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Sunshine and Crypto Roundtable🐶
Recorded: March 21, 2025 Duration: 1:58:00Space Recording
Short Summary
The crypto market is experiencing a mix of trends, with Bitcoin and Ethereum prices declining despite positive news, indicating cautious sentiment. However, Bitcoin ETFs are seeing significant inflows, suggesting renewed investor confidence. Regulatory discussions continue to shape the landscape, while significant fundraising efforts, such as Katie Hahn's $1 billion crypto funds, highlight ongoing investment in the sector.
Full Transcription
The moon slips away
The moon slips away
The door of the daylight
Yes the
The moon slips away
The moon slips away
The door on of the daylight
And we see the sun
Come
See the side
Come
Come
Go see the sky
The moon slips away
The moon slips away
The blowing off the daylight
Cast it
The moon slips away
The moon slips away
The dawn of the daylight
And we see the sun
See the sand
The moon slips away
The moon slips away
The moon slips away
The blue and off the daylight
The moon slips away
The moon slips away
The moon slips away
The door and of the daylight
we see the sun
I am
the sun
Mapp
Mhame
Yo, we're halfway there.
Yo, we're halfway there. Run it up.
Also, the SEC's round table starts back up at 3.30.
Let's get it.
I be in a loop.
She be in a group.
Don't have to do.
Turn something to nothing.
Bro, I'm living too.
How can I lose when we the hooos, who's who's, still running around.
Rima Muhawk, check ready pack to go york.
People found these guys show off.
Ain't even give it yet.
Running up a silly shit, stand out the internet.
She had the stage with Billy Island,
turning in and giving time.
Personal partners, pillar, talking
because I got new shit without him.
Only same day should be saying this baby keep it silent.
We ain't even deep as we used to be,
this shit's split divided.
Bray ain't got no hustle or nothing,
so he gonna strict the violence.
You know in the run down I'm doubting so I can't speak about it
She know I'm against and she love me I bring the free go about can't play with me you know I'm come chum I'm in a different lead
I'm tired of show what I can get done what you gonna do for me 40,000 miles up in the out only time I get some z's
full-cooked press foot on their neck and I can't let them breathe bless sweating tears come with each check it ain't nowhere any easy had to far back you know how that go we only speaking briefly
hope I'm not too much to handle see the nigger from Atlanta I spent my last check on emo this is not a regular limbo
100,000 dollar kit could have put down on another limbo
Don't be in the mix I built this shit forever had to say so
This you gonna get serious about my money
This ain't no fucking plateo
Brody down for double hummus' sound I try to tell him lay low
See don't like the drive but he spent good
I'm on the way to Kliko
AK 47's in the spots before they made the Drakeo
I'm just trying to bond in here
100 men on collar
I'm the boss pay all the bills.
I'm the gold to child for real.
Go off in this bitch I will.
I've been on my grind for years.
And I'm my hook ground instead.
I need equity to sign a deal.
I'm just trying to ball and live.
Hunter mail I'm calling this.
I'm the boss pay all the bills.
I'm to go to child for real.
Go I finish this, I will.
I've been on my grind for years.
And I'm out of here.
I need equity.
Just sign a deal.
Over buying cars, I snatch the barbers just for motivation.
Shoot out of the Spactor David Marry in a new location.
all the guys I hope y'all beat the case to get probation stashed at my mama house 400 beds in the
ventilation now look how I'm living I bought a house for the money to stay at right when
niggins think that I got soft I'm gonna pull up and spray at living like a dumb I smoke a
blunt in the back of you then maybe put up like your mama with this switch why to fuck
you say that you can do it first I'm gonna do it worse got a double the payback never
take it person show no mercy bro taught me that way back couldn't took it off I was always
talking take holes when you stay at keep a stash house you can't take none to the spot where
you lay it never be a bother if you off me no problem just say that never run an eye so if I
I owe you, I got you, I'll pay that.
Get this shit my arson when I'm old,
I can chill, and just lay back.
Really from the bottom, so the trenches
is where I feel safe at.
I'm just trying to volunteer live.
I'm the middle.
I'm the about to pay all the bills.
I'm gonna go to town for real.
Go off in these bitch out well.
I've been on my grind for years,
and I might help grind instead.
I need equity to sign a deal.
I'm just trying to ball and live.
100 men I'm calling Dix.
I'm the boss pay all the bills.
I'm the gold and child for real.
Go off in this bitch I will.
I've been on my grind for years.
And I'm at my hook, grind.
And I need equity sign a deal.
Yo, what's up everybody?
Welcome to Sunshine and Crypta.
I appreciate y'all for pulling up.
Yo, Malice, it's good to see you up here.
I swear I look down and you weren't up here.
And then somehow you're a co-host.
It's because I pulled up to my friend's house and my phone connected to the Wi-Fi and it kicked me off.
Then I got it back on and without the Wi-Fi on and it kicked me off again.
So I did it again. I'm connected to Wi-Fi and I hope it works.
Yo, I'm trying, I mean, we've been trying new things for days in here, but I've been using the Wi-Fi. It's weird. I don't like it. But the area that I'm in doesn't get 5G for some reason. So it's all L-T-E, even though 5G is basically L-T-E.
But, yeah, so...
I don't know. We'll see how it goes. But literally right before the space was about to start, I had left King Ant Space. And then my Wi-Fi went out. I was like, what the fuck is this shit?
I went as soon as I went all the way downstairs to go figure out what was up, you know, there was, it was back on. So I don't know. But I don't like it. Anyway.
Yo, there is a lot of stuff going on.
Well, I guess not really.
But I did see some interesting news earlier.
Caught my attention.
The White House made a post that said the Trump effect.
So apparently there's this Trump effect that's going on.
But it's something that I've been talking about, which is Trump's doing the same thing that he did.
the last time he was president and he's using the tariffs to do it,
but he's bringing all these big corporations back to America to work here,
which is super cool to see happening.
They're calling it the Trump effect,
but there is a list of global companies that are coming back to the United States,
and I got the list saved in my DMs.
I'm going to post it and pin it.
it's really really really it's it's pretty long and it's a lot of big big businesses i like it
um and i think this should be good maybe maybe this is really well maybe probably this is really
what he wanted by doing those tariffs and maybe those that t word's going to come to an end here
soon um near future maybe i don't know but uh to the top lots of big corporations good good good
all right also quick market update bitcoin 84 000 ethereum 1,972 xrp 2.40 cents salana 128
dogecoin 16 cents everything's on sale everything's been on sale i hope you've been accumulating
it's definitely an accumulation period
Also, the Doge's dog's floor is sitting at $2,070.
And there are some girls on the floor.
So if you need a dog, definitely recommend heading over to Doge Labs and picking one up because the screenshot's coming soon.
You already know.
Yo, Mars, welcome.
Have you been in Sunjine and Crypto before?
Hey, everyone's making me speak today. I'm just trying to support. Yes, I have. I've been here many times. I just sit very quietly at the bottom. Well, I'm glad you're on stage.
Thank you. Thank you. I'm glad to be here.
Bose representing
Bo Mafia
Bo Mafia
Yo, I saw that graph
Very, very powerful
Yesterday, that was cool
It reminded me of like
The Lords of Dogtown
Style, you know what I mean?
The skateboard movie, do you know what I'm talking about?
Yeah, that's a...
That was dope. I like that a lot.
Whoever was the artist behind it, good, good job.
That's good.
Good.
Yeah.
Good.
Sorry, I could not get my earbuds to work for anything.
I'm here now.
I good.
What-a-boda.
Shock.
You made it to the Shocking Crypto show.
What's up, fam?
I can't miss my own space, right?
How could you do that?
How could you do that?
That's just how it is.
I mean, at this point, I work today a lot, so that's why I wasn't active in V-space this morning because I couldn't.
Was it a lot or was it hard?
Um, both.
That's the fun part about it.
So I swung the jackhammer around today a little bit.
Oh, wow.
Um...
With a little bit, I mean, for I think, like four or five hours, which wasn't great.
Yeah, but other than that, I'm great.
And I hope you're great as well, Lord.
I'm doing great, and I'm actually about to read The Daily Stoic, because today's is fire.
It's about, you know, being okay where you are.
So the best retreat is in here, not out there.
People seek retreats for themselves in the country, by the sea or in the mountains.
You are very much in the habit of yearning for those same things.
But this is entirely the trait of a base person.
When you can at any moment find such a retreat in yourself.
For nowhere can you find a more peaceful and less busy retreat than in your own soul,
especially if on close inspection it is filled with ease.
which I say is nothing more than being well ordered.
Treat yourself often to this retreat and be renewed.
Do you have a vacation coming up?
Are you looking forward to a weekend so you can have some peace and quiet?
Maybe, you think, after things settled down or after I get this over with,
but how often has that ever actually worked?
The Zen meditation teacher Kabat Zen coined a famous expression.
Wherever you go, there you are.
I like that.
We can find a retreat at any time by looking inward.
We can sit with our eyes closed and feel our breath go in and out.
We can turn on some music and tune out the world.
We can turn off technology or shut off those rampant thoughts in our head.
That will provide us peace, nothing else.
I think if you take those little vacations, you know, inward, then that's not really necessary to take time off, honestly.
For real, for all.
You take a couple minutes off, find real peace.
And do you need a weekend to just sit and do nothing and kill momentum?
I don't.
Once momentum's killed, then I'm just like, yo, I don't want to do anything.
Vibes, I can't let you up.
You might have to take a lap.
But, yeah, I don't know.
I'm period.
Just ask one of your co-hosts to let her up.
Usually it's bugged for one person.
Yeah.
It's a Wi-Fi.
I'm telling you.
It's so hot.
Yeah, I just got her, I think.
Let's go.
Look at that.
Easy.
Told you.
So, be curious.
Does anyone else feel that way that, you know, you get your momentum killed if you take a day off?
Yes, I don't believe in rest days.
Actually, when I was on my first, like, health journey, I didn't know that there was such thing as a rest day because I was just determined.
I woke up every day.
And the moment that I woke up, I did all the things that I was, like, necessary to do.
It's like a mindset shift.
Yeah.
Um, when you have like an aha moment or something like that. And literally it's when you allow it to change for you. Um, and it changes you in a good way. And you like your, um,
What's the word I'm thinking of?
Standard.
You raise your standards.
And when you raise your standards for yourself, anything is possible.
Yo, exactly.
When you raise your standards for yourself, anything is possible.
Yo, anything's possible that you put your mind to.
Like, literally, if you tell yourself you can, you can't.
If you tell yourself, you can't.
You definitely can't do it.
I mean...
It is going to take hard work and determination, though, too, with that I can's.
It definitely helps with the verbiage change because I tell people don't use the word try.
And I don't mean to cut you off.
I'm very passionate about this subject.
But yeah, verbiage helps, but then making sure that you stay determined and
because determination is going to get you so much further than motivation,
motivation, or dedication is going to get you so much further than motivation,
because motivation, when it doesn't last,
that's when your dedication and determination kick in.
Yeah, verbiage is important.
The way you say things, the way you talk to yourself is definitely important.
But everything, you know, hard work comes with everything, I think.
If you're afraid of hard work, then...
I don't want to be mean, but I mean, come on.
You have to work hard to get what you want.
And you have to be able to do things you've never done before to achieve things that you've never achieved before every single time.
So you can't be scared.
You just got to try.
You just got to do it.
See?
Verbiage is important.
You just got to do it.
Every single time.
I like the saying, if nothing changes, nothing changes.
Mm-hmm.
Mm-hmm.
I love it.
If nothing changes, nothing changes.
It's a fact.
All those little cliche sayings that people think are cliche, that, like, MPCs have told you are cliche, like, what the fuck is cliche?
It's cliche because it's true, and it works.
You know, and everyone's scared of cliche, but cliche is easy, and it's, it works.
Yeah, it had to, it had to be of some, like, basis in reality to actually become a cliche in the first place.
100%.
Exactly.
That's probably a made-up word, too, right?
Clicet.
You know, so they don't, so you're like, oh, you're on to something.
No, that's a cliche, you know, like don't, don't learn that, you know.
They don't want us to know things.
The more we know, the stronger we are.
Yeah, they got to get the NPCs on the same page, you know.
So, like, if all the NPCs are on the same page telling you that's cliche,
then they can convince you that it's not worth trying, even though it is 100% worth doing and trying.
You got to lock in in order to get out.
The root of the word is French.
And it dates back to the 19th century, which was meant to, sorry, 19th centuries.
That's 1800s.
When they were printing, using printing plates to create a design, a repetitive design,
and otherwise known as a stereotype.
That's where a cliche came from?
Yep.
The printers would hear a clicking sound.
while they were making this stereotype.
Isn't that hilarious?
Crazy.
And then through years of using it, it's been completely changed.
And it's like telephone, like the game telephone.
It's completely changed.
It's all, me, that's so funny.
I love that you look that up for us, V.
Oh, yeah.
It is awesome.
Stereotype.
Che.
That's, like, it's a funny thing.
I thought maybe it was like a,
a longer word, but it's the, it's literally French.
It's cliche, cliche, cliche, as they're like printing what was known as a stereotype,
which is relative to how we use it today back in the day.
It's like a like a stamp kind of printing place.
So it's actually like a sound almost.
Yep.
The first word to probably be named.
A word is actually a sound.
And then it's now interpreted into something that, like, people don't even want to be associated with it because they're like, I don't want to be like that.
And that's crazy.
It's a sound.
Yeah, don't you love how they turn.
It's the same as stereotype.
Right?
So it's funny that the actual printing machine was called a stereotype.
All right.
Wow.
That's wild.
The roundtable is about to commence and come back.
Get that on, well, 330.
What's ET Eastern time?
Isn't it EST?
Did they change that too?
Everything's changing.
No, just sometimes they label it as just Eastern as E.T.
Nice.
Phone home.
E.T. Phone home?
Yeah, yeah.
It took a second.
It took a second.
I'm going to be real.
Yeah, you know, honestly, it was the voice.
It was like, I was like, wait.
What the hell was that?
And then it clicked.
So, but, okay, I'm going back to, let's see.
Bitcoin dips below 84K.
What is Bitcoin at right now?
83, yeah.
83, 998.
It's right below.
Bitcoin dips below 84K despite Trump's pro-crypto push.
BTC slips 2.27% in 24 hours, even as Trump vows U.S. dominance in crypto.
Long liquidations hit 50.4 million as bullish traders face a pullback.
And trading volume drops 32% signaling cautious market sentiment.
Also, fear and greys at 27.
Why?
What?
Lower.
Why is everyone so scared?
Did you say lower?
Yeah.
Yeah.
Generational entries for everybody.
We've been telling them generational entries for weeks.
The latest news I saw was that there's that Trump rumor.
I don't know how real this is.
There's flexibility on the tariff situation.
Just a very general thing I saw.
There's random.
I don't know if there's any actual news on that.
But I hope there's...
Maybe a plan for some meetings for at least Canada in the United States.
I feel like he needs to really just stop talking about crypto,
and then crypto will go back to.
I'm kind of on the vibe that what Bark was saying yesterday afternoon.
Like, you know what?
I'm not tuned into anything that he says.
And maybe we could just out of sight, out of mind it.
And go back to regular scheduled programming.
But I got some bullish Bitcoin news as well, which would be for the rest of the market as well.
So Bitcoin ETFs are on a role attracting 165.75 million in inflows on Thursday, March 20th.
That's the fifth straight day of positive momentum signaling renewed investor confidence in BTC-backed funds.
Meanwhile, ether ETFs are catching the same wave.
They saw 12.41 million in outflows stretching their losing streak to 12 consecutive days.
Is this a Bitcoin-only rally or just the beginning for the broader market?
Hmm.
Well, isn't Bitcoin start the rally?
Yeah, it's just the beginning.
It's just the beginning.
Yo, this news page that I read it from, they ask some stupid questions at the end, some silly questions.
All right.
How's everyone's day going?
Are we having a good day today?
Awesome day.
Fantastic.
Yeah, having a great day over here.
Beautiful weather outside.
Yeah, phenomenal.
Yeah, it's so beautiful.
So good.
The view of your farm is beautiful.
I've been doing your pictures lately.
I was going to post a picture of the ATV or dirt bike track that we have out here.
We have like a Google Earth View and I went around on the track on the four-wheeler and did like the tracking thing on my phone so it would pull up like a line as I go around the deal.
It's kind of neat.
That's dope.
It seems like Shield might be jealous.
I don't know.
Was those thumbs down?
Oh, he couldn't hear.
I was like, dang, I think he was wishing he had dirt bikes or something.
I was like, why is he doing thumbs down?
I was like, this is the best part.
I didn't think that he couldn't hear.
Shield says G-wagons.
I don't know if he's worried about it.
Oh, he got his G-wagon around the track.
That'd be dope.
Do you see the video of the G-wagon's in the river, or the pictures?
No, is that on his page?
Yeah, I didn't see that.
Here, let's get him up here.
He'll talk about it.
In the river?
Yeah, well, they're like all ferding vehicles, just like a Jeep.
I tried to do a bunch of...
That's cool.
And vibes, I saw that coming at me.
That's what it was perfect.
Thank you.
Yeah, I was shocked.
Dirt bikes and stuff?
Like, he isn't like dirt bikes?
I was like, what in the world?
Yeah, I love dirt bikes.
Well, I was like, what are the thumbs?
I was like, is he, does he want to see this?
Like, I was literally trying to interpret the thumbs down.
And I was like, there's several of them.
I was like, oh my gosh.
And like, it either stays on or it gets off.
I usually keep it on when web, web's around.
And I say it can't shut off.
But right now, it just doesn't work.
You're stuck?
You're in Raw Shields?
I am.
I think it's Kanye fucking with me.
You know, he hangs out in here and other listeners all the time.
I know I saw him in, I saw him at the bottom on one, one of his accounts.
That's far. Shields and Kanye are like best friends. He's all over Kanye's page.
Yeah, I'm just not retweeting his stuff. I'll just let him retweet my...
It's it until he proves himself.
Yeah, it's a 72-hour window of consecutive sponsors.
He doesn't be a dogen of log. I'm not even going to take his DMs.
For real.
Like, it's not, I mean, what, he got 33 million followers?
Like, I don't care.
It's not about the followers.
It's the small accounts, too.
Yeah.
Quality over quantity.
That's right.
Yeah, that's it.
Right there.
Yo, so I was telling them, Shields, that you take G-wagons into the river.
Did you see that?
I actually didn't go.
I just,
we just sold that you,
Heggen right now to some guy.
So funny,
he was in my office.
And I'm like,
must be nice.
He just stroked a quarter of a million dollar check.
I'm like,
how about you sweep some dogenal dogs?
That should be a requirement.
People might get kicked out as a first,
first tier then.
shit.
Yeah,
that's right.
Damn it.
Tell them five Z limit,
you know.
Yeah.
Yeah.
I got so many DMs that it's hard to go through with different stuff right now with these tickets.
It's just absolutely insane.
And I have so many people, oh, like, break up, do this, get one via, get that.
I'm like, geez, like, what is going on here?
This is way too much work for me.
Oh, my gosh.
People are telling you what to do.
They're saying you should do this and you can get two of these and you could get TAs.
I have like, I mean, I think I have like 30 something DMs right now in different things.
It's just, it's so funny.
Unbelievable.
I'm glad they're not doing that to be.
Yeah, I'm just...
That would be an instant mute.
Or even an unfollow.
I feel you.
That's why I ignore my DMs.
So if you...
Oh, yeah.
I'm starting to because it's just too crazy.
It's a lot.
You know, when you get eggplants, just sent to your DM 60 times.
I know, right?
And I was like, what are these?
So I sent one back.
I leveled up and he'll never do that again.
Wait, yeah.
Sorry.
You sent one back?
She's smart.
No, mine was way better because mine was a GIF, and it was hilarious.
How hilarious.
I mean, I sent a bunch of eggplants to Webb since the morning or since the other space, and he will not respond.
So I had to check to make sure he's still following me.
You sent him an eggplant?
Yeah.
Oh, I sent a bunch of shit.
It might be as big a trip.
I put a VIP ticket equals one roll.
Some shit like that, dude.
I'm trolling.
I fucking love it.
Troll mode activated.
You know, once you enter troll mode, it's really hard to get out of troll mode.
I've noticed if I go into troll mode, my brain switches,
and it takes a little bit of time to get out of troll mode.
I just need a brain flash, but they don't come around too often.
I think V's the one person that knows when I go into my mode.
She always calls it out, and she's like, he's on...
He's on he's on he's on he's on one or something like she always called it and I'm like
I think I was calling it this time.
Did I you know?
It was yesterday.
I love it.
And today you got me.
Did you drink a Celsius today?
Did it?
No, but I need one.
I try not to drink that stuff, but man, my head hurts so bad.
I woke up early, drove over the airport.
Like, I got such a headache, and I don't want coffee, but I have all these young, like...
It'll make the headache go away.
That's true.
Yeah, I know.
I'm going to get one.
I got to send this guy to get me one.
These 20-year-olds slam these things like all day by two at a time.
I'm like, how do you guys...
I guess I did that, like, younger.
Yeah.
Yeah, I've been drinking the goat fuel.
Has anyone seen the goat fuel?
Yeah, it's not...
No, I never saw it.
I do like Celsius compared to any of these other ones, for sure.
The Crypto roundtable is back, but I'm hesitant.
There we go.
Got a great question from the audience.
In the...
Given the limitations of time, we won't be able to get through every single question.
So I apologize in advance for that, but I'll do my best to get through as much as I can
and to try to probably consolidate some that are more thematically aligned,
so we can try to at least hit the topics, if not get to a specific topic.
question and interest first with some thoughts.
And again, encourage the panelists to raise questions of each other
as they think appropriate to motivate the conversation.
So with that and come back to the list,
is that loud enough?
Jack Wright ordering, but I think this will do.
Lewis.
Thank you, Troy. Well, I think the break gave us a chance to all kind of reflect upon. I thought an amazing and very, very constructive dialogue. And I think we heard many points of overlap and obviously some points of disagreement. I think that's fantastic. Really the point, Troy, that I was going to make just before the break primarily was the one that I said to Collins,
Conce, you're still there.
Yeah, yeah.
I'm looking in the right direction,
which is that the idea of common enterprise,
which is a key element of the Howie test,
has been sort of left out of the discussion.
And I think it is an important concept.
Collins, you already touched on it,
and I think as many...
the folks here know, it is probably the most complex and painful piece of the jurisprudence
on Howie.
But I think the one point, Troy, that I would make very briefly here, is that the one thing
a common enterprise is not, is a common interest.
The fact that in and of itself, somebody has a lot of one asset and somebody else has a lot of the same asset
does not make them in a common enterprise.
They maybe have a common interest in the price of that asset, but it's not a common enterprise.
What if one owns the issuer, though, Lewis?
I don't know that word.
No, because the issue, no, seriously, because the problem that we have is issuer is someone who has an
creator relationship. Yes, there's a creator. So I, as I pointed out in my submission from yesterday,
De Beers is the creator or at least distributor of diamonds. They have a huge interest in the price of diamonds and
they have a lot of control over that market. But you can enter into a,
uh investment contract with debiers hey guys you're a little short on money i'm going to give you
a hundred million dollars and you promise to cut the the supply for the next you know three months
while i'm liquidating you totally have an investment contract investment scheme going on you have a
pooling of investment of money, a common enterprise, a reasonable expectation, profits,
primarily on De Beers's efforts, totally down the middle.
But if you buy some diamonds with an expectation that, you know, De Beers is going to cut supply
because you read something, that doesn't put you in a common enterprise with them.
It does not make diamonds a security by itself.
That's all. Thank you, Troy.
Yeah, great. I'm going to go to Ben next, but just one quick thought on that to go back to Howie.
for a minute realizing that there's more to it than Howie, to be sure.
But if one steps back, even half a step from the four prongs of Howie and asks the question,
what was really going on in this case, at least as the facts laid out in the Supreme Court
opinion indicate, what was really going on is some folks were put money into an orange enterprise.
And I do, I think that, you know, sometimes the step, take a step back or two steps back can just be a useful way to think about, all right, on some of those close calls, this factor, that prong, the other prong, the other factor.
How do you actually apply them in some of those areas where it's not so clear cut? It wasn't a, I'm going to, you know, get access to orange groves. I've given you bunch of money again so I can eat oranges or I can do this or I can do that. It was essentially to invest.
in an orange company enterprise,
which I think Lewis goes along the lines of the point
that you were making in terms of a common enterprise,
whether that is synonymous with commonality,
maybe that's a separate point
because of vertical and horizontal and what have you,
but just in terms of what is this thing
that one's talking about really all about.
Ben.
Thanks very much.
It was just something that Kui said that, I thought it was interesting.
He was talking about how obviously it's not just the SEC that's interested in this question
that's going to have a say in this question.
It's also Congress.
And it got, and then Teresa was talking about how it's not just investment contract in the definition of a security.
There's a whole bunch of terms in the definition of a security and the federal securities laws.
And it got me to thinking, well, you know, if we're just talking about how should crypto assets be regulated, you know, what...
Should Congress do?
You know, is it really the right thing to say that the CFTC, for example, should be the regulator of crypto?
And, you know, my concern there is the CFTC doesn't have an investor protection mission.
It's not used to protecting retail investors, which would be fine if crypto wasn't being marketed to retail investors, but I think it is, which is why I think it, you know, in lots of respects, fits within the definition of the security.
But then, you know, we were talking about the how we test and all these things.
It got me thinking, but, you know, there's another possibility if, you know, it would make sense for the SEC to regulate crypto assets, which is that.
Congress could just amend the securities laws to have crypto assets be part of the
deficit of a security.
Do I think this Congress is going to do that?
I do not.
But I think it is something that should be considered when you're starting from this
kind of like clean slavery.
You're just asking this question, you know, what is the security?
What, as Teresa said, what's the synchon of a security?
You know, to me, you know, if you have something where people are being asked,
It's marketed to people as an investment.
It trades on exchanges.
You know, the value depends on what other people are going to buy and sell it at.
starts to look like a security, you know, you can kind of then just ask this level, should
it be considered a security, you know, putting aside howie and investment content and
everything like that. And I just think it's a worthwhile perspective to consider. I know that
this is a question for Congress, but my guess is the SEC, you know, its views would be,
would be, you know, influential in this respect. And then, again, talking about writing on a blank
slate, the SEC could, could raise
could regulate however it wants, right?
I know there's a lot of questions about, well,
does the existing disclosure regime, you know,
fit who's gonna be making the disclosures, things like that.
I mean, the SEC can write a whole bunch of rules
to come up with whatever disclosure regime it wants.
Both so investors can be protected
and so capital information could be formed.
I just think that,
you know, if you're really talking about this fundamental question,
you know, what makes up a security and how to regulate crypto assets,
you know, who is the best regulator should really be taken into consideration?
Chris, I know you had a...
Yeah, this is like a 30 second. I really respect and really like the question of just sort of asking,
well, who should be regulating what... I would say that even when it comes to this question of disclosure,
I personally...
went to the agency many times to say,
hey, why are we not updating,
why is CorpFIN not updating some disclosure rules?
And I think that for those of you who are familiar
with the concept of tech debt,
that kind of builds up, there's regulatory debt.
That's built up.
And this entire process is sort of initiating
the cleanup of all this regulatory debt.
And assuming, and I think that, sure, I mean,
the SEC has lots of smart people, you know,
they can address issues of crypto assets.
The CFTC has lots of smart people who can tackle the issue.
It'll ultimately be something that's happened
in market infrastructure.
But at the end of the day, we shouldn't just assume
or minimize what that regulatory debt means
in terms of any agencies.
regulatory competence. Thanks.
Yeah, I think, Chris, it's a really interesting point and a really interesting framing
on an interesting point, and I think underscores all that is ahead of the commission,
and I think underscores the value of your all having the chance to contribute to the discussion
that we're having today.
Sarah.
Thank you.
So, I mean, I agree on a lot of the discussion around we can't just rely on the Howie test,
a function of there being regulatory debt and that's why we want to do
rulemaking. But in the interim, a number of lawyers and other advocates in the
space put together an interim framework. I think the market would really be in a
better place if we could start shuffling people towards better disclosure and
better practices and have a target to hit.
people that want to signal compliance still are not able to do so that are already in the market and so I think that the things that we could do
With like knowing that we're not going to get it right with an interim framework with a sunset
That looks sort of like another iteration of safe Harvard 2.0 just to get some more
hurting of people in the market towards better practices because I think on the last
administration someone used to say a lot in industry outside the regulatory
periburbitur long survive and that was done on purpose and so I think you could
do really easily an initial sort of this market with a voluntary opt-in and that's
that's a self-sorting exercise right there.
Because if you want to continue to be a bad actor,
you can vote with your feet either way.
So there's that.
And then secondly, I'm taking issue with, you know,
these analogies that the tokens are commodity-like,
because tokens can be whatever the...
issuer, wants them to be. I think you have to look outside that to the model.
There are models where tokens are the only value accrual in a public permissionless network
with open source software. Economically, those models will not work without the tokens as a value center.
There's tokens plus equity, right? Those dual models. And if you raise money in the equity, as you raise money in the equity,
your equity holders have more protections under law than token holders have.
And so then you need to start being more careful of conflicts.
And then we have like a public company potentially issuing a token as just like fundraising as a sweetener.
And I think that in the context of the SEC's mandate that
we have to be very careful with investors because tokens are in that stack equity debt holders
the least protected and so the more conflicts your model creates the more uh fraught it is okay can i
just a quick follow up sarah just on that last um maybe second to last point on the stack
in terms of traditional equity and then debt and
a company's capital structure can be quite complicated with lots of different kinds of securities
or non-securities financing sitting within that overall
capital structure. From your perspective, is it important if one is going to consider a token
to be a security, that one can situate it comfortably within a capital structure? Or is that
not so important? Or is the view that if it is a security, if you kind of work backwards,
then by definition, it's going to sit somewhere because it's going to have some claim on
the enterprise and that then is going to be situated somewhere in terms of the seniority
within the cap structure.
Sounds like we're back at what's a security.
I just think that when I sort the market, there's, again, there's...
securities on a blockchain, right?
You slapped a blockchain on its security.
There's crypto-native assets,
assets that have functions that I'd like to see us
optimize more for use than just trading.
And then there's kind of digital pet rocks.
And I think to collectibles, in-game assets.
And I think like just that sort of
initial broad sort, like I'd just like to focus on the tokens with use cases and how we kind of
are letting, while protecting people, letting them actually be used and get into the hands
of users and get network effects.
That's sort of how I think about sorting the market, not, you know, how does this asset
trade or stack up, you know, in, because I...
That's like the financialization only of that asset in kind of a more fraught context.
And I'd like to see the more pure models actually be able to proliferate and function
because there is no other value accrual center for them.
They simply cannot function the way they were intended.
They're being blocked by securities laws.
Got it, got it.
Lee, Lee, I think you were.
I just have a cue that may not be in particular order,
but I'm happy to go with John first.
Let me just go back to, I do have a point,
but it's probably not related to Sarah's,
to Collins's point before the break about vertical commonality,
and obviously I recognize that that is not,
you know, in every circuit court a recognized form of common enterprise.
But look, I'm more than happy to concede
if a protocol developer or issuer does not retain
any tokens, then there is no vertical commonality.
But I think we all know that is absolutely not what is happening.
When you look at these crypto protocols, I mean, look, if you truly cared about, you know,
sort of decentralization and kind of, you know, restoring sort of power to users of a system,
you know, there's a, there's a hundred-year-old model out there that exists called co-ops.
Right? Cooperatives.
But the problem with cooperatives from the crypto industry standpoint is that your membership share is not freely tradable.
Right. So the whole business model of create token.
pump token, sell the tokens we have,
doesn't work within the co-op structure.
Another point I want to make goes back to Miles's point
about the commission's approach to crypto
over the last four years was not conducive
to the mission of capital formation, investor protection,
and market efficiency, I mean, I would say it's not because of the commission, it's because of, you know, the industry.
Never before in the history of the United States have we had an entire industry when told what the law is, say, no, we are not going to follow it.
Now, I know there are people in this room who have genuine disagreements over how the commission interpreted the law,
but I think the reality is that the industry chose not to because it was not in their financial interest to do so.
So let's just put things.
you know, in perspective here.
And my sort of my final point is,
as much as I appreciate all this work,
you know, the commission has already taken
significant steps in regards to essentially
every outstanding enforcement action
in the crypto context.
So, and when you look at the filings in court
to dismiss her policies cases,
it's predicated on, you know,
the eventual outcome or the work of the crypto task force.
So it does feel a bit as though this work has been front run.
And this has real implications
for the market.
I mean, the day after one case was dropped,
involving a platform,
we had, you know, CME decided that they were going to list
Solana futures contracts, right?
And Solana had been a named security
in this case.
And so, you know, there's already setting in place
a form of what I say, policy lock-in.
It's gonna be very hard to undo
if the task force, you know, does come
to some type of, you know,
determinative conclusions here,
but markets have already sort of reacted
based upon the initial dismissal.
So I think that's another thing to keep in mind
as this work progresses because people,
the market is already responding to the commission's actions.
They're not waiting for what this task force comes up with.
All right, I'm gonna get a lot of,
so here's we're gonna do.
I'm gonna go through 304 folks.
Let me get some questions and I'm sure there'll be occasion
to come back to a few folks.
I know that Sarah had a quick response to what Lee was saying,
then I'm gonna go to Miles and I had a couple of others
and then we'll get to some of the questions from the audience.
So Sarah.
Yeah, I'd say that, like, suggesting that all of those regulatory actions where good faith is a little
beyond like credulity, like when being asked to register as an asset that got infected by an investment contract,
like there is a meme that went around, like register as what? Register as what? I mean, the policy was constructed to keep people from a path forward.
I know people that spent four years
trying to find a path, negotiating all the way up to S-1s,
and they were blocked by it.
And then, you know, the other example that I'll give was when being asked to register
your staking business, and you kind of sort of looked at what securities, laws, disclosures,
what the, was, were those in the better public interest than just terms of service?
They really weren't.
And so those are just two examples I would give of just,
We have been trying for years to find a path for compliance.
Miles.
Yeah, I think to echo Sarah's point, I think that it's not really fair to say that the industry has just decided not to comply.
I think that if you look at, you know, those that sought to come in and register, right, all of them went bankrupt.
The SEC hasn't provided any guidance to the industry since 2019, even though the technology and the approach that people were taking had substantially changed, you know, every year, let alone over the course of four years.
the process was not constructive at all.
And what that really meant, right,
is rather than the SEC actually accomplishing anything
in terms of kind of investor protection,
capital formation, or efficient markets,
is what you ultimately did is you left lawyers like myself,
Rodrigo, Sarah, Collins, right,
to advise portfolio companies and clients, right,
just based on 2019 guidance that no really longer fit the industry.
And when you're trying to advise startups, you only get to say no so many times, right?
And when they, again, look across the street and say, hey, well, why is this person doing this?
And you say, well, you know, based on, you know, 30 different factors that the SEC put out five years ago, it's a little bit difficult to get buy-in from entrepreneurs.
So, you know, I would say that it was not that the industry decided not to say that they wanted to comply.
It was that there really was no way to comply and guidance was not forthcoming.
Right.
Now, going back to Sarah's point, though, about she is right, that the digital assets are not monolithic, right?
And what you're hearing up here on this stage is there's two extreme approaches.
One, let's treat these all like securities.
And the other one is let's not treat any of these things like securities.
Neither of those are viable frameworks.
They fail to contemplate or even look at what the risk profile of these assets are.
They're simple. They're very simple.
And as a result of that, they're attractive.
I understand that complexity sucks.
But at the end of the day, right, if we're not going to actually grasp what are the things that de-risk these assets make them look less like securities, reduce trust dependencies, right, which helps investors, helps capital formation, helps efficient markets.
then what is our actual goal and what are we trying to achieve?
We need to align the incentives of entrepreneurs, right, with the incentives of our regulatory
structure, which is to reduce information asymmetries, reduce trust dependencies, reduce risk.
Okay?
We can do that by giving them guidance that defines what the characteristics are that reduce
the risk of digital assets.
Failing to do so is just, you know, is just anarcho tyranny.
Um, Rodrigo.
Uh, tough act to follow, but, uh, I mean, maybe just, uh, I'll respond to Lee's point,
and then I'll try to make a suggestion for a clarification that I think the SEC could make that
's important.
Um, I really have a problem with this notion that the industry was like, you know, a scoff
law and, and, uh, you know, willingly breaking the law.
I think it, uh,
go like it doesn't take into account the fact that as I maybe with too much detail described
earlier the law actually was not clear and there were differing opinions about how the law
applied and it doesn't take into account the fact that there was no real path forward right so
it was basically like the agency like pointing at you know the industry and say why aren't
you walking through this wall like we want you to walk through the wall and we were like
you we can't actually right so I
Yeah, I don't think that's an accurate portrayal of the efforts that I think many of the
outside council sitting at this table, people that were submitting rulemaking proposals,
people that were trying to advise and engage with the industry and regulators were doing, right?
Moving to, you know, something that I think could,
where the SEC could provide more guidance
and I think it would really benefit the market,
is really clarifying their stance on the third prong of Howie,
with the profits from the efforts of others, right?
As I mentioned earlier, I think it should be relatively
uncontroversial that purchasing something with a profit motive
in and of itself does not turn the whole transaction
into a security.
But turning into the,
kind of second subprong of that, right, like the efforts of others.
I think the SEC back under Chairman Clayton really was on the right path here.
When under in the statement when Gary met Howie, they described how a, you know, Ethereum,
transactions from Ethereum.
were sufficiently decentralized to the point
where those transactions were not securities transactions.
And I think what that means to me is that at that point,
the efforts of others, those others were dissipated
to the point where there were no information asymmetries
or the type of agency issues that I think securities
laws are intended inherently
to address, right?
I think since that the analysis has become muddled,
and it has resulted both in like worst practices
in the industry and worse information.
I think the focus on enforcement actions
that target developers or protocols that show any sort of value
accrual to the token has led people
to provide worse information to the market.
People are worried to describe how a protocol might
accrue value to a token.
And I think it's also part of what's led
to the focus on meme coins, right?
I think frankly,
by persecuting a lot of the actors that were trying to provide tokens that actually accrued value,
the industry responded by saying, you know, well, here's, you know, fart coin or like whatever, right?
Like, clearly has no value.
So I think one, and I'm not, I think this, you know, reasonable minds can differ about this,
but I think one key unlocked would be to try to understand how,
protocols where, you know, they're being sufficiently centralized,
or they're not controlled by any centralized entity,
can provide those revenues to the token outside of the securities laws.
I think that is one of the key issues that has been holding back,
like for the fee-switch discussions around a lot of the key protocols in Defi,
and one where like if the SEC staff were to give guidance and clarity
and how they're viewing that now could be really beneficial for the market.
I should have one quick follow for Rodrigo and then John, I'll come over to you, just the very quick follow-up.
What about the measurement practicalities?
So one of the things I think when the discussion, it is not unique to crypto assets or even how for that matter, is you have to go from concepts.
or principles as we were talking about earlier,
to actually figuring out, all right, well, how do you measure
if in the particular context of an asset,
particular context of a transaction,
in particular context of a market participant,
whether it's an issuer or what have you,
whether or not that thing, whatever that standard
or that principle is, has been met.
So all concepts, all principles need to be applied.
And with that application, it becomes what just to my mind,
to put it very simply, is a measurement, just question and then challenge.
To put it a little differently, there's always the,
well, how much is enough?
Measured.
Or how much is too little?
And by the way, how do we measure that?
So on some of the things that you were mentioning that you think would be helpful,
do you have a sense or suggestion for how some of these concepts could,
could or would or should be measured in practice?
So, I mean, honestly, like, I don't think I have to answer to this.
I approach this with a lot of humility and the understanding that it's going to take, you know,
groups like this to try to, like, fine-tune the language and then, you know, that language
to be tested over a bunch of cases and figure it out.
But I think the principles should be relatively uncontroversial.
It's like one...
Like just because you're buying something for profit, and if that profit is not being derived from a promoter that's sitting back there telling you they're going to do things, but rather from like a distributed group of people, or a distributed network moreover, particularly one that's not controlled by anybody, I think that raises fundamentally different issues than the securities laws were intended to address, which are agency problems and information asymmetries.
Yeah, and humility is a good thing.
I think to the point that you were making, though, about, like, the economic value that is accruing to the token, right?
I think that, like, a clear delineation, right, would be, is that value accruing based on the programmatic functioning of the network, right?
Or is that value accruing to the token because a company is taking its profits and putting them back into the system by buying the token and burning.
it, right? Like, so there are pretty clear lines of delineation that you can make, right,
around whether or not this stuff is happening programmatically or whether or not a human
is kind of in the mix.
I think John.
Collins, real quick.
Yeah, I was just going to say, I think to maybe one concrete suggestion as well is,
I think starting with maybe the framework that we've used for previous regulatory exemptions
with a rebuttable presumption and establishing certain thresholds for that rebuttable presumption
is probably a safer route than trying to come up with, let's say, thresholds that will
make a definitive determination.
But I think when we look at a rebuttable presumption, using one of the examples we were talking
about before, I think, was it.
I think it was late, talking about maybe what does it need to look like if a common enterprise is established.
We might start with a rebuttal presumption of no under 10% holder, maybe a rebuttable presumption, that there's no common enterprise.
It doesn't mean that the government can't then come in and say, hold on, we're looking at affiliate relationships, we're looking at something else.
And in the aggregate, we actually think this doesn't apply.
But I think starting, I think I get the sense that everyone's worried about setting a threshold
and later we find it's too high, it's too low, but I think the solution to that is setting
it as a rebuttable presumption rather than a hard threshold is probably the initial place
to start there.
Yeah, I want to come back to that after John in that.
One, I think it's a really important point.
And number two, there are some questions that other folks have submitted from the audience that speak
to that speak to that.
So it's going to be a great segue to some of the.
questions that we've gotten. But John. Thanks. This goes back to this notion that someone brought up
about Kaviat, mTOR, being a bad regulatory paradigm. And I agree with that. I can't remember which
panelists said it, because there are two critical omissions that I think are very important for
everyone to consider, and I really hope the Crypto Task Force will consider them.
The first are the externalities associated with crypto.
They cannot be denied and they cannot be overstated.
Drug dealing, human sex trafficking, child pornography, terrorism, ransomware attacks.
I'm a ransomware expert.
But for Bitcoin, there would be no ransomware.
Lee and I teach at Duke University in Durham and colonial pipeline was hit with a ransomware
attack.
At that point, there was no gas in Durham.
You couldn't get home from the airport.
I mean, it started to get kind of scary.
I've met with the FBI on numerous occasions to work out, to find out if there are any way
that people can get their ransomware payments back.
I write extensively in my statement why crypto is not traceable.
You might be able to find where it is, but you know how much ransomware payments were ever
recovered?
Pretty much none.
Occasionally you get lucky.
you know, in a laptop, in a popcorn tin under a blanket in a bathroom like they did in New York.
But again, I go over this extensively in my prepared statement.
Just think about last week got $1.5 billion, the greatest financial heist in the history of the world.
was crypto taken by it looks like North Korea and used for their weapons program.
Now, everything that I just listed, you know, there's always people who say, that's just not true, John, and fiat is much worse.
Those points are really false because if you look at every government report on this idea of the crypto crime wave.
And I just think that the Crypto Task Force should consider that.
And then there's never really been a check of systemic risk associated with crypto.
When Voyager, Celsius, BlockFi, FTX, when that big crash happened, it didn't really impact anyone too much.
You know, there were safeguards in place because the FDIC, the OCC, the Fed, had all pretty much said to any bank that does anything having to do with crypto.
This is what the industry is called the chokehold, said, you better prove that to us.
And it's going to be an indicator.
It's going to prompt an exam.
It's going to prompt scrutiny.
Now, all of those, from what I can read, I'm not a banking expert, all of those guardrails are now rapidly disappearing.
So if you look at, I was here at the SEC during the subprime crisis and you might say,
well, subprime, what does that have to do with me?
I'm not going to take one of these silly subprime loans.
Well, it impacted everyone.
Or Enron, WorldCom, Hell South, when all those crashes took place.
I was here at the SEC.
And again, you might think, well, what do I care?
I don't invest in those things.
But that impacts everyone.
And you really, when you look at that systemic risk, a friend of ours, Hillary Allen at
Shet, you were at me.
A.U wrote a book called driverless finance.
I'd recommend that everyone read it.
And another guy named Arthur Willemoth wrote a similar article about the systemic risks involved.
And I'm a big Wizards fan, you know, for the last 12 or 15 years, I'd season tickets.
And I was at the game the other day in the elevator.
And I'm talking to two of the security guards who know me, and they're like, ah,
Mr. Stark, I saw you on 60 minutes.
And I said, oh, yeah, yeah, yeah, it was on.
What did you think?
And they were like, I just saw the end.
You said something about crypto.
And I said, yeah, you know, it's a really dangerous investment.
And they're like, really?
We both invest in it.
And I said, okay, should we stop?
And I said, I'm not telling you what to do or not to do, but what do you think you invested in.
And they had no idea.
Yeah.
no idea what they had and they laughed about it. I got no idea. I just heard it's a great thing the power of FOMO the power to turn the victims into victimizers is very serious. And so
So, you know, when this, if it does cause a systemic crash, it's, you know, ask not for whom
the bell tolls.
It tolls for thee.
We will all be impacted.
So I think these are important considerations for the SEC, and I think the idea of caveat
mTOR sounds nice, and I'm a libertarian myself.
I totally appreciate it.
But if you read the Celsius pleadings, you can read all the victim statements, and I have.
And it's heartbreaking.
It reminds me the 20 years I worked here.
You know, you can say these people,
they took it on themselves.
They took this risk themselves.
They knew what they were getting into,
and they didn't care, and that's on them.
Well, everybody lets their guard down every once in a while,
and that's just the wrong approach to take toward victims.
We all get duped.
You know, you all let your guard down.
So I hope the task force will consider those ideas
when they're trying to figure out
whether this should be part of the SEC's mission or not.
All right, well, I was going to pivot, but I'm not quite going to pivot because I got a lot of folks getting my attention.
But I'm going to pivot in five minutes, so everybody's going to make this quick.
So Sarah, and then Chris and then Teresa, and then I'm going to pivot us a bit, and then I'm sure we'll come back to some of these themes.
So I would just like quickly respond on the last point that...
those institutions that you named,
I think that's a symptom of being forced outside
the regulatory perimeter.
And what you are naming are centralized intermediaries.
And a lot of that fallout was from counterparty risk,
which is a risk that is inherent in Tradfai.
And there's actually some studies that defy
withstood contagion risk.
It was one of our first studies that we saw
that actually can break contagion risk.
So as a structural counterbalance to traditional systemic risk,
that would be something to lean into.
but given the size of the relative markets,
it's a who's locked in here with who,
tradifies likely to be the risk source
that creates contagion for a much smaller nascent market.
Chris.
So just to piggyback off of that one point,
I was going to say systemic risk is definitely something that
that regulators have to worry about.
Certainly, I think banking regulators, to your point, John, are, are, will have to tackle
in particular, but also to the point that the vectors for that systemic risk, if not
the traffic will be just more the centralized players and therefore you have to ask questions
about interconnectivity.
But I was only going to speak because, because of the caveat, mTOR point, which I brought
up, so I say, okay, let me go.
So, so the...
What we've ultimately had over the last several years is an idea of we're not going to regulate
and because if we do, it's somehow going to add some kind of legitimacy to the market.
So we're going to sacrifice our little lamps here of investors who may get duped or something,
but we're not going to add, we're not going to lean it.
I don't think that that's a sound regulatory strategy.
I do not believe that caveat impdoor is a regulatory strategy.
It does also, as the point I made earlier, it creates regulatory debt.
It just creates a void and it gets messier and messier and messier to clean up.
And that's why we're here today and that's just, you know,
from observing things from across the street.
I don't disagree, Chris, but I'll point out that caveat am tour was the logic behind the recent statement that
meme coins are not securities.
The, the, the, the, the, the, the, there are several forms of regulatory guidance that I think are, are necessary.
Admittedly, when you have the absence of defining where
at the top of the funnel in the in general,
the regulatory approach is going to be, you know, I think,
it does make it problematic and difficult.
I have to admit there have been,
we've had a very wonderfully busy and active SEC,
so I haven't read like every single thing
is practically in the last week.
That's, that's come out.
To quote Commissioner first,
don't go running to mama government
if you lose a fortune on the Trump coin.
You know, and I mean, I wasn't going to get into like meme coin
and what's a definition, but, you know, again,
it does, I have a north idea what's,
particularly in the viewpoint thing, but certainly, you know, if the expectation of profits prong is a big question in terms of what's defining, and if you're really, really curious, what defines a security?
If anything I have said with people that you and I both talk to very frequently, that that is a challenge for trying to classify a meme coin in and of itself.
not tied to a larger transaction, but in and of itself,
if there's no expectation of profit,
it's kind of hard to pin Howie there.
I do want to reiterate a point that Rodrigo made, which is
incredibly important, which is just because you want to invest your money doesn't make it
as a security. And this goes back to it, and I can't believe that, what I said at the very
beginning of this place is actually going to be important. I was just trying to buy my time.
But when you think about why securities laws exist in the first place, it's not to say
Notice that there are four prongs.
There's not one prong.
It doesn't say, if you have an investment of money,
you're a security.
He said, nope, nope, nope, nope, nope, nope, no, no.
He says, if there's an investment of money,
continue now to the other prongs of the Howey test, right?
And securities law and the Howie test is very clear
that you must have all four of those features,
even under Howie, in order for securities laws to kind of kick in.
So that was a lot more than I thought I was going to say,
so I'll just be quiet and let everybody respond.
All right, so here's, thank you, Chris.
Here's what we're going to do.
So, Teresa, but then I think, Coy, you may have tried to get my attention.
Collins, I'm not sure if you were still trying to get my if you wanted it.
All right, so, Teresa, one minute, if that's okay.
Coy, one minute, if that's okay.
Collins, one minute, if that's okay.
Through the conversation, we're hitting on a lot of the topics that have been offered up,
and then we'll take it from there.
So, Teresa, Coy, Collins, and then Piffitt.
Okay.
Feel free to interrupt me, okay?
Okay.
Wasn't he supposed to pivot five minutes ago?
With all due respect to my friend John Stark, who I also was at the commission in very difficult times like post-Madoff and none of us are in favor of victims.
And I think everybody here is...
against victimizing people in any kind of way.
And I do have to push back a little bit about no ransomware
without Bitcoin or crypto,
because I do believe that indeed there would be
a lot of ransomware continuing,
just like there was ransomware before Bitcoin,
that it will continue.
with or without Bitcoin and that people do bad things with lots of things.
So people do bad things with crypto, they do bad things with Fiat, they do bad things with paper,
all sorts of things.
But just because they do bad things, it doesn't mean that you outlaw it or it doesn't
mean that you ask the SEC to step outside of its statutory authority and become the overbearing
mama government to take care of everybody and protect them from everything because that's
not, they don't have the statutory authority to do that and doing that would actually
be breaking the law.
So I'm really cautious about asking the SEC to step in and do these things when they do
not have jurisdiction.
And I also caution the fact that look at all these people, we're all pretty smart, right?
And there's lots of smart people who've been talking about this for years trying to figure
How are we defining these things?
Because just because there's a problem
and planes are crashing doesn't mean I want the SEC
to now try and take over for the air controllers.
And so I think the fact that we've been dealing with this
for such a long time, it shows how complicated it is
and it shows that we really need to dig in
so that the SEC isn't acting outside of its statutory authority.
And I really applaud what they're doing
and coming out with things that are like so clear like memes, right?
Things like that where it's like this is not a security.
And there's only so much they can do because there's an executive order out there that
says digital asset industry plays a crucial role in innovation and economic development
in the United States and our international leadership.
Like, is the political question doctrine now being invoked?
I don't know. Does this change the major questions doctrine application in courts?
Maybe. You know, it's like there's so many bigger things here that I think we need to think about
and not call on the SEC to be the, you know, overarching to fill in any kind of
whole somebody might see with fraud.
And there's other regulatory agencies that might be better suited for some of these things.
And I mean, fraud is still fraud.
You can't lie, steal, or cheat.
That's it.
With or without securities laws.
Can't do it.
It's illegal.
Somebody can come and get you for it.
Coy.
I'm largely in agreement with Teresa, maybe just to put a couple finer points on it.
I really would urge the SEC to stay focused on its mission.
Some of the issues have been raised on systemic risk.
The SEC is not tasked with looking at systemic risks.
The F SOC exists for that purpose.
If FSOC wants to look at it, they're certainly welcome to.
For what it's worth, FSOC has looked at crypto assets since probably at least 2018
and hasn't really seen a big problem with it to date.
With respect to any money laundering, sanctions concerns are very valid and real.
The SEC has a very narrow jurisdiction in that space for registered entities, and they work
together with FinC and they work together with OFAC.
So I think obviously focusing on that, if those registered entities are allowed to engage
with crypto assets, certainly makes sense.
But otherwise, I would just urge the SEC to stay focused on the concerns with crypto within
their jurisdiction.
Collins.
Yeah, just really quick.
I think on John's point, I think there's, I might actually break with a lot of the people
that I think considering on the pro-crypto side.
And I actually agree that a lot of the negativities and the fallout are some of the
most pernicious things that
that our component of the industry kind of produces.
But even with that said, I think a lot of the times
crypto critics get into this mode
where they're making actually genuinely great points,
and then they hyperboize to the point of disbelief.
And like one of the things is like,
the first set of ransomware occurred in 1989.
any of you all were on lime wire back in like 2005,
you had your computer locked with ransomware.
All those things did exist.
So I think it's definitely a valid point,
and I actually will not go to the point of saying,
oh, well, other people do it, and it's just as bad.
I actually do think we have a unique problem
within the industry, but I do think
that it severely undermines a lot of our crypto critics'
points when they jump to this weird hyperbole for things
that it's just not necessary.
This gets to the second point, which was on Lee's point, the meme coin guidance wasn't based on caveat mTOR as the logic.
It was, yes, a warning to people. You should be aware that these things are not under the correction of the laws.
But the premise was based on a Howie analysis.
It was that you didn't have this investment of money in a common enterprise in any of these meme coins.
to the extent that you do or you use beam coins for those investment transactions,
you're still subject to the act.
So again, I think you guys both are phenomenal points on those,
but it's weird to mischaracterize what's occurring when your points are already really, really valid.
I think it's a bit strange.
But, you know, ask any cybersecurity attorney, but for Bitcoin, there would be, you know,
ransomware.
Ransaware back then was maybe $25 gift card.
Now it's $15, $20 million payments, and it wouldn't happen without Bitcoin.
The FBI will tell you that.
DOJ will tell you that.
And every, you can come to my conference on April 22nd where we talk about all the different
types of cybersecurity and have a ransomware panel.
And every single person on that panel will say, but for Bitcoin, there would be
No ransom.
That's not how I percolate.
Do you know how much the first ransomware amount was for the 8th Trojan?
Pardon me?
Do you know how much was in that first ransomware attack in 1989?
There were 90,000 floppy just given out and it was something like $25 to $50 each was already
a couple hundred grand.
First attack.
So I'm not sure.
where you got that from.
I agree, like 10, 15 mil more, absolutely, much higher.
That's why I say.
It's all this point.
But every, every ransomware attack right now is Bitcoin.
From 1990 to 2005, more than $30 million of ransomware attacks happen.
Now it's been substantially higher.
And that's why I say it's absolutely right that we should be focused on that in crypto in particular.
But it's weird to say, oh.
what Bitcoin invented this and if Bitcoin stopped-
Well, I'm sorry, just get,
he didn't say Bitcoin invented it
and I totally agree with you,
it obviously predates Bitcoin,
but you know, a few years ago,
FinCEN issued a report tracking ransomware-related
SARS filings.
Okay? And so if you look at that report every single, and obviously that's a subset of, you know, every ransomware payment.
So, but at least every single SAR filing tied to ransomware, the ransom was paid in crypto, mostly Bitcoin.
Your second one, Collins on the meme coin guidance, I actually do agree with you, by the way.
So obviously if you read the guidance, it's grounded in in Howie, which, and frankly, I agree, like, most meme coins are not securities.
I just, I didn't think it was actually necessary.
to say that and staff guidance,
my understanding is that the reason that was put out
was to serve as a warning.
And I believe Commissioner Perse,
correct me if I'm wrong,
had a company statement sort of along those lines saying,
like, we are here to tell you that if you lose your shirt
in a meme coin, don't come crying to the SEC, right?
So that's why I agree with you.
That is certainly grounded in Howie,
but the intent was to warn the public.
I just wanted to maybe just see you, Collins, and raise you one,
because I also agree with John that it is a problem.
I agree with you.
I think the problem is not, the question is not, is it a problem, it is.
The question is, what is the solution?
And I think sometimes those who, you know, they say,
forget history, are condemned to repeat it.
What is, what are we going to do about this?
And it sounds like from all your writings that your goal is,
let's just try and eliminate any crypto, anywhere we can find it,
I recommend a book to you called Last Call, The Rise and Fall of Prohibition.
It's a great book because there were many, many problems prior to prohibition.
It was a pernicious problem.
It was a legitimate pernicious problem.
And the attempt by the government to tell people don't do something you want to do failed miserably.
So I don't disagree with you, John.
It is a problem.
But just telling people and wagging your finger don't do it ain't going to be the effective means.
All right.
So let's take that as the...
opportunity to think about a bit of a pivot here.
But one of the I think was interesting from my perspective of the conversation is,
at least as I've been deciphering, is there are just different views and perspectives
as to how to approach the what is it question.
And I think we've seen that for the last 20 minutes.
And I'm not sure we're going to solve that today.
I certainly don't have the solution to that.
To all order for the commission.
But I think it's illuminating just through the conversation and back and forth to see that some of this isn't just about nuances around how does one interpreter or apply this prong of how we or that phrase within the broad definition.
Right.
of security under the 33 Act or the 34 Act,
they are just very different views as to what's the right frame,
what's the right question, what's the right lens to put on the,
is it a security or not?
And I think it comes back to the work that the definition does,
in terms of figuring out, does the SEC have jurisdiction?
or picking up on a point that that Teresa alluded to,
if not the SEC, who, because somebody else is going to have jurisdiction,
and then that may relocate some of the discussion to say,
well, but do we think they have the appropriate authorities?
Interesting whether or not that discussion is...
one that ought to inform the threshold question as to whether or not the SEC has jurisdiction,
or if rather that's a discussion as to that agency and those authorities and that legislation and that regulatory regime.
So it's been interesting for me to see all of those points come forth because I think that the best way to figure out what the path forward is,
which is the pivot I'm going to make, is to have all of that surfaced.
And so at least everybody understands the different perspectives that are being brought to bear.
One, that's the best place to see where there is commonality, where they may not otherwise appear to be,
or just see where there are genuine differences and the reason for those differences.
And then ultimately, policymaking is about making choices and judgments about what the right way to proceed.
And, of course, advising clients is about making judgments as well about what it takes to be compliant.
So with all of that, here's the...
And again, a lot of what the discussion has been has indirectly spoken at least to a number of the comments that and questions that have come in.
But I wanted to pick up something. I think, Collins, you were making reference to it a couple of comments ago and some others were as well.
I want to very much keep the discussion focused on the purpose of this roundtable.
which is what's a security, or is, or crypto assets, securities, and win and which ones,
and not turn this into a discussion about substantive regulation.
So with that cabotting of us, I do think there's an important question.
And again, Collins, it comes back to something you were saying, but I'll just open it up to the group.
That's this.
One of the, I think, and we've heard this today, I think,
challenges with the lack of clarity for some.
Some people think it's clear, others think it's not clear, but for the lack of clarity,
as a lot of people see it in terms of whether or not a particular crypto asset is a security
or whether or not a particular transaction involving said asset is a securities transaction.
The part of it as a practical challenge is, all right, well, but if it is, then what do I do?
And so just a very practical question of, all right, if this is a security or this transaction
involves a security, security's offering, what have you, secondary transaction will then what,
and then the practical challenges when it comes to compliance with what the natural implications
are under the federal securities laws, if you have securities and you have securities
transactions, because if you do, you got to do a bunch of stuff.
And the question is, is how do you do all that stuff in a compliant way, going to Sarah's point,
given the nature of the underlying technology?
So with that, as a backdrop, and just mindful of the different views on the is it a security or are they securities and when question,
to what extent indirectly can some of the difficulties and challenges and line drawing and measurements and what have you that go to the definitional question indirectly be resolved through the substantive regulation or pathways that actually speak to say, well,
At the edges, we may not know for sure if it is or it is in security, but at least what you have to do, we're going to tell you what you have to do under these circumstances.
Does that alleviate any pressure?
And again, I don't want to turn it into that substantive discussion.
What might that look like?
But does that alleviate any pressure on trying to get it exactly right, given all the different competing perspectives on what's the security in the first place?
I don't know, Colin, since you kind of inspired the question, I'll start with you.
Yeah, I'll be quick. I think it will. I think it won't resolve all of the issues, but to the extent that there is something like, let's say, an exemptive framework that says, okay, when you have a securities transaction, you operate an X, Y, and Z manner, these are the disclosures that's required. I think that would solve a significant amount for folks that are saying, all right, well, I can just...
The reason I know this is because when 2017 or 18 happened and SAFs came out and then fell out of favor, a lot of folks in the U.S., staffs are still being used outside of the States, but you actually found a lot of people started inherently structuring their offerings as reg D offerings, just prophylactic.
Obviously, then, subsequently, I don't think it's the current case, we can mention it.
The telegram order came out, and that actually undermined a lot of people structuring that way
because they thought, well, I can do a compliant reg D offering, and then at some point when the thing is not a security, I can move forward.
That obviously was taken away, and I think to a certain extent that was...
arguably understandable in that context.
But to your question, one model is the exemptive framework
then reduces some pressures from folks that say,
look, I can operate in this non-security
or securities law context.
I'll just be compliant.
We already have people trying that now.
The other thing is on a registered pathway.
If you could, even if it was just as simple as saying,
hey, here are the things from reg SK to here that we want to see.
Absolutely.
Then all of a sudden you have people saying, all right, well, great.
I can go on register because now it's not that I have to produce
audited financials or something.
It's that I've got to have my open source code available and something else.
So I don't want to, like you said, I don't want to get into the details.
I think the primary focus is if you provide pathways, there are already people that are trying to do this.
And they're saying it's not about not identifying people.
Like I already have people that I K.C.
I know all of these people.
I have the relationship.
The only issue is I can't figure out what I'm supposed to do with let's in audited financials requirement where what am I going to report the protocols revenue?
Do I do something else?
These are the practical things that without guidance, no one could register even if they wanted to.
And folks have wanted to.
Yeah.
Teresa.
Yes, I think there are some things that you could do, and particularly the 33 and the
34 Act, the 40s Act 2, but I'll focus on 33 and 34 Act, have very broad exemptive
authority with regard to securities, a security, transactions, people, classes thereof,
not only to exempt them, but also from any part of those acts, as well as conditionally or non-conditionally.
So there are a couple approaches.
So if this question is so, you know, we can't really get to what the security is, you could frame an exemption as something with these characteristics, you know, are not a security or these...
You know, and it could, and you could basically narrow the definition of a security through the exemptions.
And that is a bigger kind of use of the exemptions than we've seen.
But that is something that Congress specifically and purposefully gave.
And I believe that it also would, you can exempt people from every part of the securities code so that it doesn't have any...
any impact of the securities law.
So that means 10b5, that means Section 17,
not just registration, but everything.
You know, the private right of action is really,
it's judicially created.
And so if you look at it from that way,
you could, you have to justify it
as being consistent with investor protection.
And, but consistent with investor protection,
I think we've seen the negative impacts from,
having something all of a sudden a security, the real losers there, the people who lost the most money were the people who own the asset. I don't know that that was really consistent with investor protection. And so, um,
So I think you could do that if you come up with something that you think should fall outside the securities laws.
It doesn't mean fraud's okay because we still have, you know, fraud.
It just means we don't need to modify our fraud laws so that, you know, the efficient market hypothesis is baked into...
the fraud requirements such that there's no reliance and fraud is like the fraud on the market.
It's assumed that the fraud is within the price of the asset.
And so it's basically modifying a little bit of that liability issue, but fraud is still
fraud and fraud is still illegal and can be brought out or people can be prosecuted for that.
And then separately, you could also come up with something, some sort of exemption for things
that are securities and but you want them treated a different way.
And that's when you utilize the conditional part of it, right?
And so then you can have the exemptions and then condition, you know, certain types of
of disclosures, you know, like more like a licensing kind of thing if you want, or reg CF is a great example of something like simple, basic.
Somebody can do it for maybe like $5,000 or, you know, and that kind of a disclosure.
And you can file something and as long as you are able to, as long as you actually have anything.
asymmetry of information and there is somebody who can disclose it.
And then just like reg A, you have, you know, form Z.
So here you could just say, well, I don't have enough of my,
I can't make any more disclosures.
I don't have information.
Here's my form.
you know, to depart. So there's, I think that there's a lot of different tools and a lot of
different things that we could really, we could use the exemptive authority through and fantastic
economists here to go through the cost benefit analysis, I think. And so I do see that could be
a pathway. Yeah. So let me pivot to another topic, just to keeping track of time. We got
15-ish minutes left, ending a little bit before the top of the hour.
So maybe one or two people per each of the next.
I know there's so much more that folks want to have a chance to share,
but we don't have time for everybody on every point at this point.
So try to keep it to one or two folks responding.
Coming back to some of the questions that we've gotten, I don't think the topic of fungibility
NFTs has at least expressly come up today. I'm curious if anybody wants to share a thought
in terms of how to think about what people refer to as NFTs and the ways in which fungibility
does or doesn't map onto, you know, how we or other aspects of the definition of
security. Any takeers on NFTs fungibility? Looks like Lee has a thought.
John's volunteering me. It looks like John is volunteering. Yeah. So I'll just note that I
do have a section on NFTs in my statement. I mean, not that I'm a NFT kind of swear by any means,
but yeah you are. Yeah, he is. It's probably true. Yeah, you already know.
He's holding dodgel doggs. He's in the space right now.
Per Howie. Yeah, he is. But again, it's always, it's facts and circumstances.
And it's clear that some are, and obviously I know,
Commissioner has been dissented on several NFT-related enforcement cases.
But back to my point that way back when, you know, there's also private litigation,
and there was a case, hopefully I'm allowed to talk about cases not SEC enforcement related,
but Harper v. O'Neill in the Southern District of Florida, federal judge Moreno,
you know, looked at the facts and circumstances originally.
and said that they did meet the definition of investment contracts.
So again, I don't have like a blanket, you know, I guess, that recommendation to, you know, unlike the meme coin guidance, I would hardly discourage you from considering putting out some type of, you know, broad guidance around, around NFTs because again, it's always going to be facts and circumstances dependent.
Miles.
Yeah, I mean, I generally agree with you.
I think that it should be a facts and circumstances analysis.
I would say that one thing I would highlight is that,
I think that the commission's actions against some NFT companies is actually evidence of how politicized, you know, the agency's approach has been to the industry.
There are tons of examples of video game companies that sell assets within those games prior to those games being launched, and they fund the development of those games with the sell of those games.
Now, just because those digital assets are not.
cryptographically secured on a blockchain that are somehow not security transactions but
NFTs sold on a blockchain are security transactions so I think it's very important that the
agency kind of steps back and looks at the you know economic equivalent
transactions that are taking place in ordinary commerce that have not been treated like
security transactions and reevaluates its criteria for assessing the securities laws application to
One of the other topics that we got a few questions on,
we talked about it a little bit earlier in the day,
is on secondary training,
mask impaired to call it primary issuance,
so that I guess to use the word issuance,
is to in some sense conclude the answer
to the question that's being discussed today.
But I'll use it in the general sense.
I'm not going to use it in the is,
is it an issue under the federal securities laws sense
for purposes of the question?
But I know there's a lot of thoughts and I know that there has been a lot said over, well,
even if something is a security upon quote unquote primary issuance,
if you allow the use of the word generally here, that when it comes to secondary trading, perhaps not.
I think that actually dovetails back, Lewis, to the point that you've written a lot about,
which is say, well, wait a minute.
to say secondary trading versus, you know, say a primary issuance begs the question of of what.
What is the primary issuance of versus what is the secondary trading of?
And is it a primary issuance that is, say, an investment contract or the token is something
different, disaggregated from the investment contract as such?
such that when you have secondary trading,
if it's secondary trading of the token,
but the token wasn't even the security
when it came to the primary issuance,
then how could the secondary trading actually
be a security transaction
because it wasn't a security at the primary issuance?
That requires the sharp distinction
between the investment contract on the one hand.
and the token or crypto asset on the other.
But it is something that I think folks sometimes wonder,
well, wait a minute, how can I write my mind around?
It was and then it isn't, but maybe it is,
but maybe it will be in the future.
That's the broader point in terms of things can change,
but specifically on
secondary transactions, Lewis.
I'll direct this one to you.
What are your thoughts?
So I'll certainly be brief.
Lord knows.
But you're right, Troy.
I think there's been a little bit of heat here on this topic.
And I'd suggest maybe turning down the heat,
because there's some really just practical questions.
What difference does it make?
Let's ask ourselves that.
What difference does it make?
I think there's broad agreement, as you alluded to, Troy, that regardless of what the asset is, if there's a fundraising transaction that meets the four prongs of Howie, it falls within the securities context and either should be registered or exempt.
And then you have something that probably by itself does not meet the four prongs of Howie and it's being exchanged.
So if it were to be treated as security, as has been suggested, we should, how would that be different in a secondary market?
And so the first question is, is it need to be traded on a national securities exchange or an exempt alternative trading system?
That would be one implication.
If it was a security, it would be, if it was not, it would not be.
And so we just need to ask ourselves if we are going to treat perhaps quite a lot of tokens
that would appear to be subject to some level of control, then they would need to be traded
on national securities exchanges or alternative trading systems or not traded at all in the
U.S. So we'd have to cross, you know, that bridge.
And then the next question would be, what about all the other rules that apply to secondary trading, in particular?
444, make a wish.
Otherwise, in terms of aggregation.
For your friends.
Those things don't currently apply to crypto assets that are not securities.
I would say that, you know, a thoughtful regime that tried to figure out how to kind of,
apply those in a way that made sense for crypto would make sense. You'd also if in secondary
transactions the tokens were also bark space pin to the top make sure you set a reminder
max engage. On an ongoing basis one of the reasons our equity markets in particular work so well
in the United States is because we have a very very clear and firm rules about periodic disclosures
including current disclosures that allow the markets
to address information.
And I would say, Troy, that I would also strongly endorse
such a system to be adopted.
That unfortunately is likely, mostly the realm of Congress,
but we would see that.
So I think secondary markets,
it doesn't need to be this sort of high-level
OMG kind of situation.
I think there are practical questions
and they have practical answers.
So yeah.
One of the points that was made earlier
is, um, Theresa made a reference to the point that if you look at the definition of security,
it turns out there's more than just investment contracts.
And, um, I know the commission is very well aware that there's more to it than just
how we and just investment contracts.
Of all the different phrases, words, types of securities that are within the definition of security,
whether you're talking 33 Act or 34 Act, which is particularly what we're, I think, contemplating,
even though it turns out there's more than the 33 and the 34 Act of the federal securities laws,
I think kind of what's in folks' minds is primarily the 33 and 34 Act, at least today.
The other type of security that gets the most attention, though it is a distant second to Howie
in investment contracts, are notes and Reeves.
And so I'm curious if anybody wants to speak to kind of the practical as a practical matter, right?
Just set aside legal questions and what have you.
And the Reeves test is interesting because the fourth factor of Reeves is essentially,
does anything else reduce the risks that otherwise the holders of the notes would incur?
So it's an interesting fourth factor in terms of just a jurisprudential construct,
very policy-oriented going in part to the kinds of things that Lee and John were talking about.
That's expressly in the jurisprudence of
of reads for purposes of notes, it's not there expressing the jurisprudence of Howie,
insofar as Howie is articulated by the courts.
But with all of that as a practical matter, is there much consequence of whatever uncertainty,
lack of clarity around whether or not a particular crypto asset is a note, or is that more
of academic interest, but in practice isn't something that has much consequence?
Yeah, I think the note analysis comes up most often in a staking context.
And so the different, you know, I think it's the different types of transactions are oftentimes,
you know, where these come up.
And I kind of, the way that I think about this is thinking about like, what are you actually
getting and when is that transaction over?
And, you know, it's been very clear for the most part until now that when you get something, it's done, right?
Now, what you get might be something else, you know?
Or so, like with the note, for example, you know, it could...
there's the note transaction and then when you're getting paid your interest,
is, you know, are you getting paid and is that a security, right?
Like normally, no, that's it.
And then, but then to continue to treat it
treat what you get back, treat your interest as a security, then that's a separate analysis.
Just like in Howie, when the use of proceeds, when you get the token, usually like in a SAFT, I give you my, it's clear.
I give you my money, you know, and not to go back to Howie, but just to kind of explain how I'm approaching it with all of these things is,
That's the capital raise.
I'm trusting money to somebody in both ways in both notes and investment contracts.
And they're developing something.
I'm promised, like, their efforts, and I'm promised the proceeds from their efforts.
And the proceeds of their efforts is a token.
That's it.
Thank you.
I got it.
To me, transaction over.
But is that whether in a note context,
profit type of sharing or...
or investment contract or all these different weight things that it could be.
then the question becomes, is that thing that I got,
is that now another, a different type of securities transaction?
And I think that's kind of where some of the analysis
is getting conflated.
John.
Yeah, I agree with that.
I think that it's always going to be this facts and circumstance.
If you look back at prime bank notes,
remember those, our office did a lot of those enforcement actions.
These were bogus instruments that purported to represent
a secondary market for standby letters of credit.
Huge mouthful. Some of them just paid 1% above prime. Some of them were much bigger. It came over from Europe.
They dominated, especially on the internet. The fraud was everywhere.
And when we sued them, when the SEC sued them in a case called SEC versus Lauer,
they asserted the SEC doesn't have jurisdiction because these instruments are entirely fictional.
So how can the SEC have jurisdiction, right?
So the, I think, I can't remember which circuit court it was,
but the court came back and said, look,
if it were true what they purported to be,
then this would be a security.
So the SEC had jurisdiction over prime bank notes
and was able by bringing all these cases
to essentially eliminate that fraud
from, certainly from the United States
and maybe even further at the time.
So I look at it sort of like DeGarisa does,
sort of facts and circumstances.
Corey.
When I think of the notes in Reeves analysis,
I mean, I think this is maybe a good example
of where the task force could look in terms of staking,
of providing clear.
guidance when a lot of staking services I don't think really meets the Reeves test.
I think if there's a way to get comfortable for the task force there, that'd be great.
But I also think of it in the lending context, right?
I mean, I think that's where the SEC has successfully brought some charges.
And I just flag in the context of there's not many centralized entities doing crypto lending
out there.
Travis, one of the many travesties of the last four years of the SEC was the settlement
against BlockFi that told them.
No names.
Sorry, settlement against one issuer of a lending worker that said, come in and, you know, you can come in and register, but by the way, there's an investment company act problem and you have six weeks to figure that out.
And then six weeks came by and it never got figured out.
Like if there has to be a way to move forward if you're going to tell people to come in and register.
So I just wanted to plug that.
And then is that call-ins or Ben?
Yeah, just on Teresa's point, I know she mentioned staking,
and I think Koi just kind of alluded to it,
but separate from like centralized crypto lending,
it definitely would have a very significant impact on clarity for DFI.
There are several structures that we deal with that actually don't look like, you know,
investment contracts, they actually look like they may,
if they were to be analyzed or analyzed
be more under the note context.
And that again has substantial implications for,
one, the default being most treatment of notes,
treat them as debt securities.
That comes with a whole host of implications
that aren't applicable to equity securities.
So that distinction alone ends up informing a lot of the downstream regulatory impacts.
And then just a question for you, I don't know if maybe this is the right time or hopefully
somebody else has brought this up, but other categories like profit sharing arrangements
or participation in a profit sharing arrangement is actually something that I'm actually
kind of curious to ask the SEC folks about because it's been one of those things that I actually
think tends to pose more of a challenge if the SEC were ever to raise this because some
folks say we just look at that under the HALI analysis.
But in canvassing case law, it's actually very,
like there's very, very little case law
about what constitutes participation
in a profit sharing arrangement.
And being frank, a lot of the stuff that we've talked about,
a lot of stuff we deal with in defy,
that probably seems more of a relevant thing
to get clarity on.
Now, if the answer is we're just gonna use Howie,
great, like that's easy,
but it's actually never really been clarified.
And I'm wondering if,
You have a question on that?
Or maybe somebody here could tell us that.
It would be fantastic.
I never did speak on behalf of the commission
and I'm still not speaking on behalf of the commission.
Let me just make one quick comment on that
and then I'm gonna come to Chris
and then we may be at time.
But I think the point is,
and it underscores a point that others have made
is an important one in the broad sense of
the definition, right, so much focus has been on Howie and understandably.
And again, sometimes there's focus on Reeves.
And then a lot of the other types of securities just don't get as much attention.
And I do think that who knows how things play out,
but there could be some potential at some point in the future when someone says,
hey, well, wait a minute, okay, well, Howie is that and Reeves is that,
but turns out it's a pretty long definition.
So where does all the other stuff situate itself?
So when that kind of broad point around
clarity as well as workable substantive rules, regulations that advance across the breadth of the SEC's
mission, to your point, there's a lot more in the definition of security than Howie and investment
contracts, Reeves, notes, and it's a good reminder, I think, Chris.
So I'm going to sabotage that a little bit, but I will gesture towards notes and Reeves.
And I think that there's a general consensus that Reeves is even less predictable than Howie is in terms of a sort of, in order to sort of set expectations as to whether or not...
securities laws is applicable, but Teresa's statement actually reminded me of just one little,
because I know I was asked, we were asked to be auto mechanics.
So just one little interesting question because the capital formation process was brought up,
which is when exactly, even under Halley, sorry, does the capital formation process end,
particularly in the initial raise?
Because often you have what equity warrants in a grant, you have token minting, listing
agreement with an exchange.
Well, you know, whether or not capital formation ends or continues post-menting and whether
or not the initial token sales is ultimately facilitated by the listing, right?
Some kind of guidance as to whether or not listing is the final step in monetizing tokens.
Because if it is in that direction, then it could be treated as part of the offering.
And you could have really interesting things popping up,
like listing agreements comprising part of the offering
and the like.
So that's an interesting and probably very practical task
to clarify.
Thanks.
Miles.
Yeah.
So I would just say that I think going back to the kind of the control discussion that I've
raised and several people have talked about it, I think that that is the overarching premise
that would allow you to create uniform and unifying principle across these regulatory regimes.
A Reeves is implicated, as Collins was just saying, if I deposit a token into a smart contract
and then someone takes that and it issues me a stable coin back, and someone goes out and takes
that token and tries to make money on it and then delivers those proceeds to me.
That looks a lot like Reeves.
If there's no one behind the smart contract and it's not controlled by anyone,
then it's just fully autonomous and the trust dependencies that get at the point of Reeves are no longer there.
The same thing applies to profits interest.
How can you have a profits interest in a smart contract,
a piece of autonomous software that's not controlled by anyone,
as compared to what the purpose of that regulatory regime is,
is looking at profits interest in business entities.
So as a result of that, right,
I think control is the unifying principle
that basically can be used to go across
all of these different regulatory approaches.
And I think that that's very important, right?
Because we need to have consistency
in how we're thinking about the problems
and where the risks arise.
Great.
Thanks, Miles.
So I think we're at time.
I know there's gonna be a few closing remarks.
I thought the discussion was amazing,
among the panelists, I think encouraging that there's
so many folks who were thinking.
Yo, breaking news from just in.
Former federal prosecutor Katie Hahn is raising two new crypto funds totaling $1 billion.
Katie Hahn, a former federal prosecutor.
It's a mouthful.
And ex-Coinbase board member is launching two cryptocurrency funds totaling $1 billion through her venture capital firm.
Hawn Ventures to invest in early stage and accelerated acceleration stage crypto products.
That's that's something.
Yo, I know they're wrapping it up, so I figured, you know, it was a great conversation
that lasted five hours.
I hope everybody enjoyed their time today.
I know I did.
I got super prepared for tomorrow.
Proper preparation prevents poor performance.
You already know every single time.
I hope everybody set a reminder for bark space.
It's pinned to the top.
My phone's about to die.
This isn't good.
I don't know where my charger is at.
Uh-oh.
Does anybody still-
Is anybody still here with me?
Still here.
Still here.
Oh, yeah.
Oh, yeah.
Oh, yeah.
All right.
As I run to find my charger.
I'm definitely charging too. I got down to 6% look down. I was like oh my gosh that thing was scary.
Battery, battery percent check. Not 69 for the first time ever order.
It's 69.1.
Yo, I don't know.
Well, I guess it's just gonna die. Oh well.
Go ahead, go ahead, crash.
I'll say I got 58% left and it's on the charger, but order, what'd you think of my license plate there?
That's pretty nifty.
What license plate?
You got a license plate?
How's the truck?
Oh, it's in production right now.
It's being built.
I like it.
They did the structural.
Now they're working on paint.
So, yeah, it's coming.
I do like the license plate.
It's fire.
Doional.
How you been?
Yeah, I'd be rocking.
I've been good, man, real good.
Yeah, getting things falling into place here.
So I'll be out on the road here soon.
I just got to make a few trips back and forth to get it set up for the hand controls.
And, yeah, man, and then it's going to be exciting.
It's going to be all over the place this summer for sure.
And especially with that license plate and the things I'm going to do to the windows and stuff.
Oh, yeah, it's going to be a moving billboard, man.
Nice.
That's exciting.
Yeah.
it's exciting
have you had a car before or is this the first
first one
well i mean
since the incident
no no i've only been driving for i don't know
probably about 10 hours or so since the accident so
But I went and got everything, got my license back, paid for my restrictions and stuff like that, right?
So I got restrictions for hand controls and then for contact lenses or glasses.
You can put it on things now.
Oh, sure hop mic in.
Sorry, sorry.
That's exciting, Crash. I'm happy for you.
Oh, yeah, man. Yeah, me too. By the time, like, oh, yeah, just the way that this whole vehicle is going to work is just going to, you know, open up doors for so many other people who never thought that it was possible, right? So that's big in its own thing because, you know, who wants to be in a van when you can be in a truck, right? So, but, yeah, it's going to be big things, man. Big things are coming this summer. So.
Awesome.
You're going to put that, oh, bark space started.
I'm going to pin it to the top right now.
And then I'm going to go look for my phone charger so my phone doesn't die.
Yo, thanks for joining us for Sunshine and Crypto.
I appreciate you all for pulling up.
We're here every day from 3 to 5 EST.
I'll catch you guys tomorrow.
Peace.
