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Today we will go over this week's SEC's decision, because we think it's important for our viewers to understand the changing landscape of the crypto market here in the US and internationally. My name is B, taking over Nick on the radio for today. For people new to this channel, this channel focuses on Bitcoin and concurrency news with respect to Latin America, the Middle East, South Asian Pacific, and Africa.
[Michael S. Piwowar was first appointed to the U.S. Securities and Exchange Commission (SEC) by President Barack Obama and was sworn in on August 15, 2013. Dr. Piwowar was designated Acting Chairman of the Commission by President Donald Trump from January 23, 2017, to May 4, 2017.][1]
How regulators like the SEC define and treat cryptocurrencies is important, because it affects both the value of the coin or token. In addition, a type of regulation like this brought down by the SEC can affect the likelihood on whether the underlying technology will thrive in its particular market place. So yes, investors in the United States as well as those in the areas we cover on this channel should stay alert on any crypto currency decisions pushed by the SEC.
I will first talk about what is the SEC and what happened this past week. For folks who do not know, the SEC stands for the US Securities and Exchange Commission. It is an independent, federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital securities markets. Anything that deals with monetary transactions, assets, and anything of "suspected" value is known to fall into the SEC's jurisdiction.
[Picture taken from Peter Van Valkenburgh's blog titled 'Is Bitcoin a Security'][2]
Just recently an internal investigation looked into the funds stolen from an ICO called the 'DAO' in which investors lost more than $40 million dollars due to a hack which is absolutely crazy. And of course anytime investors lose a lot of money, an investigation opens and the SEC looks into the matter. So the fact that the SEC weighed into this incident should be a clear warning to the cryptocurrency market.
As the SEC report this week puts it, "U.S. federal securities law may apply to various activities, including distributed ledger technology, depending on the particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular [cryptocurrency] offer or sale." And that leads me and you to the important question: Are cryptos securities?! Our answer on this channel is that it doesn't just depend as other crypto experts would tell you. The SEC can use a statement like I just read to come hard on any concurrency no matter if it's a token, coin, blockchain, or computerized system meant to function as blockchain but is not. Thus if 1. investors invested money, 2. expected to make profit, and 3. there was actual work by the centralized authorities to help push the technology to "perform", then SEC jurisdiction is not too far away. These three things makes up what is part of the Howey Test which was created by the US Supreme Court for determining whether certain transactions qualify as "investment contracts". So now, guess what?! We should not be surprised to see more scrutinizing of centralized cryptocurrencies by authorities like the SEC to impose laws within the crypto space in the very near future.
[Current picture of the Supreme Court Justices of the United States. Picture taken as recent as June 2, 2017][3]
I want to say that this is not the first time that federal or national financial institutions have weighed into the crypt market space. We have seen how some Initial Coin Offerings also known as ICOs in fear of the language used in US legislation or policies, have even disallowed US investors from participating in their own initial coin offering. An example of this was with the recent and most popular ICO called Status that took place in June of this year.
The reason why it's good for folks of this channel to be aware of the SEC is that other national governments slowly try to adopt their policies. The stock market and bond markets are the top 2 heavily regulated markets. Though central governments are currently imposing their own laws and regulations into the crypto currency market, they may look forward to adopt language used by the SEC as a standard or template to regulate their own local or regional crypto currency markets. So who knows, 10 years from now, when this space matures, the crypto market could end up being the 3rd most regulated market. We could see the crypto market of Brazil, South Africa, and the Philippines show up at that time.
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Pictures:
[1]. [Michael S. Piwowar was first appointed to the U.S. Securities and Exchange Commission (SEC) by President Barack Obama and was sworn in on August 15, 2013. Dr. Piwowar was designated Acting Chairman of the Commission by President Donald Trump from January 23, 2017, to May 4, 2017. Site: https://www.sec.gov/biography/piwowar-michael-s
[2]. [Picture taken from Peter Van Valkenburgh's blog titled 'Is Bitcoin a Security']. Site: https://coincenter.org/entry/is-bitcoin-a-security
[3]. [Current picture of the Supreme Court Justices of the United States. Picture taken as recent as June 2, 2017]. Site: https://www.nytimes.com/2017/06/02/us/politics/travel-ban-supreme-court-trump.html.
Documentation:
[1]. Securities And Exchange Commision. Securities Exchange Act of 1934. Release No. 81207 / July 25, 2017. Site: https://www.sec.gov/litigation/investreport/34-81207.pdf
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