Remember trade alerts and 69 off available for the programs A link Down Below on building your wealth. Whether it's real estate, stocks, crypto, you name it. check it out down below from my perspectives. Now we gotta talk crypto And Holy smokes, this is intense.

The SEC is getting increasingly aggressive thanks to the collapse of FTX and there are some murmurings that the Biden Administration might be trying to go as far as straight up Banning Crypto. Those are some of the talks that are going on right now about potentially Banning Crypto and what some people are calling Operation Choke Point 2.0 In this video, we're going to talk about why as some people believe that's happening. We're also going to look at the coinbase response to why they believe that staking is not a security and I have to say I'm embarrassed about the response. We'll talk about that as well.

But first understand this: Regulators right now, according to Columbia University seem to be building a wall around Crypto and and that's because you're getting more and more denials of crypto access to the mainstream Financial system. Consider crypto firm Custodia Bank that was just denied access to the Federal Reserve's Fed payment system on January 27th and the Federal Reserve also made a statement forcing essentially that if you want to be associated with the regular Financial system, you better have Risk Management Systems in place. You better follow the law and you better be in compliance with know your customer, anti-money laundering and anti-terrorist financing laws. You also have to show whether you're insured or uninsured.

You have to show that You are actually appropriately supervised. These are basically responses from the Federal government saying look, we're pissed that FTX happened and that Americans lost money in FDX and FTX UF and we want to prevent something like that from ever happening again. Now there are some folks in the crypto space saying well, Banning Crypto, We're preventing these. These crypto on and off ramps actually ends up making Crypto more dangerous.

You should be regulating it into existence. not out of existence. But this particular Crypto Venture Capital Investor and journalist Nick Carter says that you potentially are trying or you're seeing the Biden Administration essentially ban crypto. This is how far they're going.

They're saying that there's been a widespread Crackdown over the last few months against the crypto industry and crypto veterans are now nervous according to this individual that crypto businesses might end up completely unbanked and shut out from the entire Financial system because of the discouragement that is happening from the Federal Reserve and financial institutions against these companies. Look, for example, at letters sent to Silvergate scolding them for being associated with FTX and Alameda research. A lot of people got caught up in this and just totally destroyed. Uh, in terms of their association with FTX, you've got Signature Bank polling out and having its deposits and their exposure to crypto, you've got Statistica alleging in a class action lawsuit that Signature Bank knew there was suspicious activity going on at FTX and still ended up being associated with FTX Now then you have a Silvergate.

Uh, basically limiting its USD on and off ramps and this is probably the big issue I Made a little note uh, at the top of this piece actually here. remember: Chase limits on wires to crypto I Remember wanting to wire money to a crypto firm to invest in crypto and uh, and the the headaches the banking system made you go through to actually get your money into the crypto ecosystem. We're pretty intense and this basically suggests that look I mean if you kill which at the moment, you could still fund uh, you know, let's say, like your coinbase account through uh, debit wire or PayPal whatever. But if you eliminate those on and off ramps, you make it a lot harder to get into the crypto and to actually invest in crypto.

Uh, and so you're you're noticing. now. look even Binance announcing that they have a policy with Signature Bank that they're only going to process Fiat transactions worth a hundred thousand dollars or more. Uh, so you've got a whole host of intensity and increased scrutiny coming into crypto.

And it's not the good kind of Regulation It's more like the regulation that's squeezing crypto out rather than trying to legitimize Crypto. Binance, for example, just suspended USD Bank transfers to retail clients Binance Us Not being affected by this. This is Binance International, so you're seeing this sort of squeezing out and the question isn't how bad it is of what's happened, but it's what's going to happen next. And the next idea is that you're going to potentially see the Banning of Just Stable coins in general.

I Mean consider the following note: I put here at the bottom. As of yesterday, the SEC is threatening Paxos, who's an issuer for stable coins. They are really big into the crypto ecosystem their payment processor as well. But anyway, Paxos is threatening to be sued, suggesting that Uh stable coins are a security Now, Paxos has vowed to defend this, suggesting that no stable coins are not a security and do not need to be registered with the SEC.

However, this has led to the New York Department of Financial Services demanding Pax to stop stop minting Binance USD which is the third uh, largest Uh coin. Uh, Card Market that might have gone down to Fourth Uh, but Busd is the third largest stable coin. uh, not to be confused with BNB which is the Binance token that's the fourth largest Uh coin. Binance's stablecoin is the third largest stable coin and next to a Usdc in position Two tether in position one.

But you did see B and B fall about 10.75 percent over the last a week here. and I Hate to say it, but Coinbase's response to to sort of this pressure in my opinion, was a joke. Now I'm going to show you Coinbase's response here and show you why right after we continue going through here. But I want you to see what sort of the crypto argument is.

The crypto argument is that hey, look, if you squeeze crypto out of the mainstream Financial system and you effectively ban it by limiting the the access for crypto markets to traditional Finance, then what you're really doing is you're opening the door to crypto, going to places like the United, Kingdom the UAE, the Caribbeans, the Saudi what whatever right? You're going to other jurisdictions and they suggest that by doing this and pushing crypto to less sophisticated jurisdictions, you're actually creating more risk and not less in the crypto ecosystem. It's an interesting argument, but it's one that I think will be wildly unconvincing to the SEC, especially since the SEC has a very wide definition of what a security is Listen to What a security is here. This term security means any note, stock, treasury stock. And now I'm going to read you some that are particularly relative I think to stable coins, a certificate of Interest or participation and profit sharing.

Okay, and stable coins. you profit share when you yield farm, right? Or when you stake when you have a staking coin, you profit share. Uh, in the benefit or in the the work of somebody else, you could be argued to potentially have something that's similar to a stock. Although it doesn't go up or down in value, right? it's stable after all.

But some people say, well, that's very similar to a CD a certificate of deposit where you put cash in a bank account and you expect to receive some kind of yield and you farm yield on a certificate of deposit, right? So this the Sac has this really broad definition of what a security is and uh, a Coinbase came out with this response and Coinbase's response was basically, hey, here's why staking services are not Securities And they basically say the following: They go over here and say hey, Well we don't think that staking is a security because it's not a security and doesn't pass the Howie test. So think about that for a moment. The Sac or or Coinbase rather makes the argument that staking is not a security and the reason it's not a security is because number one, it's not and number two, it doesn't pass the Howie test. Now the how we test has to do with investment contracts.

It only has to do with investment contracts. So basically you have coinbase and they were applauded for like standing up to the SEC on Twitter But all Coinbase did was argue. the pink part of what a security is right Here, this is the definition of a security and Coinbase is like, well, we're not a security because a we're not and B we're We don't pass the Howie test which has to do with investment contracts. Yeah, well, what about the argument that you're a CD? Or what about that? you're like a profit sharing agreement.

What about those arguments? No Defense At All By Coinbase I Personally think that Coinbase's response to the Uh to this this idea that is staking a security was kind of embarrassing. Let me show you their response They go. To put it simply: no staking is not a security. Staking is not a security under the U.S Securities act, nor under the Howie test which the Sac uses to determine whether an investment contract is a security.

The Howie test came from a 1946 Supreme Court case, blah blah blah blah. And then what did they do? They literally only talk about the Howie test. Point one, about the Howie test, Point two, about the Howie test, Point three, about the Howie test. And then they they gave a conclusion.

Finally, Point four about the Howie test and they give. That's it. That's the end of the blog. So I'll talk about that how we test in just a moment.

But it's crazy to me because they literally say no staking is not a security because a it's not a security and B it fails the Howie test. But again, the Howie test is just one of the tiny ways you could be considered a security. And even in that test, they suck. They fail.

So in my opinion, even though everybody on Twitter is like Yay Coinbase, Brian Armstrong y'all are Gods I'm like, what lack of logic do you have to have the chief legal counsel for Coinbase go? Well, it's not a staking's, not a security because a we don't think it is and B it fails the highway test. But again, how we test just like maybe like five percent of the definition of security and you gave no argument at all as to why it's not a security otherwise like CDs or profit sharing or whatever. And even the argument that they make on the Howie test in my opinion, is very weak. First of all, they say that when a customer Stakes their crypto, they aren't giving something in response or or in exchange for something else.

Now remember, when you stake your money, you are blocking up your money. Unless of course you're losing using like a Lido right? you're technically locking up your money to get payment. But Coinbase says, well, that's not really giving up your money and receive payment. Okay, it's an argument I don't know how strong it is.

Then they suggest that staking isn't a common Enterprise A common Enterprise is defined as when profits are combined and the success of your return on money depends on the work of others. And basically, Coinbase is saying well, you're not really working on the coin, the the benefit of or you're not really profiting on the work of somebody else, you're profiting off of the benefit of a protocol Working So you're kind of just getting paid for protocol working. But I think the SEC will look at this and go. It sounds like a common Enterprise to me.

and it sounds like whether it's by magic or some kind of algorithm. people are making money by putting their money into a system and that's basically profit for common Enterprise So again, second argument pretty weak from the SEC. Then the third case or test of the how we test is that is there a reasonable expectation of profit and they suggest. Well I mean you don't have to make money when you stake? That's an option.

You know it's actually not really profit. it's just payment. And I'm like, okay, that's interesting because what motivation do you have to stake other than receiving payment? Well, probably none. I mean sure, you get to vote in the protocol, but other than that, like, really, you're gonna do it for free.

It's a tough argument. I Don't think coinbase is making a good argument here at all. And then their last argument is that well staking has nothing to do with the effort of others because, well, there's no managerial work involved. and it's not an entrepreneurial.

Uh, uh, Endeavor It's just a protocol. And so this is basically saying the effort of others has to be entrepreneurial. They're trying to redefine what effort of others is because it's really the effort of a protocol or computer right which is technically others. So in my opinion, Coinbase makes in a sort of bottom line in my opinion, kind of an embarrassing case for crypto.

and and I think it's bad for the crypto Community Like Coinbase should have done a lot better here, because basically their argument is we're not a security because we're not, and we're not a security. Because of this extrapolated uh definition, we have that we're not an investment con uh, contract, and each of their arguments are, in my opinion, relatively weak. Now, I'm curious to know what you think, but in my opinion, the Coinbase letter, while I don't even think people read it on Twitter people are cheering Coinbase's efforts on Twitter In my opinion, they're really, really weak. But okay.

I think the crypto Community could have come together and done a lot better in pre-arguing the SEC that staking is not a security. But if that's the best that crypto Community has, I think you better buckle up for a whole lot more hell coming down from the SEC and Regulators in the crypto Community because that was kind of embarrassing in my opinion. Not good, not good at all. and I I really wish the blockchain and crypto Community better because I'm a big fan of blockchain tech.

while I don't invest in cryptocurrencies because I think most of them are relatively speculative. Uh, and that's not to say I'm not interested in speculating. you know I'll go to a Vegas casino and I'll speculate I'll speculate on options because it's fun. Uh, but but beyond that uh is is is uh, you know a very bullish on blockchain technology.

but beyond that am I optimistic by Coinbase's arguments here. Absolutely not. If anything, kind of embarrassed I don't know. Let me know what you think in the comments down below.

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