Crypto’s nightmare scenario is already here – POLITICO

With the help of Derek Robertson

While Coinbase’s problems with the SEC escalated just last week.they represent the exact scenario that keeps crypto executives up at night for much longer.

In fact, Coinbase spokeswoman Lisa Johnson told me that the company has been working on long petition last Thursday, he filed with the agency to formulate new rules regarding digital assets, partly in an attempt to stave off accusations of listing unregistered securities.

So it was an unfortunate coincidence that the SEC made public a complaint on the same day, implicitly blaming the company for what it was doing just now. Johnson said that Coinbase was unaware of the pending SEC complaint.

And in the months leading up to the petition, executives have been demanding clearer guidance from the SEC, with the looming threat that the federal government will decide that most of the industry is trading in securities.

“It’s a sword of Damocles over this trillion-dollar industry,” said Jay Verret, a professor of law at George Mason University and a critic of the SEC’s approach to cryptocurrencies, who said the problem has hung over the industry for the past five years.

But the industry hasn’t sought guidance like those presented in last week’s insider trading complaint against a former Coinbase employee that said several crypto tokens offered by the exchange qualify as securities — or the kind that could. arise as a logical consequence of this conclusion: an investigation by Coinbase for a possible listing of unregistered securities, the existence of which Bloomberg reported on Monday.

Even before this week’s news, industry representatives were complaining about “enforcement regulation,” with the agency clarifying its rules of interpretation, punishing crypto firms that break them. That was the approach he took in February when he fined trading platform BlockFi $50 million for providing an unregistered security.

Despite these complaints, crypto critic Rohan Gray said the ambiguity actually helped the industry get around the law.

“Mostly it was the lack of enforcement,” said Gray, director of research at the Digital Fiat Currency Institute, a group that supports the issuance of digital currencies by central banks, “because the SEC is concerned that they may not necessarily be able to win the case.”

And wider legal uncertainty around digital assets also creates other challenges for regulators. AT talk At the Brookings Institution on Monday, Commodity Futures Trading Commission Chairman Rostin Behnam spoke of a “regulatory vacuum” that prompted the commission to start “thinking creatively” about how to exercise its powers.

In short, entrepreneurs have quickly moved into a legal gray area depending on their interpretation of the law, agencies are now moving to enforce their own interpretations, and Congress may at some point pass legislation codifying new rules.

For its part, the SEC claims that many digital assets are considered securities, and its chairman Gary Gensler said that most crypto exchanges offer at least some securities, whether or not the companies admit it. This is a problem both for exchanges and for many issuers of crypto assets, only a few of which have registered them as securities.

Over the past week, it has become clear just how big the problem is: Coinbase shares have fallen by about 20 percent, amounting to billions of dollars in market capitalization.

At least the company’s investors were warned. Because Coinbase shares are definitely is registered security, the company has already stated the risk that the SEC will disagree with its opinion that it does not list securities, which exposes the company to potential investigations and penalties – in information disclosure on file with the SEC.

Writer Neil Stevenson yes, the one who coined the term “metaverse” be able to to explain technology before they really exist.

Thus, it is in great demand with valid technology companies by advising Jeff Bezos’ Blue Origin and virtual reality company Magic Leap. His latest venture is a partnership with Bitcoin veteran Peter Wessens to run LAMINA1blockchain, which they call “the base layer for the Open Metaverse”.

I interviewed the two of them about their goals for the project, which aims to provide the technical foundation for a creative, artist-friendly metaverse space. Below is a condensed and edited version of the conversation:

Neil, people like to point out that your novel Snow Crash is a dystopia, but its metaverse is essentially neutral technology. Do you see this project as an attempt to steer him in a more useful or nobler direction?

PS: Trying to manage something like this at a high level probably won’t work. It’s an open-source, bottom-up phenomenon, so trying to build it from the top down probably won’t end well.

Snow Disaster is a dystopian novel and a parody of dystopian novels. There is nothing inherent in the metaverse about the metaverse that makes it dystopian or utopian… I don’t believe in the argument you sometimes see on the internet that there is anything intrinsically dystopian about the metaverse. This is what we do.

Neil, the blockchain community is more overtly ideological than the others you’ve suggested. How did that influence your approach to this project?

PS: I have known people who have been interested in cryptocurrencies since the mid-1990s, and many of them got into it precisely because they were thinking about metaverse-style applications. They realized that it’s impossible to have a distributed community without other people’s code running on your computer, which raises obvious security and privacy concerns, and these friends have been working on cryptographic approaches for a long time to make this possible.

There has always been a strong motivation among cryptohumans towards idealistic goals, and although not everyone can agree on how they achieve this – libertarianism is not a generally accepted way of thinking – it is highly motivating for many people who have been working in this field for decades, and this is motivated the belief that this can lead to a better society.

Peter, how do you feel about people who see blockchain as just a means of financialization?

PV: I think bitcoin is undervalued – well, really undervalued – in terms of its social impact, bitcoin was a whole new way for people to collaborate. Blockchains are not companies in the traditional sense. I don’t think there is any other human structure that has successfully pulled people in unison towards something that ended up worth a trillion dollars at its peak.

I look at the lessons of this and see that there is finally a way to monetize open source software with a combination of community, payment systems and whatever you call it, Web3 or crypto incentives – there must be a way to use this more than just bitcoin, and create a new way for people to work and collaborate. — Derek Robertson

Huge changes are coming to one of the most vibrant and long-running VR spaces.

VRChat is a metaverse-like space known for its copyright infringement bypassing avatars, weird role playas well as problematic memes – announced This week that his next update would crack down on the custom modifications to the game’s code that made such things possible. This means, for example, no more full scale recreations of Nintendo games.

Mods, which will now be banned, are a big part of the game’s lifeblood. Until now, VRChat has mostly turned a blind eye to code workarounds that users have used not only for cultural chaos, but for everything from improved accessibility to speed up the game’s somewhat archaic graphics engine.

The VRChat tweet announcing the update got… a strong fan response with over 3,000 replies and an equal number of retweets with quotes. The rationale behind the change to VRChat is that it will make the game safer and smoother, and they have tried to address some of the harsher criticisms in follow-up blog, but this incident is yet another reminder that the incentives for growth in virtual worlds are sometimes at odds with what their most dedicated users want. — Derek Robertson

Stay in touch with the entire team: Ben Schrekinger ([email protected]); Derek Robertson[email protected]); Konstantin Kakaes (ur.[email protected]); and Heidi Vogt ([email protected]). Follow us on Twitter @DigitalFuture.

Ben Schrekinger writes for POLITICO on technology, finance and politics; he is a cryptocurrency investor.

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