a few big ones would be hunted down vigilantly though and set an example for smaller ones trying to do the same thing.

Well stated counter argument and opinion.
Please expand on the following -
"...the centralized entities behind each of these PoS alt tokens should have an obligation to disclose critical investment information to the investing public."

Cardano is open source and after Voltaire is completely implemented the community has 100% control. Whom and what exactly needs to ne disclosed?

From Teitter

"Crypto is simply open source software. It is regulated by nobody and has a GNU license.

The jurisdictional over reach is simply to attack the broker dealers that are not registered. But there are no guidelines to sell decentralized assets. So hence the stalemate.

A new commission is needed as they did in Hong Kong to regulate decentralized assets and brokers that trade them for dollars." -

We successfully prevented @POTUS' 30% digital asset mining tax from being included in the debt ceiling deal but the fight is far from over.

I am working on a regulatory framework that will allow individuals and companies to own and trade digital assets in America.

Stay tuned...

— Senator Cynthia Lummis (@SenLummis) June 10, 2023

.@GaryGensler is finally saying the quiet part out loud: the Biden Admin wants to kill market innovation to pave the way for a CBDC, which would give the federal gov. unprecedented insight into your life.

I will fight to make sure this doesn’t happen. https://t.co/CV4QxaZCSE

— Senator Bill Hagerty (@SenatorHagerty) June 7, 2023

Hoping it is true so that the space can move forward with smart new regulation.

https://cryptorank.io/news/feed/74898-193393-gary-gensler-accused-of-market-manipulation

I wouldn't hold my breath for anything to happen in Washington.

Never, but he needs to go. Too much conflict of interests and shadyness surrounding him.

Pepper Brooks said:

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"Crypto is simply open source software. It is regulated by nobody and has a GNU license.

The jurisdictional over reach is simply to attack the broker dealers that are not registered. But there are no guidelines to sell decentralized assets. So hence the stalemate. "

I'm sorry but 99% of "crypto" is not open source and is not decentralized. Any PoS protocol that gives validators control, power, and authority to make changes is not decentralized and that accounts for every single coin but one. I don't care if 1 validator has 51% control or 20. This is a sales pitch not based on reality.

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1. I don't invest in 99% of crypto.
2. You don't understand true POS decentralization. AND Please don't compare Cardano to ETH, Matic, or Sol because those are 100x more centralized.

Many will not like or agree with the following and that is acceptable, if, you can offer a valid counter argument.



"Decentralization has two levels: block production and team (governance).

Decentralization is based on holding a scarce resource. In the case of Cardano, it is the ADA coin, in the case of Bitcoin, it is the hash rate. Many people believe that decentralization can be measured by the number of nodes in a distributed network. This is a misconception, as decentralization requires protection against Sybil attacks. A single entity can run thousands of nodes almost for free.

There are over 3,200 pools registered in the Cardano network. Blocks are produced by about half of them. The 5 largest block producers have shares of 8%, 4%, 3%, and 2%. Similar to Bitcoin, Cardano uses the concept of delegation. In the Bitcoin network, miners delegate hash rates to pools. In the Cardano network, stakers delegate ADA coins. There are around 1.3M stakers in the Cardano network. Hundreds of them would have to join together to have more than 50% of the ADA coins.

In the Bitcoin network, the Foundry USA pool produces around 32% of the blocks, and AntPool 21%. The other 3 pools have shares of 18%, 8%, and 6%. If the two dominant pools cooperate, they have more than 50% control over the hash rate. As for the miners, these are the entrepreneurs today having tens of thousands of ASIC miners. It is estimated that the 50 or so largest miners collectively control over half of the hash rate.

Every blockchain project has a team, a GitHub repository maintainer, and someone who signs off on new client releases. Every software project must have someone who manages the project and approves changes. There is no other way.

Cardano is transparent and has 3 founding entities. The roles of IOG and Cardano Foundation are important. IOG is involved in the development of the protocol.

When Satoshi Nakamoto left Bitcoin, he handed over management to Gavin Andersen. He subsequently founded the Bitcoin Foundation. It is not true that Bitcoin does not have a formal leader. Project management is being handed over, the process is just not transparent.

The last 10 BIPs have come from 2 developers, Andrew Chow and Pieter Wuile. Both of these developers work for the VC-backed company Blockstream. The CEO of Blockstream is Adam Back. There are multiple VC-backed companies in the Bitcoin ecosystem that are involved in funding Bitcoin development. All of these companies have a CEO.

IOG is working to establish on-chain governance. The first steps have been taken. ADA holders vote on the distribution of $ADA coins from the treasury to fund projects in Catalyst. Meetings are being held around the world regarding CIP-1694. Entering the Voltaire era has been on Cardano's roadmap since the beginning of the project.

Summary: In terms of block production, #Cardano is orders of magnitude more decentralized than Bitcoin. In the case of governance, the projects are very similar. Cardano is more transparent and is moving towards on-chain governance. In the case of Bitcoin, there is censorship in the main communication networks. The governance process is less transparent."

ac04 said:

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if you actually believe all that BS there is nothing we can do to help you. good luck.

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What is inaccurate?
Do you even know why DOT isn't on the SEC list???
Answer- it was labeled "software" mostly due to its on chain governance which Cardano has almost completed.

Important - I don't try to convince people of what I believe, just offer explanations as to why I believe it. I always welcome differing opinions, especially when they are accompanied by specifics.

Why do you think the SEC is going to care?

Do you know the saying, "don't fight the Fed?"

tremble said:

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Why do you think the SEC is going to care?

Do you know the saying, "don't fight the Fed?"

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I don't think anyone is making an argument about the SEC caring or not caring. The argument is that new legislation is needed for a new technology so that it isn't forced into an antiquated mold. All of my opinions and information sharing are too put a spotlight on the fact that the current regulation model doesn't work with a new disruptive technology. A new one is needed to protect investors without hindering innovation.
Why folks are hell bent on crypto falling under the SEC is baffling to me. We can create a new body that understands the technology and how best to protect its growth, while installing safeguards against bad actors.
I don't need the flipping government telling me what is allowed with my money nor whom gets to benefit from my limited options.

Previous SEC Chairman Hinman emails will be released on Tues.

The emails will help XRP. But I am not sure about the whole of crypto.

I think a good ruling on summary judgement in the XRP case will be good for crypto though.

The emails wont change the Howey analysis but they will likely show the difficulty in applying 1930s/40s precedent to modern day technology. The emails will likely help @coinbase and @ripple in the Court of Public Opinion and hopefully drive bipartisan efforts in Congress. https://t.co/DfpZaLgw4O

— John E Deaton (@JohnEDeaton1) June 11, 2023

https://dailyhodl.com/2023/06/12/billionaire-chamath-palihapitiya-says-sec-covering-its-faults-in-regulators-current-assault-on-crypto-firms/

https://beincrypto.com/crypto-sector-turns-against-sec-chief-gary-gensler/

Is my crypto/cash safe in Coinbase?

Brian Earl Spilner said:

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Is my crypto/cash safe in Coinbase?

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I have always moved mine off Coinbase, Crypto.com, Kraken, etc. as quickly as possible, which takes ease and convenience.

Hot wallets I use - Trust, Eternl, and Yoroi.

I trust your moms hot wallet

/rimshot

https://t.co/I7wkgGZzUp

— Watcher.Guru (@WatcherGuru) June 12, 2023

SEC - Stabilization Act filed.


https://cointelegraph.com/news/breaking-us-lawmakers-file-sec-stabilization-act-to-fire-gary-gensler


https://cryptobriefing.com/?p=124512

Opinion- I've been thinking a lot about what is happening with the SEC and the end game.

I do not believe the SEC thinks ADA and most of the others are security.
I think the SEC is calling the ADA pairings on Coinbase and Binance securities.

https://fortune.com/crypto/2023/06/12/gensler-video-ethereum-litecoin-not-securities/

Great morning if you hold XRP! Up 7% in last 24 hours. Hinman emails are out, and they are helpful to XRP and show SEC colluding with ETH.

Next up for XRP is waiting for Summary Judgement in their court case.

The e-mail below shows #ETH GATE IS REAL and the #SEC has been protecting VITALIK and his friends. #RIPPLE forced to spend over 200M to fight an unjustified battle against the criminals ahead the #SEC. #XRP is not a security. 🚨 pic.twitter.com/ZvxjndPikp

— EDO FARINA 🅧 XRP (@edward_farina) June 13, 2023

Ripple Labs claims Hinman’s remarks at the time mean XRP should not be considered a security – which could result in a favorable outcome for the payment firm in its ongoing case with the SEC. By @shauryamalwa.https://t.co/CgfCttpkxP

— CoinDesk (@CoinDesk) June 13, 2023

https://cryptobriefing.com/?p=124532