Coinbase Compares Buying Crypto To Collecting Beanie Babies (bloomberg.com) 42
Coinbase said buying cryptocurrency on an exchange was more like collecting Beanie Babies than investing in a stock or bond. From a report: The biggest US crypto exchange made the comparison Wednesday in a New York federal court hearing. Coinbase was arguing for the dismissal of a Securities and Exchange Commission lawsuit accusing it of selling unregistered securities. William Savitt, a lawyer for Coinbase, told US District Judge Katherine Polk Failla that tokens trading on the exchange aren't securities subject to SEC jurisdiction because buyers don't gain any rights as a part of their purchases, as they do with stocks or bonds. "It's the difference between buying Beanie Babies Inc and buying Beanie Babies," Savitt said. The question of whether digital tokens are securities has divided courts.
I'm not sure about that (Score:2)
For Bitcoin, that is true, and I don't think they are trying to argue it is a security. But for some of the other coins, you do theoretically get some rights as part of the purchase. For Ethereum and other proof of stake coins, you get the right to a share of gas fees in certain circumstances from owning the coin, and some of the other coins have business plans attached to them like the right to play some game that might come out in the future.
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What are the beanie babies stuffed with?
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Those rights are only with the original purchaser of the coin. (at least in countries like the US and England)
If the seller of the rights reneges and a purchaser in the secondary market sues the seller will simply demur claiming that there is no contract between the seller and the owner of the coin and that therefore the owner of the coin has no standing to sue. This is covered in This video on the problems with NFTs [youtube.com]
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Probably more similar to gold than beanie babies. While you can buy and hold physical gold, that has some regulations. There are also gold backed securities which are also regulated. Coinbase trying to argue that bitcoin isn't like a security is one thing, but you know that they're secretly trying to argue that bitcoin should not be regulated at all.
Ultimately what they've got is "you send us money, we hold on to it, later we send you back your money which has either grown or shrunk in value." Entities t
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when I buy airline tickets and fly, I get frequent flyer miles. Is that like owning stock? Is that an unregistered security? What if those frequent flyer miles were stored on a blockchain instead of mysql, does that fundamentally change it then?
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I'm not sure what the specific rules are in your jurisdiction, but generally, they are only redeemable against the airline that issued them, and you can't sell them. Those two factors make them not securities.
If you could sell them, they would probably be considered a futures contract which would make them a security.
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Meanwhile the SEC has approved bitscam ETFs. (Score:2)
Which are getting huge inflows. [reuters.com] The companies selling them are most, but not all, of the ones controlling vast swaths of retirement funds. I'm sure this will end well.
Re:Meanwhile the SEC has approved bitscam ETFs. (Score:4, Interesting)
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I am not sure where you got this from, but this isnt true.
Re: Meanwhile the SEC has approved bitscam ETFs. (Score:1)
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Which are getting huge inflows. [reuters.com] The companies selling them are most, but not all, of the ones controlling vast swaths of retirement funds. I'm sure this will end well.
I don't think what you're insinuating makes sense.
Vanguard, for example, operates a real estate based ETF, VNQ. Does this expose Vanguard to all the risk involved in owning the underlying real estate or REIT? It's probably more of a selling shovels to gold miners situation. BlackRock should be fine. I don't know what the actual risk exposure is to an ETF operator, but I imagine it's a great deal lower than anyone holding shares of the ETF, think about it.
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Not a fair comparison (Score:5, Interesting)
When I buy Beanie Babies, I at least have something tangible
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That's not totally true... I bought some crypto during the market highs in 2021 and then sold it in early 2023.
I now have some tangible market losses that I can claim on my taxes! That's something, I guess.
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Beanie Babies brought my daughter great joy back in the 90s. She loved playing with them -- even in the bathtub (yuck).
I can't imagine anyone having that much fun with their crypto.
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I will let myself out now.
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I have loads of fun with crypto currency.
Not by buying any. Mostly by making fun of people who got scammed, of course.
Semi-accurate (Score:3, Interesting)
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They should at least be consistent (Score:2)
Sometimes if it walks like a duck... (Score:5, Interesting)
A very few times, even if it walks like a duck, it's not a duck. But the fact that it looks so much like a duck will make the explanation difficult. I think Coinbase has a point. When you buy a bitcoin, your only hope is to be able to sell it again, in the future, to a bigger idiot. That's the same hope usually with a stock, but the crucial difference is the "usually". Sometimes you buy stock to obtain control of a company, because there are rights acquired too, like the right to vote.
But they have worked so diligently in dressing the bitcoin with the trappings of a security, like having a "quote" for example, and a "volume", that it's now difficult to convince anybody that it's not a real security, that what you are buying is just a very long number, and who knows why you are doing it, perhaps you like long numbers. What there is certainly not, is any other kind of guarantee involved.Tomorrow they could close all bitcoin exchanges and you could say nothing about it. So it's not a security at all, they could call it an "insecurity", but that's not a catchy name, I suppose.
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I love this. I think describing craptocoins as "insecurities" is perfect.
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Stocks aren't regulated just because they give you some small share of ownership, the primary reason for regulation there is because they are investment instruments. And coinbase absolutey is marketing this as an investment (not as a cash replacement).
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That is precisely my point, that it doesn't matter how is marketed, the SEC should consider what it "is". I could start tomorrow selling certificates of ownership for planets that are beyond the light horizon, that is in the unreachable part of the universe. I could market it like an investment. People could, just as with bitcoin, consider it an investment. But the SEC should have nothing to do with it, as it's obviously a curiosity, or a collectible. The fact that a secondary market of rare certificates wo
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antisecurity
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Its a commodity, not a security.
And you can trade P2P. Exchanges are more efficient, but not necessary.
The Number Goes Up point you are making or future "bigger idio" is exactly the same thing for Gold ETFs.
People invest with the hopes of prices going up.
Bitcoins cycle has gone through 3 drawdowns of 60 to 80% and recovered to new all time highs every single time.
If you zoom out, its always going up.
Stocks, ETFs, Gold, Silver are all priced at the margin. And people keep buying.
Beanie Babies? (Score:4, Insightful)
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They lost their enthusiasm for being an alternative to currency when they found out that this required them to meet *standards*.
Shockingly honest (Score:1)
Beanie Babies: useless crap, sold at ridiculous prices, pure FOMO. True cost: $5 of stuffing and labor plus marketing.
Bitcoin: useless crap, sold at ridiculous prices, pure FOMO. True value: $0.
exactly right (Score:2)
Since crypto has no intrinsic value and does no work, it is simply a collectible - something to be collected for fun or speculated over. At least for tangible things, eventually collectibles lose their value because there is no one left that cares.
Except with Beanie Babies (Score:2)
Except with Beanie Babies you actually have something tangible.
It may be worthless shit, but it actually exists and you can touch it.
And...you might even be able to find some fool to buy it for more for it than you paid for it.
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So, in other words, with Dunning-Krugerrands, you at least not have trash you have to throw away.
So much worse (Score:2)
The Beanie Babies were actually a bit better. Beanie Baby buyers fell into a few categories. Investors, collectors, and people wanting to make their child or significant other happy. That latter group mostly got the hoped for return on investment. The collectors presumably enjoy their collection or they would have stopped. The investors mostly failed to see a significant return on investment, but they were at least able to recover much of their investment by re-selling to the other 2 groups.
And that's even
Oh great! (Score:1)