US SEC rulemaking does not harm the encryption startup encryption technology but is beneficial

US SEC rulemaking does not harm encryption startup encryption technology but is beneficial

The SEC's guidance creates a more attractive environment for regulated technology companies such as Facebook to provide them with proprietary cryptographic assets that are integrated into existing products that can be used as non-securities in existing cryptographic transactions. Legal transactions. At the same time, the US Securities and Exchange Commission has set the startup's encryption program to a more rigorous review target.

The encryption community's response to the SEC's guidance last month ranged from shrugging to horror. SEC commissioner Hester Peirce believes that the 38-factor test may "propose more questions than answers." These factors, combined with the so-called Howe test, will not only bring serious legal consequences to the crypto-initiator, including ending their projects and returning investor funds, but also determining whether the exchange can violate US securities laws. A cryptographic asset is listed under the circumstances. So for projects like KIK, this could mean life and death. Last week, KIK announced that after its CEO deplored "the time spent designing the SEC is more than the time designed for its users," the company has invested $5 million to fight the SEC on the Howe. However, since there is clearly little relief from existing encryption projects, the guide really needs an important question: Why was it released from the beginning?

Central network

The latest news from Silicon Valley may reveal some information. On May 17, after hiring two Coinbase compliance managers, Facebook set up a Swiss subsidiary to set up a new “project library”, a dollar-linked cryptocurrency project that apparently includes the payment processor MasterCard. Card and Visa. Libra may also reward users who watch ads, similar to the $35 million Basic Attention Token (BAT) cryptocurrency startup that was launched in May 2017 in 40 seconds to reward viewers and promote their privacy. Micro-transaction on the center's "brave" browser.

The huge impact on the crypto asset market and the global payment flow, such as the widespread use of local Facebook tokens, is difficult to underestimate. Facebook's 2.38 billion active users account for almost a third of the world's population, making the size of all cryptocurrency projects dwarf. This prospect, surprisingly, has little interest from the crypto community and should be suspended for everyone from Altcoin enthusiasts to the avid bitcoin maximist.

This is an exciting news for those who are keen on the proliferation of any type of new payment system. However, for those who are in favor of decentralized cryptocurrencies, this should sound a wake-up call, especially if Facebook repeatedly shows a lack of respect for personal privacy, a blatant censorship and a preference for dishonesty. It is meant to be mediated by those platforms that resist censorship. Advocates of HAT cryptocurrency hope to eventually replace it as a value transfer mechanism. Even a small percentage of Facebook users using their cryptocurrencies and using them to access encrypted exchanges may lead to unprecedented expansion and price increases for crypto asset users, while familiarizing themselves with a centralized group (ie Facebook and Mark Zuckerberg) Exchanges, wallets and other relatively unbeatable leverage.

Does not support starting ICO?

Unlike Facebook, most cryptographic asset projects, such as BAT, start from scratch. BAT, founded by Mozilla co-founder Brendan Eich, plans to use its $35 million ICO funding to motivate its team and build a decentralized platform. The platform stems from Mozilla's non-profit open source idea, which aims to “destroy” the digital advertising industry by directly connecting users, publishers and advertisers, thereby dissolving companies such as Google and Facebook. The startup's ICO financing mechanism is characterized by many of the most famous and successful encryption projects, as well as the most notorious scam. However, according to SEC guidance, tokens like BAT – the promoters “hold shares or interests in digital assets”, or they “assign digital assets to management as compensation” – will have $44 billion more than Facebook Libra with a cash reserve is more likely to be considered a security.

Similarly, the SEC now states that when the promoter “funds more than the amount needed to build a functional network or digital asset,” the token is more likely to become a security, in which case the promoter can “hold” In the case of assets with an effort to benefit, in this case, the promoter continues to spend money on revenue or operating costs. Provisioning to strengthen the network, and the future value of the network and the sponsor's expertise are included in the fundraising documents, all of which may apply to products such as BAT, but may not apply to Libra. In addition, the SEC is more likely to see a Instead of providing existing goods or services used on existing networks (such as Facebook), it is “committed (implicitly or explicitly) to establish a business or operation” (such as BAT's platform).

In addition, the US Securities and Exchange Commission believes that if assets are “widely available to potential buyers,” as British American Tobacco provides, “it is more likely than “expected users of goods or services that require network functions”. It is considered a kind of security. This is good news for Facebook, which seems to target users on Messenger, Facebook and Libra Instagram.

"Community Standards"

Perhaps the best explanation for this guiding principle is that the SEC says it is unlikely that crypto assets will be considered a security if “design” makes “the value of it remains the same or even decreases over time”. The SEC may also find that digital assets become a non-secure asset when “as a substitute for legal tender” and “CA”. Currently redeemed on a developed network or platform to obtain or use these goods or services. ”

Given that cryptocurrencies emerged after the 2008 financial crisis, as a substitute for Wall Street-centered legal currency-based global financial systems, US regulators agreed to lay down their arms and provide funding for cryptocurrency issues without deflationary mechanisms. The scarcity of deliberately causing bitcoin value may not be what people think of as cryptocurrency. Rather, it is reminiscent of a common phrase in 2015 for traditional financial institutions and government agencies: “This is not about bitcoin (or cryptographic assets), but about basic blockchain technology.” It now appears that As long as the encrypted assets do not add value, especially from a listed company, the encrypted assets are not bad. Ted is working on a major stock exchange that is part of the Wall Street-centric legal currency global financial system.

Zuckerberg is still a bust

Encouraging publicly traded US companies to successfully conduct initial public offerings (and therefore under the supervision of the SEC) to enter and control the cryptocurrency sector is in line with the SEC's primary policy interests. In 2017 and 2018, thousands of International Associations raised a total of $15 billion, up from $100 million two years ago, while the number of US IPOs has been less than 200 since the 2008 financial crisis, less than the Internet. Half of the bubble's high point. Recent indicators show that 80% of ICO is unprofitable in 2018, and the response to Uber and Lyft's large IPO in 2019 is indifferent.

For its part, ICO is increasingly appearing outside the United States, with the British Virgin Islands, the Cayman Islands, and Singapore receiving $7.6 billion in 2018, or 60% of the ICO. In an increasingly attractive offshore ICO model, the SEC seems to be an interesting approach to simply reducing the barriers to initial public offerings, perhaps by trying to downplay the millions of dollars in initial public offerings. In this case, the SEC seems to be in a difficult position; it is forced to decide to unilaterally weaken Haowei to motivate the ICO on the shore to reduce its task of protecting US investors, some of which will undoubtedly lead to serious consumer fraud, or I forced ICO offshore by summoning, litigation fraud and "killing". However, if a token like Libra is issued by a publicly traded, SEC-compliant multinational company, it will become the main token, allowing the SEC and other regulators to impose on the crypto asset market and service industries that are still in their infancy. Secondary impact.

However, these do not mean that the SEC is directly planning to stifle innovation or entrepreneurship. Although not every case relies on clear precedents, nothing in the Guiding Principles is a spiritual category of Howie. In addition, as a prosecutorial agency, the US Securities and Exchange Commission is expected to interpret the law as widely as possible to facilitate the discovery that an offer is a security. Publicly stating that certain activities do not constitute law within their jurisdiction, and that declaring activities outside their jurisdiction can serve as a defense of the prosecution and weaken its influence. There is one potential purpose: many areas that the US Securities and Exchange Commission seems to have exempted from its guidance have previously been the grey areas where big technology companies may now seek to occupy. Since listed multinational companies like Facebook can't get involved in the gray areas that start-ups are involved in, this may be a necessary step to pave the way for Libra. Now, whether you like it or not, the encryption community has a choice: be prepared for Libra, or you will be beaten. (chain to finance)