October 05, 2021

How the Greatest Decentralizing Force for Crypto Projects Is the SEC - Ep.278

1 hour 15 minutes

How does the SEC determine if a token is a security? Why is DeFi particularly hard to regulate? What will regulators do about stablecoins? On Unchained, Greg Xethalis, chief compliance officer at Multicoin Capital, and Collins Belton, founding partner at Brookwood P.C., dive into crypto regulation, discussing securities laws, DeFi regulation, and why the US should be promoting stablecoins rather than trying to shut them down. Highlights:

why the SEC and CFTC have not announced bigger crypto enforcement news at the end of their fiscal years

why the SEC is going after DINO (decentralized in name only) companies

what the Howey and Reves tests areand how the SEC uses themto determine whether an asset is a security or not

why Collins and Greg think the SEC has recently begun been applying Reves more often

why they think centralized crypto lending products should not be considered securities under the Howey test

whether new legislation needs to be written for cryptocurrency-based products

what makes Collins think the SEC is being “disingenuous” regarding the SEC registration process for crypto companies, like Coinbase

how regulators will end up handling DeFi and why both Greg and Collins are long-term optimistic

how the US government has a “great history” of respecting privacy and encryption

why regulatory pressure is likely to build up around centralized crypto exchanges and what we can learn from the EtherDelta case

why Collins thinks most cryptocurrency companies should be regulated

why the SEC is the best motivator for forcing protocols to fully decentralize

how smart contracts could theoretically be used to standardize SEC Commissioner Hester Peirce’s Safe Harbor proposal

how blockchain data makes cryptocurrency companies more transparent and easier to regulate than centralized entities

what Collins and Greg think will happen with stablecoin regulation going forward

why the US should be pushing to make dollar-pegged stablecoins more prominent

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Episode Links

Greg Xethalis

Twitter: https://twitter.com/xethalis

LinkedIn: https://www.linkedin.com/in/xethalis/

Collins Belton

Twitter: https://twitter.com/collins_belton

LinkedIn: https://www.linkedin.com/in/collins-belton-10226283/

Cases Mentioned

SEC charged DeFi Money Market

https://www.coindesk.com/markets/2021/08/06/sec-charges-so-called-defi-company-for-allegedly-fraudulent-30m-offering/

SEC charged EtherDelta

https://www.coindesk.com/markets/2018/11/08/sec-charges-etherdelta-founder-over-unregistered-securities-exchange/

Howey Test and Reves Test

https://securities-law-blog.com/2014/11/25/what-is-a-security-the-howey-test-and-reves-test/

https://skrypto.sewkis.com/howeys-cousin-reves-may-be-another-way-for-the-sec-to-argue-that-tokens-are-securities

https://www.creditslips.org/creditslips/2021/09/coinbase-and-the-sec-.html

DINO

https://twitter.com/hesterpeirce/status/1423637816492318722?lang=en

-uniswap-labs-investigation-could-signal-a-new-era-of-enforcement

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By Laura Shin

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