I don't know - I have a lot of sympathy for your points but your experiences are so generally described that I can't really evaluate whether I agree with you.
You are leaving out the vacuum created by the regulators. They've been massively absent and unclear. The legislators are afraid of scaring off $ and the agencies won't issue relevant guidelines. I don't blame (non fraud) entrepreneurs for trying to enter the space.
> You are leaving out the vacuum created by the regulators.
One phase I’ve heard in other situations is that “bad cases make bad law”[0]. IANAL, but my understanding of this is that because the US is a common law system where precedent influences future outcomes, legal and regulatory bodies are hesitant to take legal action unless the outcome is likely to be in their favor. Loosing cases end up creating legal precedent against the power of the regulatory body.
In a greenfield areas where there there is no precedent to point to regulatory agencies end up being served to wait until there is a clear and obvious case to be made to cement their authority. If the SEC were to have taken aggressive action again kinda scammy ICOs early on, it’s possible they could have lost legal action, and hamper their ability to regulate in the future. Waiting for a scam obvious enough for them to win in court gives them legal precedent to successfully pursue more actions in the future.
[0] This came up a often on the podcast “All the Presidents’ Lawyers” with Ken White, generally when discussing how and why the DOJ does things.
The SEC did just that. The first ICO-related case involved someone issuing a coin supposedly backed by gold and real estate, actually backed by neither. The SEC has been bringing the hammer down on about two crypto-related scams per month.[1]
Most of them are out and out frauds. They haven't been aggressively going after every unregistered thing that passes the Howey test.
The SEC is mostly complaint driven. Someone complains they lost money in a scam, and the SEC takes a look. So they get involved in the aftermath, not the runup.
Recently, the SEC just doubled its "cyber" enforcement staff. So enforcement actions should pick up. Just in time for the flakier NFTs that promised something would happen in the future.
As fellow counsel, I'm sure you get why the post had to be general. I earnestly believe that none of the clients I had did anything I thought illegal when I represented them. But I can't ethically blog details of their compliance postures, or of their private negotiations. I can't name names, of clients or of counterparties.
I did not then and do not now perceive any great regulatory "vacuum" as concerns securities regulation. Having learned the 33 Act from law school and in practice, rather than Coin Center and blogs, I didn't see uncertainty demanding regulator clarification. I saw Coin Center and friends trying to manufacture a perception of such uncertainty. Even so, the SEC Report on Investigation on the DAO came right out and said "security", under both '33 and '34 acts, five years ago. And hammered the point that existing analysis fully applied.
Because bribery has ensured that regulators and regulation got strangled in the US. This has been a multi-decade effort, eg Regan's “Most Terrifying Words – ‘I’m from the government and I’m here to help.’” propaganda meme etc. There is a reason that what is called blatant bribery pretty much anywhere else in the civilized world is called "free speech" and "lobbying" in the US, without any intended or perceived irony or sarcasm.
Absent regulation, rules are defined by those in power for their convenience rather than for the public's benefit.
us citizen not a lawyer -- the problems you state are so obvious, that they ALSO have been a multi-decade effort, to mitigate or control, with real rules, that are enforced. Specifically so that shrill, not-on-your-side people cannot dismiss the Entire System in a few words, as here.
I am not a fan, nor making excuses, but its not constructive to oversimplify important, multi-step mechanisms
> they ALSO have been a multi-decade effort, to mitigate or control, with real rules, that are enforced
Source? In the global north, most regulatory bodies are understaffed and underbudget and cannot possibly even try to protect the public from vicious corporations. With the neoliberal wave of the 80s, there's been a merger of State and Corporations interests (what Mussolini called "corporatism") and millions of people have died as a result: from poverty, from work "accidents", from harmful chemicals advertised as medication, from industry pollution...
The people in the regulatory bodies are friendly with the corporate people. It's not uncommon for these bloodsuckers to jump from one field to the other and back again in about a decade.
To give one small example that's familiar with HN people: all of silicon valley hosts (GAFAM) were illegal by french privacy law (passed in 1978) yet they were all operating luxury offices in Paris and bribing engineers to come deceive/exploit the public.
I'm not a fan of defending defeatist worldview, but to believe that the State is here to protect people from corporations is an oversimplification. The regulation, corporate, and State people all come from the same higher classes, all went to the same schools, and eat in the same fancy restaurants in the same bourgeois districts. We lower people don't have the same interests as them, and they are well aware of that... are we?
yeah exactly this -- the United States specifically rejected the class status system from Royal Europe and Vedic India, and wrote law and legal precedence to defeat "the regulation, corporate, and State people all come from the same higher classes, all went to the same schools, and eat in the same fancy restaurants in the same bourgeois districts"
human nature has developed over thousands of years at least, so is this still true? partly of course. So, make the world you want to live in.. speak in public, write, participate in civil society.. When money is involved of course there is insider dealing.. and there is legal enforcement everyday .. pick an example, the female South Asian lead Attorney for New York somewhere, a Wall Street enforcer.. look for it, easy to find.
I am all for engagement, much less for repeating stories of old problems as if nothing has changed, right?
Nah, all that stuff is illegal today. The bribery comes later in the form of, “hey, you worked with us on that bill, maybe you’d be a good board member! We pay $xxx,xxx per year to board members and they meet 4 times a year” or, “you know, without this legislation we could totally open a new factory in your state; say, doesn’t your cousin own a supply company there? I wonder what a new factory would do for his business…”
Since you brought up Schröder imma make it pretty Germany specific: parties and candidates are much less reliant on fundraising. Coalition building makes bribing/lobbying certain parties way less efficient. Ranked party lists makes singular politicians less targetable for bribing/lobbying. And Schröder has become one of the least popular former chancellors due to his engagements in Russian oil corporations and with the war going on pretty universally a persona non grata
Congressional staffers aren’t allowed to accept meals from lobbyists. The rules are very strict, to the point where government employees will do stuff like kick in for the price of their meal at things like industry conferences.
That's of course what's legal "over the counter". Now look under the table and you find the real bribes. Just from the past decade of french politics i could name at least half a dozen major bribery/collusion scandals that resulted in no punishment for the criminals in power.
And of course, as someone else pointed out, you don't necessarily need to take a bribe right now when you know you can quit your job as a regulator to earn 6 digits working for industry. That's a common bargain with regulators, but it's not even just them. You could say the same about journalists, who at least here in France, often refrain from criticizing private propaganda machines (Lagardère/Bolloré/Bouygues/LVMH empires who control >50% of media) because they don't want to compromise their chances of getting a job with them later.
I remember learning during my ethics briefing (OMB, not congressional) that industry events frequented by feds and congressional staffers will oftentimes say on the invitation how much the catering will cost per person and provide a way for attendees to reimburse the event organizers. Most events will just serve coffee and muffins to avoid this (since it's generally considered kosher to take a small pastry and a beverage w/o needing to file an ethics disclosure or pay back the organizer).
> The problem of safely transferring money digitally between strangers without an intermediary is hard.
That's because money is an imaginary belief. If you don't have a common Church to feed this religion, it makes no fucking sense at all. It's just arbitrary numbers that govern our lives, so it's sensible that you need trusted intermediaries to interpret these sacred numbers.
Money without trust makes no sense because money by very definition is trust. Trust that you'll find someone else that will barter your imaginary number against something of actual use/value. Same applies to gold btw: it's just a stupid metal... unless you can trust that someone will exchange it for something else.
> finding practical scalable tools for that?
I think you may be interested in GNU Taler. As much as i hate money and banks, taxable private payments that interop with existing banks sounds like what we're missing today, although it does not solve the problem of the many poorer people (even in global north countries) who don't have a bank account.
Many years ago, the CEO of First Data said something like, for each VISA transaction we process, we make a nickel. Last year, we made 100 billion nickels.
>Largely by repeating self-serving nonsense about how criminal use was negligible, banking regulations were illegitimate, and securities laws somehow did not apply—and finding enough lawyers willing to flatter the latter, and eventually work the litigation—the critical, interested mass of crypto players bum rushed the regulatory system.
Exactly.
>A scene being riven with datajackers, confidence men, and self-taught, emoji-adept bucket shop jockeys does not condemn others not so involved by abstract association, be they merely fools or holdout true believers. But neither do I support special accommodations for those in denial or indifference to the unwelcome company they keep. The way blockchain is going is largely bad, tragic, or both, not deserving of special leniency.
Does it surprise anyone that the bottom-feeders have rushed in? If it surprises you, you must also be surprised that craigslist has turned into a cesspit, and NextDoor boasts the stupidest people on the Internet.
> Neither should Congress or anyone else confuse the hype machine’s capacity to invoke real grievances—banking access, financial consolidation, transfer network improvement, predatory lending, monetary policy—with capacity to solve them. The proper tools are known, but they aren’t found in any “white paper”. They are found on parchment, in the Constitution, vested in Congress.
What a mouthful. Some problems are technology problems (e.g. "transfer network improvement"). Not sure what Congress has to do with solving these (read: nothing). Other problems are finance problems (e.g. financial consolidation, whatever that even means). Again, Congress has no say here, as these are problems to be solved by financial institutions (banks, funds, etc.). And others (e.g. predatory lending) are policy problems; here is the only place where Congress would have a say.
> If our representatives tie themselves to blockchain with special favors, they will stand with it when the hustle grinds down, the debts come due, and full account is taken of its past as well as its promises. They should do the opposite.
Nancy Pelosi consistently beating the market[1] is a meme at this point. How about we first solve the problem of congresspeople actively trading the very markets they're supposed to police? The entire post is just a confused hodgepodge of misgivings and grievances with no rhyme or reason.
> Some problems are technology problems (e.g. "transfer network improvement"). Not sure what Congress has to do with solving these (read: nothing). Other problems are finance problems (e.g. financial consolidation, whatever that even means). Again, Congress has no say here, as these are problems to be solved by financial institutions (banks, funds, etc.).
I think you may be misunderstanding these terms. I read "transfer network" as referring to how banks transfer funds between each other, not as a specific kind of network technology, and there is most definitely a role for law and policy in establishing how independent financial institutions interact with one another in account holders' interests. I read "financial consolidation" here as referring to the consolidation of financial institutions, and Congress and regulatory authorities for sure have a role to play in determining what constitutes a monopoly or monopsony in the financial sector.
Interoperability and anticompetitive mergers are absolutely (though not exclusively) policy problems.
> How about we first solve the problem of congresspeople actively trading the very markets they're supposed to police?
I mean, sure? Let's ban senators and reps from holding individual securities; I won't argue with that. But that seems orthogonal to a discussion of whether a particular industry should be exempt from regulation (and frankly seems like whataboutism).
I hate this new trend of dismissing tangential points as "whataboutism" -- this is simply a question of priorities. It's inane to prioritize blockchain regulation when even the markets (you know, the ones we've had for a few hundred years now) aren't regulated as heavily, which was the point.
The markets are heavily regulated; you were complaining about someone (seemingly) getting away with insider trading. It's completely irrelevant to the topic under discussion, which was that blockchain-based solutions have been escaping traditional securities regulations. Deciding that blockchains should be a free space for crime because, hey, someone else gets away with a different criminal activity, so what's the point of having laws? is the textbook definition of whataboutism.
As I mentioned, it's a matter of priorities, not whataboutism. We should fix the financial system: how about we start with Citizens United, with lobbying in Washington, with more stringent insider trading rules, etc.? This (definitionally) should be of a higher priority than the blockchain—if we really care about fixing the financial system. Lamenting that the blockchain might get "regulatory favors" when the government spent $700 billion bailing out the banks in 2008 is so tone-deaf it's almost in poor taste.
I don't know that the tl;dr is "blockchain bad". What I took from it is that blockchain-based money movement shouldn't get special treatment compared to other ways to move money in regards to regulations (KYC, enforcement, etc.)
Author of post here. Much appreciate this comment.
My personal TL;DR is probably more like "blockchain, bleh". I think it's a dead end, for social ⋃ technical reasons. But I know and respect folks holding out hope and putting in time. I wouldn't pull the plug on them.
But the burden's still on them to meet and exceed extant standards. No public policy regressions tolerated. If you want deregulation, fine. Argue that across the board and compete.
Cryptocurrency became popular as a result of the increasingly obvious dysfunction of the fiat monetary system.
Unfortunately, this dysfunctional monetary system which crypto was meant to replace has managed to take control of crypto and has turned it into a parody of itself.
Still, it's difficult to think of a better alternative to cryptocurrency to replace the current failing system.
The best we can hope for is that fiat proponents will keep deploying their endless printed fiat currencies towards the continued corruption of the crypto ecosystem until they destroy all of society and their own monetary system along with it - They will keep systematically feeding the greed, deception, inefficiency, incompetence and insanity until it takes over everything.
In their quest to discredit the cryptocurrency ecosystem, fiat proponents are also discrediting their own monetary system. It's a self-destructive and mutually-destructive race to the bottom.
I think it's naïve to assume the technical implementation of a monetary system will change human nature. Dysfunction and corruption are not technical problems.
I don't know - I have a lot of sympathy for your points but your experiences are so generally described that I can't really evaluate whether I agree with you.
You are leaving out the vacuum created by the regulators. They've been massively absent and unclear. The legislators are afraid of scaring off $ and the agencies won't issue relevant guidelines. I don't blame (non fraud) entrepreneurs for trying to enter the space.