Personally, I am not in support of on-chain voting as a process to progress improvement proposals. In part because i find the entire idea of on chain governance for token holders as a theatre and a number of holders are not technically aware enough to vote on changes and are largely driven by emotions or metrics which may not be in favour of the long term heath of the network. This is a recipe for un-necessary friction & drama.
Couldn’t have said it better myself, @hgedia.
@Lordwadsworth neither of us are lawyers so this opinion comes loosely, held, but here are my thoughts on your comment.
But Mr. Gensler, who took over in April, said projects that reward participants with valuable digital tokens or similar incentives could cross a line into activity that should be regulated, no matter how “decentralized” they say they are.
“There’s still a core group of folks that are not only writing the software, like the open source software, but they often have governance and fees,” Mr. Gensler said. “There’s some incentive structure for those promoters and sponsors in the middle of this.”
MF is raising funds from VCs, and they are also writing the code so… I mean, I don’t know the exact deals that are being made, and I’m sure they’re trying to toe some line, but as far as I know, VCs have given USD to MF to develop Mina, and MF has given VCs tokens in exchange.
According to the token distribtion , MF, O1, VC and contributors have > 51% of the tokens. 44.1% of tokens are distributed amongst just VC and contributors, so even if MF and O1 recuse themselves from votes, any holding-based governance is essentially centralized. Given Mr. Gensler’s comments, I’d rather take my chances with MF steering decisions responsibly, with community input than let VCs make all the decisions in a “decentralized” way.
The level of decentralization that on chain voting creates would be a good safety net to protect the protocol from future regulations.
You also posted this link in discord: https://www.sec.gov/news/speech/speech-hinman-061418 which is another opinion by an SEC leader hinting at ethereum maybe being a security when it launched, but not now. Critically, I don’t think it does say that. It leaves the option open, but to me it’s worded more like “if it were determined that eth was a security in 2013, which I’m not saying it was, that wouldn’t mean that it’s a security today”. I think you are throwing the word “decentralized” around pretty loosely, which is not something the SEC would do. You seem to imagine that if there are a few people e.g. at MF which make up “the board”, then that is a security, but if more people vote on things then it’s not a security. I don’t buy that at all, since in the US common stock is a security, and stockholders make decisions at corporations. E.g. exxon, amazon. While I agree that SEC leaders are using the word decentralized in their opinions, and that might indicate their thinking on future regulations, I don’t think it’s a strong legal umbrella. The Howey test does not ask about decentralization.
“Can a digital asset that was originally offered in a securities offering ever be later sold in a manner that does not constitute an offering of a security?” In cases where the digital asset represents a set of rights that gives the holder a financial interest in an enterprise, the answer is likely “no.” In these cases, calling the transaction an initial coin offering, or “ICO,” or a sale of a “token,” will not take it out of the purview of the U.S. securities laws.
But what about cases where there is no longer any central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created? I believe in these cases the answer is a qualified “yes.”
where the digital asset is sold only to be used to purchase a good or service available through the network
This seems like the key phrase for me. Why do we all hold mina right now? It can’t possibly be to use a good or service on the network because zkapps aren’t live. You can make the case that you hold mina now so that you can use the network in the future which is how ethereum was positioned when they sold tokens before the launch of the network. Why did VCs buy the token? I strongly suspect that they bought the token speculating that the price will go up and they can sell at a profit. EF never sold to VCs, but MF has, and that’s a pretty big difference imo. So then the question is, given our current state, if we added DAO voting on top, would it not be a security? I don’t think it makes a difference, because what does voting have to do with use case? Voting on proposals that you think will be good for token price, e.g. reducing inflation which is brought up all the time, makes you more like a shareholder imo, and a shareholder holds a security.
My closing remarks are that if the SEC views 99% of crypto as securities, then Mina is likely to be a security. As an investor I view enforcement action as a risk, but I don’t think being classified as a security would have to be a death knell. The Biden admin and Gary G seem interested in making money off of crypto and making it more “safe” for people. I think the cat is “out of the bag” on crypto, and future regulations will bring coins into the regulatory fold rather than leave them out to dry.