If ETH is a security, then who’s the broker-dealer?

TL;DR: Mainstream crypto is trying to become legit the easy way (asking what the rules are), but the Biden administration is trying to outlaw self-custody and implement price controls to protect the dollar. Their solution is to basically do the same thing with Coinbase that they're doing with Trump; assume he's doing something illegal, find a bunch of lawyers to tell it to a judge, and put the pressure on until he folds. They bit off more than they can chew, and they're quickly realizing that…

Let's assume that the SEC is right and ETH is a security for a second.

Securities vs. Commodities

What's the difference between a security and a commodity in the first place?

As Gary would tell you himself, a security has an issuer. Case in point, rice and wheat are commodities because Mother Earth distributes it equally based on how much arable land you have. This is as opposed to a bond (which signifies debt), a stock (signifying equity), or a derivative (such as a futures option). A derivative is a security if (and only if) one of its underliers, i.e., the asset(s) it derives value from, are classified as a security.

Note here that commodity derivatives are not securities. For example, there's a huge market around agricultural derivatives, e.g., futures which speak for rice or live cattle, which has nothing to do with the SEC. In fact, this is the main job of the CFTC, alongside regulating oil trades and so on; that's the "F" in CFTC.

So what if ETH is a security?

If ETH was a security, then there's nothing wrong with that on its own; everyone who's ever bought a stock or bond has participated in securities trades. The thing is that, in that case, the broker-dealer of ETH is technically breaking the law; they were supposed to register with the SEC, and they haven't. Never mind the fact that crypto people have been coming into Gary's office asking what the laws around this are for the past 5-10 years!

OK, then who's its broker-dealer (BD)?

That's the million-dollar question! The Biden administration's goal is to get as much crypto as possible off the market and out of the average Joe's hands; that way, they can dump their USD shit-coin on him.

If they just sue the guys that broker or deal ETH, then they could sue those guys, shut them down, and confiscate all the crypto! Of course, they have to get a judge to sign off on that, but they have plenty of judges on payroll.

The thing is, ETH is decentralized, so it exists as a consequence of the shared efforts of all the staking pools; those pools are always going to be there, whether inside or outside the US. What Liz Warren wants to do is declare all miners and SPOs as broker-dealers, but that's problematic b/c there's no way to enforce it; I could set up a mining rig or SPO in my basement just to prove that point.

If we can't find the BD, then what?

Simple! Just sue the whole industry until a few of them collapse under the legal pressure and the rest fall in line!

See, they're fucked there too because the players in our industry who are most threatening to banks (Coinbase, Kraken, Uniswap, etc.) know exactly what they're doing. Coinbase's legal representation, Watchell Lipton, are some of the best securities lawyers that the SEC has seen in a while, second to only… Marty Kaplan, who's representing Consensys! This means that winning against the ETH community is about as hard to the same with Wall Street.

So we, the SEC, tried this all and ended up looking like idiots multiple times… What now?

We double down on our ideological position, repeating again and again:

The crypto industry is rife with non-compliance, and we say that without pre-judging any one company or cryptocurrency.

Translated from Fed speak:

We're the state, and you guys our enemies, so we decided y'all are breaking the law. Help us understand what you're doing so we can tell you which law you're breaking.

Predictions for the future

They're going to pass some law that says stablecoins have to be backed by Treasury securities, i.e., government bonds, which is going to hold off the collapse of the dollar for a good while. Eventually, we'll meet the same fate as Japan, and that's when the New World Order will become actually worth talking about.

My money's on India; they're the only major economy with demographics going for them, and they've got the most crypto users after the US itself. The problem is that both major parties in India, the more-democratic BJP and less-democratic INC, rely on socialism, and India has a legacy of socialism that they need to move away from.

The youth need to realize that Wokeism is cultural socialism, which is exactly what's robbing them of their futures and turning them into state-owned livestock. Everyone who wants to make money is going to make it; today's socialists are going to turn into tomorrow's impoverished class because they don't want to save themselves from poverty.