This is a good explanation thanks. One thing that is still unclear to me and I would love to get clarification on in another post: what is the legal standing around coins that are considered securities and others that are not and how did it come about?
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That is an interesting and complex topic. I'll definitely consider making a post on it in the future, as it's an area I've had to become well acquainted with due to our company's business: specifically we try to avoid buying/selling any cryptocurrencies that may be a security due to SEC regulations and licensing requirements. This is the biggest limit on what tokens we can offer on our site.
Thanks, I look forward to it!
I can help you with that. A hoard of lawsuits started being filed against people who fraud-ed people using crypto's. In order for the people who were ripped off to be able to proceed in court for losses the federal chairman had to make a determination that crypto's held value, he determined that crypto's hold the same value as any other fiat.
https://www.sec.gov/news/testimony/testimony-virtual-currencies-oversight-role-us-securities-and-exchange-commission
Thank you. I have heard that older chains are exempt somehow?
Just to clarify, sunlit isn't answering your actual question about what makes a cryptocurrency coin a security, it appears he is confusing securities laws and money transmission laws (which is kind of easy to do, since many articles published on the two subjects don't draw a clear line). I deal with these rules almost daily, and there's been times when it happens to me too.
The most applicable rule for whether a cryptocurrency is considered a security by the SEC is called the Howey test. I don't want to go into that much further here, but you can get a quick overview by googling it.
The issue he seems to be referring to revolves around "stores of value" and rulings and guidelines from FINCEN (the US regulator in charge of things like money laundering). But this is a totally separate issue from securities law.
And, yes, you're not really wrong in what you said, some mined forms of cryptocurrency have been ruled to fall outside the guidelines of security law, and this especially tends to be applicable to older cryptocurrencies (which were mostly mined). But this is part of a big topic, so more info some other time.
Thanks for that, I look forward to your next posts
I doubt that, but even if true, each new update or fork is argued to be a completely new network if I understand OP's logic correctly.
There are no exemptions, at least in any filings made in US courts, as long as the crypto has value it is held to the same rules applied to fiat, meaning if you lose your value over deceptive/illegal practices you can file suit for losses/damages.