Over the last year, the SEC has been investigating a significant number of token offerings that took place in 2017. While some of those offerings were scams or worse, many of the ones that are being investigated by the SEC are serious projects, started by some of the top cryptographers and computer scientists in the world, and backed by the leading token funds and venture capital firms in the US and around the world.

Sadly, the SEC looks at crypto tokens and sees securities that they want to regulate as such. They cannot seem to understand that not all of these assets are securities, they cannot seem to understand that most are commodities, currencies, or utilities like frequent flyer miles. They cannot understand that crypto tokens are unlike any assets that have come before them and that crypto tokens need new regulatory structures. They cannot understand that their unwillingness to come up with new rules paired with their “regulate by enforcement” strategy is hurting the crypto sector, pushing it offshore, and is causing most of the new projects to raise capital outside of the US and/or put together legal structures that look like Frankenstein monsters.

I have seen this play out in multiple projects and also in the exchange sector, which I posted about over the weekend. For as long as I have been involved in the crypto sector, I have been advocating and advising that companies work with the SEC, cooperate with them, and educate them. But that has not worked. I am frustrated. So are many others. Even one of the SEC Commissioners has gone public with her frustrations.

One of the crypto projects that the SEC has been investigating, where I have had a front-row seat, is the Kin project that was birthed by USV’s portfolio company Kik, where I am on the Board.

Kin is a digital currency (not a security) that is in use in over 40 mobile apps now. Last month over 1mm users earned Kin in one of those mobile apps and over 300,000 users spent Kin in one of those mobile apps. Kin is one of the most used crypto currencies in the world.

And yet the SEC won’t agree to settle with Kin on reasonable terms. Instead they want to force Kin to become a security, which would decimate its appeal as a digital currency. Imagine that a user had to go to a securities brokerage firm like Schwab to purchase a token in order to be able to use Apple’s App Store. That is crazy and yet that is essentially what the SEC wants Kin and many other crypto projects to agree to do.

So today, Kin has launched which is a crowdfunding effort to fight the SEC in court. Kin has contributed $5mm worth of BTC, ETH, and Kin to the effort. And others are contributing their crypto assets as well. You can do so here. I have contributed a number of my crypto tokens to the effort this morning.

Whatever funds are raised by will be used by Kin to fight the SEC in court, to help secure a favorable ruling that could well set a precedent for the entire sector. Any funds that are left after this legal battle will be set aside for other similar legal efforts in the crypto sector.

It is my hope, and Kin’s hope, that will be an inspiration for the many other important crypto projects that are silently battling with the SEC to come public and raise capital from the crypto sector for their fights.

The SEC is regulating by enforcement, not new rulemaking, and worse, they have taken a divide and conquer strategy. It is time for the crypto industry to come together and fight back. I hope that Kin’s efforts with represent a watershed moment/movement that will pressure the SEC to think and act differently toward this important new sector.


Comments (Archived):

  1. awaldstein

    Aggregating community to a common cause is invariably a good direction.Excuse my ignorance but does this all boil down to one lawsuit that has a common ground cross a majority of projects–simply a classification of what is and is not a crypto security–or is it more complex and more difficult for lawsuits to have a common benefit from a ruling?

  2. pointsnfigures

    My experience with federal agencies is they act like the Politburo did in Russia. Or even worse, Illinois government or Chinese government. Even your elected officials cannot help you and worse, might be in cahoots with them.They have their mind made up and crush dissent.While not insider trading, this link to Marc Cuban’s fight with the SEC will give you a flavor of the culture;

    1. William Mougayar

      They only change if there’s an act of Congress. But Congress is so slow, and the SEC hasn’t budged much with any thinking innovation on their part. They keep wanted to fit the square peg into the only round hole they know about.

      1. pointsnfigures

        To be honest my guess is Congress really doesn’t understand the issue. It’s rare when they do. It’s a long educational process. (As someone who spoke with Congresspeople over the years on issues pertaining to the commodity industry) If you are going to lobby Congress, it’s best to educate the staffers; like the Chief of Staff since they tend to hang around for a long time. They really move the legislation on the Hill.

        1. William Mougayar

          There are efforts underway to educated/connect with the staffers and Rep’s. The ones that understand the need for change are still a small minority. It is an uphill battle, no doubt.

        2. JLM

          .Sure they do. The Big Bank lobbyists explain it to them right after the crypto lobbyists leave the room.JLMwww.themusingsofthebigredca…

      2. JLM

        .The US SEC is part of the Executive Branch of the US government. They execute the laws as written by Congress.The SEC is not in the innovation basis other than to research current trends.The Congress is in the lawmaking business. They have specialized committees, like the House Financial Services Committee, to deal with legislative areas.The Big Banks have long since bought or rented the entire Finance Committee with their political donations. They are wholly owned subs of the Big Banks. Period.Take a look at the House Financial Services Committee and see how long all those serfs have been in Congress.Chairwoman Maxine Waters is 80, has been in office for 28 years, and received 67% of all her contributions from “large individual contributors/PACs”. She took in more than $400K from insurance/securities & investment/real estate/law firms.She raised $1.5MM to “win” a safe seat. It is just baksheesh.She is also an idiot. She controls what comes before her committee.This is why campaign finance revision and term limits are critical.JLMwww.themusingsofthebigredca…

    2. JLM

      .Sort of apples – oranges.Cuban was accused of garden variety insider trading. Not a difficult case to understand and the kind of thing any Ass’t US Attorney would try without any help from the US SEC.Cuban prevailed at trial in front of a jury because he provided convincing evidence that the information was available to the public and was not “material, non-public information” the rubric for a guilty verdict on insider trading.They would have probably settled with Cuban if he hadn’t been so savagely public in his response.Still, he took it to trial and won in front of a jury.JLMwww.themusingsofthebigredca…

      1. pointsnfigures

        and they appealed to the SCOTUS…. they have more resources than most and use them

  3. William Mougayar

    Your 2nd paragraph is key. They don’t want to understand that there is anything new here. And that’s the sad part. I’ve also blogged today about this very same thing, and given several examples pointing to how the SEC is mis-handling crypto:http://startupmanagement.or

  4. jason wright

    “And yet the SEC won’t agree to settle with Kin on reasonable terms.”- reasonable terms. what might they be?

    1. fredwilson

      Acknowledge that like Ethereum, it is not a security

      1. notes

        As a non-crypto person the only thing I see on this sector are scams and speculation, and the constant badgering of far-right conspiracy theories such as the austrian gold standard bs much loved by Putin and far right INCLUDING THE ACTUAL NAZI POLITICIANS IN AUSTRIA CAUGHT ON TAPE SELLING OUT TO RUSSIANS. “We’re making a lot of money investing in gold when the economic system crashes”. They literally said that on tape.Although you claim to be progressive you’re acting as a de facto far-right libertarian preaching this nonsense and attacking institutions.Here’s how you recover from this: you speak out against the scams, not the SEC. Our institutions are under coordinated attack by the far-right government and the Russian mob and there you are pushing their talking points. This is not going to end well for anyone who is on the far-right side, simply because the bag holders have caught on to the scheme. And the SEC is watching. The naked pump and dump schemes and the manipulated trading patterns are clear for all to see.My advice to you is stop associating yourself exclusively with this, because this ship is going down and so is your brand if that is pretty much the only thing you care about these days.You have a brand built on being “smart money”. Don’t let greed turn you into “scam pusher money”.

      2. jason wright

        I’ve understood why Bitcoin is not a security. I’ve always questioned why Ethereum has the same privileged status. Bitcoin is software that enables the mining of BTC. Ether was directly issued by an entity. That seems a crucial difference…at least to me, but not to the SEC. I scratch my head about that.The Kin token felt like a well established (for a startup) company issuing the equivalent of a new class of shares to the market as a defensive strategy. More like a pivot than an action native to its primary model.I’m assuming FB’s GlobalCoin will be as a security.

    2. Nick Grossman

      I think it’s also important to separate the initial sale from transactions today, perhaps treat them separately (as the SEC has done with Ethereum). Transactions today involving Kin are highly consumptive, see

  5. iggyfanlo

    I’d like to be optimistic on laws changing, but having heard some excerpts of Congress questioning Zuckerberg about social media, it’s clear that they are firmly stuck in 1995 and having trouble getting out.To solve more current problems, do you see using a “frequent flyer” approach unsustainable today? Getting “points” instead of tokens? Seems like mostly semantics since even “points” trade.And I would hope that using this approach (short term) would eliminate some of the fraud/scam/get rich quick nature of early crypto

  6. DJL

    The Federal Government (any branch) is hopelessly unqualified to regulate any new technologies. When you listen to our Congress(people) speak, it is obvious that many of them are just not educated beyond what basic law it took to get them elected.The US needs to establish technical liaisons in the private sector that are not lobbyists. That may be our only hope, but that means giving up “power” to the private sector.

    1. Paul Chou

      I would defend them to some degree that at the political appointee level this might be true, but the staffers are really smart. I am a government advisor in a certain capacity and I’ve dealt with the SEC at the division head level — they are really smart. One asked me a nuanced question about BIP32 once, and I was floored.I agree with one of the other comments that it would be helpful to understand their perspective on how Kin fits within the Howey test. But I would also caution that just blanket underestimation of the folks working in enforcement is a mistake. Many are very, very good, and often do not get credit for how much they have thought about this topic.

      1. DJL

        Point taken. That is good to know. It is probably like any other large organization, the smart people doing the work can get overshadowed by the bureaucrats at the top. (I replied to the wrong post and cannot undue it in disquis.)

        1. Paul Chou

          Yeah this is very true. Often, the staffers are quite informed and often frustrated by the bureaucrats (those we tend to think of as the slow moving government, but also with other policy agendas of their own that can conflict with the staff opinion).But the interesting thing in my interactions with the Washington DC folks is that the staffers are often extremely well read into these topics, they are surprisingly as captivated and excited about this space as the entrepreneurs working in it, and finally / critically, they are extremely good lawyers with a job to do.Often that means the decision for how something plays out is not exactly aligned with the entrepreneur, but it is rarely without a very reasonable rationale. Again, they have a job to do, but they are far from hostile to the space. I know for a fact many who have left or are planning to leave government want to work in this space after, so take that into account when assessing them.

    2. obarthelemy

      Generals are very bad soldiers.Composers can’t play all instruments.Most directors can’t act.

    3. JLM

      .Yes and no. No fan of the gov’t, but you give them a bum rap in several areas:1. This is not about tech. It is about a financial security or a financial non-security.The guys at the top of the SEC come and go from the biggest and best securities law firms in the country. That in and of itself may not be a good thing.In the bowels of the SEC, they have met and know a million scammers. They know who they are, what they smell like, how they operate.2. Nobody can hold the NSA’s jock when it comes to using tech. They are doing things that are 5 years ahead of the rest of the world and they have 1MM SF of Cray computers with which to do it and unlimited storage.It is said they have every phone call ever made in the US that was ever committed to a file.3. Some things like GPS not only are organic to the military — missile guidance — but developed by places like DARPA.Some of the foremost experts in the world are in the bowels of places like the USDA, the Corps of Engineers.Much of what we criticize government for is legislative policy made by the legislative branch or enacted by executive order.JLMwww.themusingsofthebigredca…

      1. DJL

        I agree. Hence why I tried to distinguish between “legislative” capability and technical capability.For example, the math used to justify Obamacare could have probably been debunked by a freshman math student. (Oh wait, my Alma Mater was involved) But instead someone used bad science to justify bad policy.I think the “bought” banks are going to work this our to their advantage.

      2. Chuck Shultz

        As a long time geek, investor and IT grad, I am in this for the tech. From the investor POV, these outdated laws really hold back our economy. Blockchain/crypto is catching on around the world on a mass scale and if the SEC does not tread carefully, they’re only going to hurt our economy. Also investors (citizens) and yes this is very much about technology. The internet, cell phones.. all technology. Ecommerce has been shutting down brick and mortar stores left and right. There’s no need for the middle man anymore. If we can’t keep up with the times we’re in serious trouble globally.

        1. JLM

          .Please do not take offense as I mean you none, friend, but these “outdated” laws are what was supposed to see us through a number of different scandals many of which gave rise to new laws.One of those scandals is manifested in the wholesale corruption of new schemes. Reasonable persons see much to dread in cryptocurrency. Not the technology, the sheer lack of a need in the face of a well ordered marketplace.If it is the answer, then what is the question? It is a solution in search of a problem while struggling to fit into the neighborhood of commerce. What is its basic utility? What essential unfulfilled need does it serve?Freddie begins his blog post acknowledging the corruption in crypto.The SEC exists to protect the retail investor, not to advance disruptive forces, if in fact there is any real useful disruption to cryptocurrency. Where is the killer app?The American GDP/economy will do just fine. Crypto taken to its extreme isn’t the gap between the end of a sentence and the beginning of the next one. It is miniscule.The American economy, the global economy won’t feel the impact if every CryptoKittie in the world is run over by a bus. There will zealots who attend the funerals, but the world’s economies will be absent.In the end, if there is a technology that is useful, such as the software of the blockchain, the large financial institutions and the tech giants will co-opt it. They will simply buy it.You say there is no need for the middle man, but there are a great many who want a middle man or who are exposed to fraud without one — witness the more than $2B in crypto theft alone in the last 12 months.The globe follows the direction of the American economy. There is no other reserve currency that can even take the place of the USD as it relates to, just an example, the global oil business on sheer volume of available float.Ecommerce is an order entry mechanism. It is not a revolution as it relates to the goods and services. It is an efficiency in pairing buyers and sellers. The network/platform effects do not alter the basic goods. It is all about exposure and distribution.Just as enclosed shopping malls had their heyday until the operating expenses began to kill them, commerce — including ecommerce — will evolve, but the biggest element of the evolution will be exposure, order entry, and distribution.JLMwww.themusingsofthebigredca…

    4. Richard

      It’s a wild overreach to call the talent we have seen in the treasury department to be unqualified. These are some of the best minds in the county.Let’s remember what happened when the regulators have had a hands off approach to leverage and risk of new financial products throughout the years.Also, wasn’t it Fred who was pounding down the doors for opening up the startup market to individual investors through reg-d, via the American invests act. There was no crying about securities in those arguments. Now with crypto – the argument is turned upside down. He will argue for whatever suits him fund in the moment and then turn into a big gov proponent after dark.

  7. Girish Mehta

    Goes without saying, your blog – none of my business to suggest what to say or how to say it.But since you have opened this post up to comments, I’ll say this as a comment and not a critique -Nowhere in this fairly lengthy post do you make the SEC’s argument (their rationale).In a debate, if you can make your opponent’s argument very clearly and as well as they can, and if you can subsequently refute it, your case becomes much stronger. Since it is a fairly long post today, you could have made the space for that. For instance, most of us here are familiar with the Howey test, this post doesn’t say anything about why the SEC takes the position on Kin that it does.I’ll also say that it is unlikely that “crypto tokens are unlike any assets that have come before them” is going to be a compelling argument to a regulator in this context.

    1. DJL

      (Sorry wrong reply)

      1. Girish Mehta


        1. DJL

          Although I do agree with your comment. Difficult to understand both sides of the argument from a single post.

    2. notes

      Well said, thank you. Troll farm one-liners are not enough to fight the damages incurred by bag holders. I mean aren’t MOST crypto tokens scams?!! Troll farm one-liners won’t do the job of fighting what is obvious to the naked eye. This space is scam central. Fight the scams not the SEC.

      1. Chuck Shultz

        The laws in place by the SEC are meant to keep the rich rich. Why is it legal for a lower or middle class citizen to play lottery/scratch-offs or gamble away every last penny they own at a casino? Yet when it comes to investing in a new technology it is illegal? Please inform me how this is right? These laws are hurting our country (aside from the top 5% of our people). Most of these laws are completely outdated and can not be applied to our present lives.

    3. Nick Grossman

      For a really detailed view of the relevant legal arguments and facts in the case, this document is a good place to start:

      1. Matt A. Myers

        Anything that summarizes that in layperson for us who don’t have a week to spend just begin understanding that document?

  8. Jms Dnns

    I have created to fight for an alternative cause. That is, the cause of what “crypto” means.Please join me in this fight to liberate the abbreviation from the cryptocommodity community and return it to the cryptographic community, where it belongs, and whose work enabled all this cryptostuff anyway.Fight For The Abbrev

  9. JLM

    .This is a very curious communication and sets the predicate for why the SEC (and the IRS) are not “cooperative” on the issue of crypto.First, you take an argumentative tone when the better tone would be one of education, logic, reason, persuasion. You cannot bully the government. You cannot bully Big Banking’s lobbyists.You cannot pry Congress’s teeth off the Big Banking tit without slapping them senseless with a checkbook.Note: Any Congressman sitting on the Finance Committee is “sponsored” by the Big Banks. I would say “owned” but I am trying to be polite. Congressmen will tell you whatever you want to hear as long as you are giving them money, but they are not going to overrule their masters, The Big Banks, until the money is comparable.You admit that some (many?) token offerings are scams and then say that the top scam enforcement entity should look away from the industry, don kid gloves because there are others that are not scams.That is not the way regulation works — when regulators find evidence of a scam, they do not start distributing “get-out-of-jail-free” cards, they double down and look deeper, suspecting that what they are looking at is a calving iceberg, not crushed ice in a Manhattan. To think otherwise is to delude yourself.You suggest that the issuance of tokens may be as innocent and as simple as “frequent flyer” miles. Do you know of the enormous controversy of frequent flyers since Citibank issued 1099-MISCs in 2012? It is a huge jug fuck (technical finance term).Short course — Citi began to award frequent flyer miles when you opened an account. People used them to buy airplane tickets. Program worked like a champ.Some tax guy at Citi noted the implications of Tax Code Section 61(a) that gross income includes “all income from whatever source derived”. Decided something that led to a free airplane ticket just might be gross income.So, Citi sent out 1099-MISCs to their customers. Some guy in marketing thought this would be great because now Citi customers would really understand what a benefit they received when they opened that account.One of the benefits they received was a tax audit because folks didn’t report income from the Citi 1099-MISCs, one of the few trackable things on a tax return.City then moved their pawn to King 4 and started calling them “Thank You Points” — a bit of labeling creativity not unlike the crypto business. Hey — they tried to change the name to solve their problem.Then, the IRS issued a Notice that seemed to put oil on the water, followed by a recent Tax Court case. Shankar v Commissioner that sopped up a lot of the oil.Now, the Tax Court and IRS are thinking that FF miles are “interest” — something given in exchange for the use (deposit) of (taxpayer’s) money.So, simple like frequent flyer miles? Not so much.The downside of all this is that an entity would become an issuer, require a licensed broker to deal in their tokens, and would be subject to quarterly reporting.This is not the end of the world — said the guy who ran an SEC reporting company for a dozen years.Being an issuer is a simple fact. No calculus involved. These guys are issuers.Are they issuing securities? Are these securities public or private? Bit of Howey analysis amongst other things.So what? You have to find a licensed (FINRA) person — Series 6, 7, 63, 65 (if advising), 66 (combines the 63/65 exams), together with the supervisory licenses. It is all spelled out here:…There is also the ability to just form a JV with a small brokerage who has these licenses.You have to join FINRA — all of which is spelled out in great detail by FINRA and requires $50-100K in capital. You have to have a bank, a clearing agent, and a service bureau.Then, you have to conform to issuing 10Qs, a 10K, and 8Ks IAW the rules.Why is this a problem? It is not. Any bucket shop can master this stuff in six months.Crypto trades on the Internet. Schwab trades on the Internet. No big deal. Totally bogus strawman argument.One of the reasons the SEC is not “cooperative” is that this is a very small industry compared to the size of the markets and securities the SEC regulates. There are individual stocks that are bigger than the crypto market.I end where I began. The SEC is not going to be flexible in the face of corruption. Approximately 2% of all crypto transactions are fraud or theft.This is going to be a long haul. The Big Banks will wait until the end and swoop in and take what they want.One must always remember that Bad Facts Make Bad Law. Right now, there are a lot of bad facts out there.JLMwww.themusingsofthebigredca…

    1. Richard

      the crypto space also includes those who (covertly) will monetize the hubris of these crypto securities scams (not withstanding Fred’s opinion) issued these past 10 years via the SECs whistle blower program. A recent award to one individual was 37 million.

      1. JLM

        .What deal is that? It’s not the Crypto Asset Management/Timothy Enneking deal is it?JLMwww.themusingsofthebigredca…

        1. Richard

          Anonymous data.Is it hubris for a billionaire to ask for donations for his investments?

    2. Matt A. Myers

      “Note: Any Congressman sitting on the Finance Committee is “sponsored” by the Big Banks. I would say “owned” but I am trying to be polite. Congressmen will tell you whatever you want to hear as long as you are giving them money, but they are not going to overrule their masters, The Big Banks, until the money is comparable.”This is the one area I fear the most: how many people in power, or being lined up to be in power, have already been perverted with vested interest (given or bought) in any number of these crypto-assets-as-Ponzi-Pyramids? Fortunately to some degree there is already fairly strong regulatory capture and real-life trust networks, long-term relationships already in place – and these status quo systems seem to prefer stability over risk, which includes the control mechanisms that are inherent to fiat, and so on – so there’s still time to steer the ship right.

      1. JLM

        .Rest assured that when the Big Banks buy or rent a Congressmen, the Congressman stays loyal to their master.We are talking huge money here.JLMwww.themusingofthebigredcar…

    3. sigmaalgebra

      IIRC someone advised “Buy low and sell high.” A little more generally, that is asking for volatility. Might argue that quite generally volatility is the best thing a day trader has. To some extent, all this can apply to some VCs.Or to make money, the green kind, in all this crypto stuff, just have to buy low and sell high, that is, take advantage of volatility.With a lot of hype, media attention, controversy, volatility, etc. in crypto someone paying close attention might well find some opportunities to buy low and sell high, i.e., make green money.From the beginning, I saw crypto as a silly direction for investment or activity of any kind, in particular, that nearly anything useful crypto could do, high end relational data base has been able to do, broadly much better, for decades. So, from that view, I was tempted to conclude that crypto was no place to make money. Then, I didn’t conclude that, didn’t make that leap. Why? Silly, even really silly, does not really imply can’t make some money, maybe a lot of money. The main path to money I see is essentially just the volatility and paying close, daily, maybe hourly attention to it.So, we think about paying close attention to a lot of volatility. Then, for some icing on this cake, help out the volatility. Hmm ….One might guess that the post today is to help the volatility and pay close attention to it. For helping the volatility, maybe throwing Web site verbal spitballs at the SEC, “bullying” the SEC, etc. could be effective.E.g., I know a guy who made much better than a nice living trading pork bellies. He paid close attention — e.g., for decades killed 5000 hogs a day and being so active in the market had some of the best information to pay close attention. Next, for the volatility, the supply of pork bellies is from the supply of hogs. The demand for pork bellies is from the BLT sandwich, etc. Thus, the supply and demand have very little causal connection and the prices are very volatile. He was a good day trader of pork bellies — did well.So, one way to make money is to pay close attention to something highly volatile and, then, to help the volatility.Maybe the post today is “smart money”.

  10. Tom Labus

    There will be test cases. There will be guys going to the slammer. Then there will be a new industry. We shall see.

  11. Jms Dnns

    One thing that people in the crypto-“currency” community don’t seem to discuss, is the vital role that printing money has played in managing the US economy.If we go back to 1792, we see Hamilton, arguably the father of Wall St, invent a mechanism for using his role as treasurer to unfreeze an economy that has locked up from excessive speculation. He invented it then and the concept went without name until the son-in-law of the founder of the Economist, Walter Bagehot, put his name on it and called it Bagehot’s Dictum, but we know it today as “quantiative easing”.The idea is that the central bank, aka lender of last resort, replaces assets that no one wants, that theoretically should still be worth something, and replaces them with cash, which itself is just an abstract container of value. This unfreezes the economy because cash is the thing everyone needed, but garbage assets is all anyone had. If the mechanism works, the economy normalizes and the central bank can shrink the money supply by offloading the assets back, possibly for a profit.Bernanke studied this and made his name by discussing the value of using helicopters dumping bags of money on an ailing economy. He wrote about how The Great Depression was such a disaster because the central bank did not use Hamilton’s method. He applied Hamilton’s idea again in 2008, which is, imo, why that recession was light relatively speaking.This mechanism is arguably one of the most important mechanisms the Fed has, and is not available when using crypto-“currencies”. I take this to be one of the primary reasons the government would never accept it as a currency.With that said, I do find it fun to imagine helicopters carrying bags of block configurations that return coins, eg. Cryptographic Easing. Perhaps a backdoor in the algorithm actually could let the Fed print(coins) when they need. Or maybe just bags of compute cycles, to overwhelm the majority and force weird stuff to get logged in the chain…Expanding on this conundrum, it seems to me that these cryptothings are not, and should not, be currencies.They are most easily thought of as gold, pork, or oil, in that they are this thing that exists, you can own them, and markets exist for them. It doesn’t need to be more complicated that that.

    1. JLM

      .Agreeing more with you than you do with yourself, I note that the assets in question were also “illiquid” often at any price.When markets get constipated, they need to be lubricated.JLMwww.themusingsofthebigredca…

    2. Tom Labus

      Washington’s directive to Hamilton was pretty direct. Pay off the debt from the war. He didn’t have an office yet. He sold bonds to the Europeans. Some with land pay outs. A little different than the treasury today.

      1. Jms Dnns

        That was the reason Hamilton gave for the whiskey tax, which lead to Shays’ Rebellion.The context for my comment is the Panic of 1792:

      2. JLM

        .He also took on all the state debt from the individual Colonies and pushed it upstream to the Treasury. This one act was likely the linchpin of creating a Federal government.Of course, he did get the customs income, the landing fees, and tariffs for the US of A. We lived on that income until 1913 and the advent of the personal and business income tax.Hamilton was a genius. Washington was a genius for finding and using Hamilton.Washington-Hamilton — best startup co-founders in history.If only Hamilton had been a better shot?JLMwww.themusingsofthebigredca…

        1. Jms Dnns

          Washington + Hamilton is like 1+1 = 3But Hamilton, without Washington, was out of control. It’s like 1= 0.5 for Ham Solo

          1. JLM

            .Everybody should be required to read Ron Chernow’s “Washington” and “Hamilton” to understand from whence the US came. “Grant” is a superb read, also.It — the American Revolution — was a very close call and the genius of Washington as a CinC and a President is extraordinary.His anointing of Hamilton was part of that genius.I agree with you as it relates to the multiplier impact of Washington + Hamilton, but it was more like Geo (8) + Ham (6) = 25Hamilton was the classic aide-de-camp who is groomed to lead by the experience of being the aide to a good general.To this day, this is the way the US Army works. Eisenhower, famously, worked for both MacArthur and Marshall prior to WWII.Eisenhower said, “I studied dramatics under him [MacArthur] for seven years.” SEVEN YEARSMacArthur, never one to share the limelight, said, “He [Eisenhower] was the best clerk I ever had.”They did not like each other, but it was Eisenhower’s tutelage under MacArthur that ingrained the staff work that would command at Normandy.JLMwww.themusingsofthebigredca…

          2. Jms Dnns

            I stand by my previous comment and have read both Chernow books about Washington and HamiltonHowever, I also wrote a heavy metal song about Washington. I kept thinking about how Washington didn’t trust anyone around him after experiencing Arnold’s betrayal, and how he lied to basically everyone about his army’s plans to retake NYC. I figured I’m never going to be mad enough to write legit heavy metal lyrics, but I could pretend I’m as mad as Washington was.The band isn’t real, so there was no one to tell me how bad an idea it is to make a heavy metal album cover out of the constitutional convention. The drummer is an algorithm too, so there were no other band members to tell me not to write a song that sounds like Mastodon or Metallica.. And the bad singing is toooo real.

          3. JLM

            .Day job.Mitigated by the sheer cheek to do something like that. I once listened to the Declaration of Independence sung in the shadow of the Liberty Bell in Philadelphia. Quite good.JLMwww.themusingsofthebigredca…

    3. Girish Mehta

      I have made the point here a few times that given the critical role of the central bankers in the operation of the nation-state today, cryptocurrencies cannot become mainstream currencies that replace sovereign money. Alternative/fringe assets or currencies – Yes. Mainstream, replacing sovereign money – No.Bagehot’s dictum was differentiating illiquidity and insolvency. His point was for the central banker as the lender of last resort to lend (1) freely and without any limit (2) and at very high interest rates, to illiquid businesses that were not insolvent businesses. QE is a little different.Unfortunately the crypto enthusiasts operate on simplistic false choices that are not questioned. Inflation bad, Non-inflationary good. Centralization bad, Decentralization good.In 1896, William Jennings Bryan campaigned on the issue of bimetallism – that the dollar should be backed with both gold and silver, rather than only gold. This would increase the supply of money and was to support poor farmers who were debtors and wanted inflation – because inflation reduces the cost of their debt and also increased the prices they could command for their crops. Who opposed them – the Bankers who wanted money to be based only on gold and therefore “sound money”.”You shall not press down upon the brow of labour this crown of thorns. You shall not crucify mankind upon a cross of gold” – William Jennings Bryan arguing against the gold standard.One of the biggest blunders of Churchill’s career (and he had many) was when as Chancellor of the Exchequer he took England back to the gold standard in the mid-1920’s at the pre-war exchange rate and plunged England into a depression.For a modern-day equivalent of the gold standard – look at the problems in the Eurozone.The ability to create money is valuable in today’s economy and QE 1 and 2 prevented a worse state of affairs immediately after 2008-09.@TomLabus:disqus @JLM:disqus

      1. Jms Dnns

        I don’t usually hang out on Fred’s blog, but I couldn’t resist announcing after spending the 5m it took to put it together.And then I figured I’d toss out a brief description of something that seems to answer a lot of questions for me, so I wrote that up.I am not familiar with how things happened in 1896 or 1920, but I am getting there in the history books. I’m moving chronologically from Washington and Franklin. But finance is a great excuse to skip ahead for context! So thanks for that.Do any other points in history stand out? I am eager for more data but am reading history book after history book to get it, which can be slow when you’re looking for unknown unknowns

      2. Jms Dnns

        Could you elaborate on how QE is different? Would you consider the difference a useful update to previous models?

      3. Tom Labus

        Great comment So interesting that the original call for an economic monitor came out of the Agrarian movement. Getting crushed by wild swings in the economy will do that

    4. Matt A. Myers

      Isn’t the Ponzi-Pyramid scheme structure inherent in most (if not all) of crypto-“currencies” a similar mechanism – it’s just that the money printed mechanism is allocated instead given weighted towards earlier adopters, and based whatever value they can manipulate (subtly or force through adoption through lobbying and political efforts) society/consumers at large into purchasing into the scheme?

  12. awaldstein

    Worthwhile to listen to Laura Shin’s Unchained Podcast today. She digs deep and hard and clarifies a lot.

    1. Adam Parish

      I listened. She discussed both sides very well.

      1. awaldstein

        She does a great job and I find for topics like this internalizing the complexity through podcasts is the most effective.I listened to this during a workout and came away not only physically but mentally ready for the day.

  13. creative group

    CONTRIBUTORS:The Howey Test was based upon SCOTUScase of SEC VS. W. J. Howey Co.Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 (1946),[1] was a case in which the Supreme Court of the United States held that the offer of a land sales and service contract was an “investment contract” within the meaning of the Securities Act of 1933 (15 U.S.C. § 77b) and that the use of the mails and interstate commerce in the offer and sale of these securities was a violation of §5 of the Act, 15 U.S.C. § 77e. It was an important case in determining the general applicability of the federal securities laws.We are still scratching our heads regarding why regular unsophisticated investors need to fund anything a minority of wealthy have the largest stake in. Billionaires & Multimillionaire’s should be able to fund an issue that they benefit the most from.A great read that explains the psychology regarding many of the wealthy is The Future of Capitalism by Paul Collier. He outlines some solutions to WEIRD (Western, educated, industrial, rich, developed ) which those who are wealthy don’t see anything to correct.The exact issue has occurred with Public schools VS Charter (The New private and exclusive which is funded by the public) Education Secretary DeVos claim to fame which secured the position for another unqualified political appointment)We realize there is a lot to unpack but needs to be addressed. The philanthropic endeavors many times shade other issues that are in plain sight.Captain Obvious!#UNEQUIVOCALLYUNAPOLOGETICALLYINDEPENDENT

  14. Vaultoro

    Even though we launched in early 2015, we at didn’t ICO but raised a traditional VC round to enable trade between crypto and allocated bullion. I don’t think that the concept of an ICO is inherently a scam, I actually love the fact that the public needs to re-learn what risk is after years of societies obsession with de-risking everything. Plus ICOs give the retail investor the chance to support and profit from interesting projects.The reason we did not ICO was because of regulators not acting fairly or transparently in this space. Regulators, especially in the US are generally bullying and doing some kind of power grab while leaving blatant scams to run rampant. We have had to stay away from this groundbreaking funding mechanism due to uncertainty and lack of clarity.

  15. David Gerard

    if you really believed in this, you’d be … just putting in the money? You have the money.

  16. Carlosandsir

    What are your thoughts of the BUNZ approach – create a digital currency not via ICO and that doesn’t trade on an exchange?Were the technical merits and crypto impact of this approach evaluated? Versus the company deciding to take on the known SEC risk going the ICO route instead.In the face of the plethora of scammers in the industry, what is your recommendation to help the SEC protect investors?

  17. aminTorres

    Hi Fred, I am traveling right now which is why I am seeing this almost a full day later but I believe the space can benefit greatly from a third party entity much like the AdCouncil. They uses many of the greatest minds in communication to bring awareness to the masses in the form of public service announcements on a broad set of issues. I believe this could be a game changer for the space.

  18. Bellisario

    We should be defending crypto from the KYC/AML thugs. Illegal scam tokens should fight their own battles.

  19. Adam Parish

    Donated 1.608 CVC. Very small amount but wanted to show my support for change.

  20. TheLounsbury

    I’ve liked your commentary over the years, but here you are just plain 100% wrong and frankly raising funds this way to defend something you’re invested in is plain … slimy. You’ve made a wrong call here mate and are too deep in to see.