Yesterday, the SEC said crypto memecoins are not a security. Hence, they don’t fall under SEC scrutiny for security law. That is regulatory certainty and it has been missing ever since crypto came on the scene.
Gary Gensler tried his best to cripple the crypto industry. He bankrupted three banks in the process.
At best, the United States' financial regulatory apparatus has made uneven rulings regarding crypto. This might have been a wake-up call for innovators who were not exposed to the alphabet soup of regulators who oversee our financial system.
Yesterday, I helped teach an undergrad class at the University of Illinois. Students asked about crypto.
I told them I don’t know all the answers and I cannot predict the future. I did say that I think in the last three administrations, we had no regulatory certainty and in this new administration it looks like we will have some.
I do think there will be some use for crypto. Suppose you are able to make a hologram of yourself. You could send that hologram to transact on your behalf. They could have a crypto signature that is traceable only back to you. With the advances in AI, having crypto attached to original work will be important so you know you aren’t being faked. Tokenized stock, tokenized real estate titles and things like that will establish more certainty, eliminate friction and could create more liquidity. Stablecoins might work in international payments to eliminate friction and get rid of gatekeepers. There isn’t a huge use case for crypto right now. If you don’t have it in your life, you can still go through life. It’s not like Excel or some software program like that. But, someday it might be.
I am not a huge fan of regulation. Big companies can use it to eliminate competition and pick winners and losers. Regulation can also interfere with free markets—see the Economics of a POW Camp. But this ruling will free up meme coins.
Memecoins are Beanie Babies. They are worthless. Yes, people hype them, unaware people buy them thinking they will make millions and get the rug pulled out from under them. Stupidity is not a reason to regulate.
I have some personal experience with this that I feel I can relay now that the SEC has ruled memecoins are not regulated. A long time ago I wrote a blog post about LGB Coin. Because of that blog post, I was named in an SEC action. The charge came from a Florida lawyer who I think, but do not know, was connected to the SEC and the Biden Administration. If you read the charges, I was characterized as the ring leader and the computer programmer behind the memecoin.
Of course, those charges were 1000% untrue, misguided, probably politically motivated, and capricious. I didn’t even know anyone involved with the memecoin except for one person who I named in the blog post.
I can only describe or think the lawyer was a politically motivated and cost me $100,000 in legal fees. If I were a benevolent dictator, the lawyer would be disbarred and have to pay back all the legal fees incurred by the people named in the action. I have no idea what’s going on with it now, but I hope someday someone somewhere refunds my money to me. I haven’t spoken to any of the particulars for at least a couple of years.
I never did distribute coins to people I wanted to distribute them to because the cost for gas on the Ethereum blockchain was too expensive. I wasn’t going to incur a $1000 cost to send a few worthless memecoins to someone who showed up to protest tampons in the boys bathroom at a school board meeting.
I am empathetic to people being politically attacked for no reason by a central government. It’s not just memecoins. It’s Biden attacking people who were organizing against abortion. It’s Biden going after J6 people. It’s Obama using the IRS to attack political rivals. It was Nixon going after hippies. It was J. Edgar Hoover using the FBI to attack rivals. It was the entire federal government and Democratic state governments being used to attack one political rival, Trump.
So, when Democrats talk about shredding the Constitution, spare me.
Nothing like being a victim of the Blob to sharpen one's senses.
What a waste for them to force you to spend so much $$ on defense...when it could have been much better deployed to other uses.
sorry you went through that, Jeff.
If only "stupidity is not a reason to regulate" were a mainstream notion. Seems that regulators prey on the stupid just as well as the hucksters