Quote from: BenOnceAgain on March 28, 2018, 12:28:36 AM

Quote from: ico41 on March 27, 2018, 02:38:34 PM

I believe that there needs to be political activism in addition to blockchain technology to push back against over-regulation. If the SEC and others are going to force every crypto project down the path of filing Reg-this and Reg-that, then they need to create a system that is more egalitarian, and support the filing process so it doesn't take a half a million dollars to file with the regulators.

It can also start at a more grassroots level, and without overt political activism. It can be economic activism, as it were. For instance, for those of us who have small businesses, we can support this movement right now by accepting one or more forms of crypto-currency for the goods and services that we provide. Bitcoin is probably the easiest, but as we all know there are some issues. There's no reason why it couldn't be any altcoin you find easy to use and convert.

Again, we will soon see the struggle of this, as regulators seek to shut down every exchange and put pressure on banks to sever that link between Fiat and Crypto. And tax authorities will aggressively pursue taxation. But as a business owner, it's worth it to me to put up with this struggle and accept the tokens - and thereby support projects that way. When I once again enter the consulting market later on this year, I'll be sure to accept a wide range of crypto for my services. I'll deal with the issues on the back end one way or another - even if it costs me a little money, it will be worth it to support the cause. I encourage everyone else to do the same.

I agree from a pragmatic perspective, the technology is not enough to enable decentralization to take place on a mass scale. I wish it were, but there are practical, real-world considerations that come into play. There's politics and there are regulators. It'd be great to say "well we can do it anyway no matter what they say", and strictly speaking, this is true. But it then becomes essentially "black market activity", which will not enable massive adoption. One of the best facets of the cryptocurrency "movement" is an escape from the control of traditional legacy finance, and it will be hard to do that without some industry-wide cooperative efforts.

I don't know financial regulation in every country though I am learning more than I expected. But one good thing in the United States is that we can use the framework put in place by the large financial interests against them and in furtherance of our own values. In the U.S., the financial services industry is one of the first (we have several others now) that were permitted to self-regulate. Self-regulatory organizations (SROs) are organizations that have been delegated authority by the SEC, etc. to create and enforce their own rules. A few months ago you'd see threads from me on here, Twitter, and Reddit talking about the need to promote best practices, voluntary standards to help demonstrate to regulators that some type of self-policing over the large frauds was getting organized. However, the Gemini twins wrote a blog a few weeks back calling for the creation of an SRO for the virtual currency industry, see: https://gemini.com/blog/a-proposal-for-a-self-regulatory-organization-for-the-u-s-virtual-currency-industry/.

So while a few months ago I was talking about standards that would be best-practices to offer to help raise the quality bar and reduce fraud, now I believe that some SROs should be created. The SEC has indicated support for this approach. That blog proposes the creation of one organization called the Virtual Currency Association (I think). I believe that there should be more than one SRO. I know that when one SRO becomes dominant in the field they end up causing consolidation and ever-increasing standards that limit the pool just as you were saying. It would be like if there was only Visa, no Mastercard. Visa would be able to charge more, change rules, etc., at will because they'd have no alternative organization to keep them in check. I've seen this with the merger that created FINRA, which is the big SRO that regulates legacy securities markets. Multiple SROs can cooperate in many ways, but it is still best to have alternatives to keep from monopolistic behavior.

I agree that compliance with the regulatory requirements should be made easy, inclusive, and inexpensive. I want innovation to keep moving the field forward, and over-regulation is one quick way to kill that. So I believe that SROs offer an answer to those challenges: controlling costs, allowing flexibility and innovation, and also enhance the stature of the industry before lawmakers, regulators, and even through education to the broader public.

So I have been seriously considering taking my plans and work for the "BTRIC Institute" part of my organization and applying those ideas towards creation of an SRO that would get established to meet all the legal requirements for recognition by the SEC and establish a framework that can be used to keep more draconian regulations in check. You must be able to reduce fraud but you do not need to make any potential token have to go through a whole SEC-1 process and create prospectus documents and all the garbage that traditional Initial Public Offerings require. The ICO as a new asset class loses much of its appeal and utility if it becomes as complicated as taking a company public. If you're going to spend that much money to raise capital, why not just list on NASDAQ or NYSE? So I believe a relaxed framework can be developed that focuses on key areas where fraud can be identified, clear technical issues reviewed (security audits, exchange businesses have procedures in place to limit losses if they're hacked, etc.).

The other side of the coin (no pun intended), is that virtual currencies I really believe are currencies and need the legal and regulatory backing as a currency. There are key differences between a currency like Bitcoin, a utility token, a security token, and unconventional cryptoassets like cryptokitties and other collectibles. Also, blockchain insurance and other crypto assets all need slightly different frameworks, but easy to comply with regulations. It is just like stocks, bonds, money, and contracts are all written on paper but are all different things. I believe an SRO can help build the case for the differentiation. The IRS should not always consider every crypto asset as a security asset, applying capital gains tax to each transaction, which they now do. That's ridiculous. An SRO that establishes a process to determine what type of cryptoasset different coins/tokens/kitties/etc. are will be in a good position to work with regulators to bring their rules in line with the realities.

I believe it's something that needs careful consideration in the immediate time-scale. SROs should get up and running in time to engage in the G20 process that's producing draft regulatory frameworks.

Best regards,
Ben

Wow - I had no idea about SRO's or any of this. I'm very interested in being a member of such an organization and I'll reach out directly to you one way or another. I have an attorney friend who might also be interested. Thanks!

ico41

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