🎓 Dr. Freemo 🇳🇱 @freemo@social.cleverlibre.org

@LouisIngenthron

> As I understand it, those rulings do not apply to all cryptocurrencies. They apply to crypto tokens *sold as investments*. In other words, they were sold to customers with the promise the value will rise, and it's that advertising that ultimately got them in trouble.

Sort of, you are thinking of the criteria for the Howey test. There are 4 criteria, but the one you are thinking of is that there must be an expectation of profit. This does **not** mean the expectation has to come from the seller though. As long as those engaging in the exchange generally do so because of a belief it will be profitable, then it qualifies. The expectation may come from the seller, or it may simply be the general understanding of the population.

This should be obvious because if I sell you stock in a company it doesnt stop being a security if I, as the seller, tell you the stock isnt likely to be profitable. It is still, by its nature, a vehicle to investment.

> A cryptocurrency that exists for stability (or at least doesn't actively advertise itself as existing for the sole purpose of going up in value) would not be beholden to such rules.

Incorrect. UST (Terra USD) is a stable coin with a fixed price of 1 USD to 1 UST and is by design stable. This is however has been explicitly stated by the SEC to be a security.

> That all makes good sense to me. It's how it should work, and wouldn't prohibit using crypto for legitimate purposes.

As per the above you are mistaken, so I guess no longer makes sense?

@LouisIngenthron Sure, though I said regulation, not law. The regulating bodies (like the SEC) directly issued regulations using their autonomy. They are similar to laws but not issued directly by congress but rather issued by the agencies congress has given autonomy (similar to laws around drugs re:FDA).

So here are some of the notable events.

On February 8th 2018 the SEC, as part of their testimony at U.S. Senate Banking Committee declared that all cryptocurrencies, regardless of utility or function, are to be treated as securities. This basically meant a few things 1) you couldnt use it as money anymore 2) you cant legally buy many coins unless you are an accredited investor. This is ultimately what lead to the 2018 crash, and is probably the most impactful regulation that kills good-guy crypto (as it literally makes most crypto illegal to own at all outside of rich people).

This was reiterated in a speech given by a SEC representative a few months later just to make sure it was publicly known.

In october 2020 this was upheld in court with the kik case (I think its Kik vs USA or something like that). They sold coin in an ICO to people who were not accredited/registered investors. They were found guilty in court. Again this pretty much made it virtually illegal to own many coins or use them and trade them freely in the USA.

A similar case in December 2020 against ripple also upheld this ruling.

January 2022 the SEC proposed amendments to the Exchange Act. md a few more a few months later. These changes were sweeping and effectively made DeFi on the blockchain as we know it (like unicorn) illegal. The proposals would make the definition of an exchange so broad as to include DeFi, and require things that are impossible of blockchain based DeFi (like an owner, who registers and controls the system, rather than smart contracts being autonomous). This effectively put the last nail in the coffin, now it isnt just illegal to buy coins in an ICO or from an individual, but even from the block chain itself.

I dont have time to write a book, there are soooo many other regulations or proposed regulations that are at play here. But above are some of the most major ones

@LouisIngenthron Tons of them... Years ago the first crypto crash was caused by US regulations that prevented the use of crypto in ordinary transactions (so you cant use it in stores int he US)... more recently regulations have made it illegal for my bank, one of the biggest legitimate actors in the crypto world, to stop supporting crypto. To quote a representative from the bank:

"As a result of the evolving regulatory environment and the uncertainties around the crypto market in the U.S., we’ve taken the difficult decision, together with our U.S. banking partner, to suspend access to cryptocurrencies through Revolut in the U.S."

Sadly the USA has went out of its way to regulate crypto out of existance and create exactly this environment, where it is virtually illegal to hold or use crypto so that only those who dont care about what is legal is left using it. This has been a very clear and obvious pattern out of the US government in an attempt to kill crypto.