On Wednesday, Oktober 4th 2017, a major crypto-currency exchange has announced to de-list BitShares for, to many surprisingly undisclosed reasons, followed by a significant amount of speculation about the reasoning and motivation behind this move and consequently, fear, uncertainty and doubt. A few aspects of what might have been seen as root causes need to be addressed:
BitShares is NOT a Security
The US federal securities law, as nicely described by an article from Coinbase, makes use of the so called Howey Test. There it says:
The US Supreme Court case of SEC v. Howey established the test for
whether an arrangement involves an investment contract. An investment
contract is a type of security.
In the context of blockchain tokens, the Howey test can be expressed
as three independent elements (the third element encompasses both the third
and fourth prongs of the traditional Howey test). All three elements
must be met in order for a token to be a security.
Furthermore, it provides an easy to use framework to apply the circumstances during the initial donation period to fund the development of BitShares 1 and BitShares 2 and obtain an notion of legal risks of that particular asset.
Those that have been around long enough to remember or have the patience to crawl through the historical documents of bitshares on bitsharestalk, will be able to easily fill in this form and obtain this notion. A notion that is far away from showing any thread that SEC might eventually consider investigating if BTS is a security.
Furthermore, Coinbase gives recommendations and best practices for token sales.
- Principle 1: Publish a detailed white paper: check
- Principle 2: For a presale, commit to a development roadmap 1, 2
- Principle 3: Use an open, public blockchain and publish all code: github
- Principle 4: Use clear, logical and fair pricing in the token sale: check
- Principle 5: Determine the percentage of tokens set aside for the development team: None, or fully shareholder controlled
- Principle 6: Avoid marketing the token as an investment: BTS was marketed as share in a DAC, initial distribution was 50% mined and 50% donations
Ultimately, although not yet clear to many, BitShares fulfills all 6 principles listed by Coinbase in order for a Blockchain token to not be interpreted as a security by U.S. regulations.
Market-Pegged Assets (a.k.a. Smartcoins or BitAssets) are NOT Contracts for Difference
There is awareness raised by regulation-close and undisclosed parties that parts of the Bitshares documentation deem market-pegged assets as contracts for difference which would render them illegal in some jurisdictions including the U.S. Anybody knows that Is not the case.
Upon further investigations and legal advice, it turned out that a minor misunderstanding of technical personal caused this confusion and wrongly presented MPAs as CFDs.
A Contract for difference is a type of financial derivative, where two parties exchange the difference between opening and closing value of an underlying asset.
However, the underlying smart contract implemented on BitShares represents a secured loan where the borrower (user) obtains a loan (e.g. bitUSD) from the smart contract (blockchain) by providing sufficient collateral.
It is understandable that parts of the documentations might have been misread or misrepresented this distinction and it is kindly requested from everyone to adequately update their documents. That said, BitAssets are loans and therefore are fully legal in most jurisdictions.
Flawed Blockchain Code
Arguments have been maid that the BitShares blockchain is instable and comes to a halt on a regular basis. These claimes are unfounded. In the years of operation, the BitShares blockchain has had only two major consensus issues where the block production has been halted for only few hours in total. At no point in time were funds at risk.
After having clarified this, further investigations with undisclosed parties resulted in statements of blockchain nodes losing connection to the P2P network and consequent loss of synchronization with the rest of the network. The root cause of this has been identified and a (non-consensus) patch is been worked on. The core developers have not been made aware of this issue by any affected parties and never experienced this rather rare event themeselves. Eitherway, the BitShares core backend code will be improved from the helfpul information and the excellent support of our decentralized development team.
Disclaimer
This document does not constitute legal advice and should not be relied on by any person. Developers and users should consult their own counsel in connection with their initiatives in this area. You should not rely on this document as legal advice. It is designed for general informational purposes only, as a guide to certain of the conceptual considerations associated with the narrow issues it addresses. You should seek advice from your own counsel, who is familiar with the particular facts and circumstances of what you intend and can give you tailored advice. This document is provided “as is” with no representations, warranties or obligations to update, although we reserve the right to modify or change this Framework from time to time. No attorney-client relationship or privilege is created, nor is this intended to be attorney advertising in any jurisdiction
Bitshares fundamentals are some of the best in the industry - tons of development, adoption and exciting news. I see Bittrex delist without an explanation and in violation of their own policies and a highly coordinated FUD campaign knock 40% of market cap off in a few days and wonder... who is scared of Bitshares? :)
I do think they see Bitshares as a securtiy and delisting it, because of the Delegate model
https://steemit.com/bitshares/@blockchainbv/the-usual-crypto-rollercoast-who-is-profiting-by-the-way
Thanks @blockchainbv good to know
Thank you for posting @xeroc.
Not much is posted concerning Bitshares.....appreciated this information very much.
All the best. Cheers.
Thanks for your clarification, it really makes sense.
Though Bitshares is decentralized, it is good for the committee or BTS foundation to represent the whole community to investigate this issue or negotiate with centralized institution.
Great bitshares explanation in FUD times
Is there a dev team still working on developing bitshares trading platform? Will there be upgrades to the interface? Not sure if its just me but the trollbox doesn't work either. I don't think it would take much to upgrade the platform to make it more user friendly.
???
I am using bitshares online exchange and even market explorer not working ,hope it will be solved soon
Hi @cyberblock –Very valid comment and something we have been working on extensively with the community right now. There was some very lit and productive discussions on the telegram bitshares_dex channel yesterday about it, and the fixes should be at core Bitshares level –To provide the strongest foundation before other businesses build on top of the blockchain. There will be worker proposals coming up for multiple fixes and improvements to the Bitshares official faucet (UI). No matter how much anyone can hate on CEX; they do have very slick interfaces allowing a painter and decorator to figure out how to trade. DEX needs to shake off the 'nerdy' image, and reputation for complexity. The right UX/UI will be the biggest step towards achieving this.
Thanks for your response, I love the idea of the decentralized exchange and the fact that there are virtually no maker/taker fees. Centralized exchanges make it hard for small traders to make a profit. I did some trading on bitshares over the last 24 hours and everything is working fine except for the trollbox and the fact that its not very liquid. Ive also recently purchased 100k bitshares. Based on my research it does seem to be quite undervalued at the moment.
latley I've been spending more time on Bitshares and I come to realize it really is an amazing platform. No wonder some people want to shut it down. I beleive it has huge potential, and I'm holding alomost all of my assets there.
Impressive Research mate @xeroc
I have also posted on BitShares here: https://steemit.com/trading/@bunnychum/why-bittrex-delisting-bitshares-bts-bts-going-down-is-it-still-any-good-my-views
Would love to see your views on this, if you can visit...
Upvoted and Following you... :)
sir i have recently joined streemian i want to know can i make my own trail ?
Wasn't sold.
The end.
Stan even checked it lol
Bitshares is back to where I originally invested in it at. Though unfortunately I think because of my novice trader mistakes I am at a large net loss overall. Growing pains. Nothing much to do but buy the bottom.
@xeroc! its so bad that bittrex is delisting a major coin. This post was very intresting though I just need to know whether will they add it again or just it is the end of Bitshares on bittrex.?
There is so much FUD around in the crypto space it's hard to know what to believe. I guess it's to be expected after the phenomenal influx of funds to countless projects.
Good article, yeah there are alot of risk out there, sometimes it is not easy to separate fact from fiction. You just have to dig deeper, stay safe my friends.
the price is telling us that something not good is happen, I hope it will goes up someday, so much improvment but only news worth, they control the price not the improvment !
@xeroc
Your post is very intersting.
In my opinion it's a great time to be mining/ buying BTS
good information
Thanx for clarification.
Bitshares handles about as much traffic as Ethereum and Bitcoin according to my rough data by adding up block explorer data in a small interval of time and according to Stan Larimer (okay not a neutral source) more than both of them combined.
On the other hand, it looks like Bitshares and Steem will be obsoleted by EOS.
Good post! I'm going to follow you to see more post like this and for support us!
Great explanation. Instead of fearing - educate yourself guys. And Bitshares are offering great information about every step they are going to do, which is not often seen in other coins. Definitely a great coin and team. Keep going guys!
Congratulations @xeroc, this post is the forth most rewarded post (based on pending payouts) in the last 12 hours written by a Hero account holder (accounts that hold between 10 and 100 Mega Vests). The total number of posts by Hero account holders during this period was 255 and the total pending payments to posts in this category was $3584.68. To see the full list of highest paid posts across all accounts categories, click here.
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hi,
I am dildar , I just upvoted u. please add me on followers and upvote me as i did for u.
Good Post
Trying to learn my way around the issues and fixes but I continue to share BTS info regularly to spread word....
Good..https://steemit.com/@omarfaruk7
amy steemit..plz..
Thank you @xeroc for your informative post. Steemit.com could greatly benefit from more informational/research content such as your article has provided.
I started following you. Follow me back if you wish. All my best to you and our fellow Steemians.
Hi bro. i have been trying streemian but it hasn't been working. is it required that i get premium services or that shouldn't stop it from working
Can you say why your text is on my post like this ...
https://steemit.com/photography/@foxkoit/morning-frost
??????????????????????
Now is cone .... How did you do this ??????
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