I specifically agreed with this comment: "The SEC has been getting blasted for its regulation-by-enforcement approach to crypto." I understand the SEC's hostility to crypto, but what I don't understand is why they can't just provide clearer rules, up front, about what is OK and what is not, instead seeming to explicitly not provide clear guidance and then saying to companies after the fact "no no, that's too far" (in some cases - other cases were clearly fraudulent BS from the get go).
I'm not a lawyer, and haven't been following the ins and outs of all of the crypto-SEC battles super closely, but I'd be curious if someone with more knowledge in the domain could comment on why the SEC hasn't been more proactive in defining rules.
The industry that the SEC regulates is full of clever people who have a financial incentive to push rules as far as possible.
The concern is that if they provided a clear line between what is allowed and disallowed, that everyone will go right up to the line and then find creative ways to exploit how it’s defined.
The SEC prefers to keep the line fuzzy so that actors keep their behavior well on the “allowed” side.
I still don't buy this explanation regardless, because it makes navigating the space impossible.
In crypto it appears the exact opposite is happening.
It makes sense that the SEC probably does not have the resources to explain to anyone engaging in any securities activity exactly how to behave, but crypto is untrodden ground and they could have provided more guidance there.
Cryptobros can't seriously expect anything different, so these complaints are just political theater to prod lawmakers into acting (e.g. explicitly legalizing their schemes.)
Proponents think it will collapse the dollar and bankrupt all governments.
Opponents think it's negative-sum and the sooner cryptocurrency dies the better for industries that actually create value.
Either way it's a (mild) attack on effective government and civilization more generally. The less subsidies for traders the better, from the perspective of a currently-influential government.
It's basically "unsportsmanlike conduct" for the financial system. The NFL doesn't tell you exactly how hard you have to push the other guy before it counts as unsportsmanlike conduct, because that would be stupid, extremely context sensitive, and only help players push each other around more. It's up to you as a player to actively stay on the right side of the fuzzy line for that exact reason.
Every person on here who works in tech should understand how stupid "no the rules need to be clear" is when it comes to bad actors and adversarial systems. Imagine if it was expected for you to clearly explain to a user who failed your internal risk system what caused them to fail, so that they can fix it and try again. Imagine if you were asked to implement a system that explained clearly to your users what would get blocked as "carding behavior". It's clear to those who have built or worked with these kind of systems how utterly stupid and self defeating such an endeavor would be.
There isn't even an unambiguously correct definition of "Fraud" in the first place!
On the bright side, it clarify things. The downside is it cost a lot of money.
They can always do what traditional money does, stay within the safe zone with well established precedents.
The reason why it's more appealing for criminals to do it with crypto is that claw-backs are essentially impossible.
When you are dealing with sociopaths (i.e. most of the industry that the SEC regulates), reason and compassion are useless as tools for getting people to do the right thing ... but fear still works.
Where was this proven? My experience is the opposite. Inconsistent enforcement makes people think they can get away with breaking the rules. And because the enforcement is inconsistent, they have a guaranteed non-zero probability of succeeding.
Ain't that just the darndest thing.
I can write a letter to the ATF asking if my shoestring with two loops tied in it counts as a machine gun if I also own a certain rifle, or if I only own certain parts of that rifle, or if I sell it to a guy who owns that rifle; they might respond but maybe not. (As a matter of fact they have made public statements concerning such shoestrings, but only because they chose to.)
The idea of "guidance" is "hey, would you fine or sue me if I act like this, in this gray area, that's genuinely hard for me and my lawyers to determine if it's within the law?"
The court decisions to refute the ATF on bump stocks and SEC on crypto ETFs show the laws were written fuzzily there. SEC's insistence that the law speaks for itself looks kind of dishonest, or ignorant.
Frankly, these crypto bros seem to be trying to get the SEC to publicly contradict themselves, and plan to use that as ammo to turn the court of public opinion against them, but the SEC isn’t interested in playing their game.
Human interaction is fuzzy, THAT'S why the rules are fuzzy. Also, the SEC itself isn't the arbiter of what the law says, that's the court's job.
Go ahead, try to write a complete and comprehensive and unambiguous system for defining human interaction.
To the extent to which we are taking about the laws (and not rules), it is worth noting that the SEC--despite claiming these laws are clear--is almost hilariously bad at understanding them given that they are now on a losing streak in the courts ;P. So far, they have lost on their enforcement of Ripple, were told the reasons they denied Greyscale were unacceptable, and the courts have them on a right timeline (refusing to cede jurisdiction) to provide to Coinbase the regulatory clarity they petitioned for (which is currently supposed to happen by October 11th, but we'll see if they figure out how to delay further).