1
00:00:08,840 --> 00:00:11,639
Speaker 1: Hello, and welcome to another episode of the Odd Thoughts

2
00:00:11,720 --> 00:00:16,160
Speaker 1: podcast on Tracy Alloway and I'm Joe. Wasn't so Joe?

3
00:00:16,200 --> 00:00:19,840
Speaker 1: I got an interesting email earlier this week? Was this

4
00:00:19,960 --> 00:00:23,239
Speaker 1: that thing you tweeted? Yes? It was. Well, you could

5
00:00:23,239 --> 00:00:26,520
Speaker 1: say that about practically any email that I received, because

6
00:00:26,560 --> 00:00:29,479
Speaker 1: we both just tweet all of everything that's in our inbox.

7
00:00:30,520 --> 00:00:33,320
Speaker 1: That's that's really sad, isn't it Okay? But one thing

8
00:00:33,400 --> 00:00:36,800
Speaker 1: in particular I tweeted about, and it was an advertisement

9
00:00:37,200 --> 00:00:42,199
Speaker 1: for an upcoming I c O an initial coin offering. Right.

10
00:00:42,320 --> 00:00:46,080
Speaker 1: I think anyone who's been on the Internet in recent months,

11
00:00:46,120 --> 00:00:50,680
Speaker 1: particularly if they're into tech or finance, has been inundated

12
00:00:50,760 --> 00:00:54,600
Speaker 1: with ads for initial coin offerings. I get them all

13
00:00:54,640 --> 00:00:57,080
Speaker 1: the time. I used to get them on Facebook. I

14
00:00:57,080 --> 00:00:59,440
Speaker 1: get them in my Gmail. I got it's like this

15
00:00:59,560 --> 00:01:02,000
Speaker 1: new toe can and get a ten percent discount on

16
00:01:02,080 --> 00:01:04,600
Speaker 1: this token that will give you access to WiFi or

17
00:01:04,600 --> 00:01:06,720
Speaker 1: whatever it is. Actually, that's probably one of the more

18
00:01:06,720 --> 00:01:09,760
Speaker 1: linear ones. But I don't think like anyone really has

19
00:01:09,840 --> 00:01:12,360
Speaker 1: any idea of what these are, what what the deal is.

20
00:01:12,440 --> 00:01:16,360
Speaker 1: It's also weird and new. This one in particular was

21
00:01:16,400 --> 00:01:20,320
Speaker 1: illustrated with a little cartoon rocket. Uh. It also said

22
00:01:20,560 --> 00:01:23,560
Speaker 1: the company had signed an agreement with the world's largest

23
00:01:23,680 --> 00:01:27,880
Speaker 1: Nasdaq exchange, whatever that is. But the thing that got

24
00:01:27,920 --> 00:01:30,640
Speaker 1: me the most about this particular ad was it said

25
00:01:30,680 --> 00:01:35,560
Speaker 1: we received the approval of US Securities and Exchange Commission

26
00:01:36,040 --> 00:01:38,959
Speaker 1: and U S Securities and Exchange Commission is in quotes.

27
00:01:41,000 --> 00:01:43,920
Speaker 1: Everything about this is so beautiful. Look, I'm not going

28
00:01:43,959 --> 00:01:46,480
Speaker 1: to judge this I c O but if I were

29
00:01:46,520 --> 00:01:49,760
Speaker 1: an investor to be this would uh be some at

30
00:01:49,800 --> 00:01:52,960
Speaker 1: least caution signs just from how you described it, all right,

31
00:01:53,120 --> 00:01:56,920
Speaker 1: But the reference to Securities and Exchange Commission and I'm

32
00:01:56,960 --> 00:01:59,400
Speaker 1: doing air quotes right now and you can't see me

33
00:01:59,480 --> 00:02:03,080
Speaker 1: doing that for the phone, obviously, UM got me thinking

34
00:02:03,200 --> 00:02:06,280
Speaker 1: about I c o s and regulation because obviously this

35
00:02:06,360 --> 00:02:09,079
Speaker 1: is a perennial issue. How are I c o s

36
00:02:09,160 --> 00:02:14,480
Speaker 1: regulated and are they actually securities in the eyes of

37
00:02:14,560 --> 00:02:17,160
Speaker 1: the U S legal system? Right, Because the basic idea

38
00:02:17,360 --> 00:02:20,720
Speaker 1: is companies are you could say, issuing their own de

39
00:02:20,800 --> 00:02:24,720
Speaker 1: facto currencies, selling them and they want to do that

40
00:02:24,800 --> 00:02:26,800
Speaker 1: as freely as possible, or many of them would like

41
00:02:26,840 --> 00:02:29,079
Speaker 1: to sell for any amount to anyone in the world.

42
00:02:29,720 --> 00:02:32,040
Speaker 1: But they and they would say Okay, they're not. We're

43
00:02:32,040 --> 00:02:34,919
Speaker 1: not really selling securities. These are tokens that give access

44
00:02:34,919 --> 00:02:37,639
Speaker 1: to a network or something. But if they are securities,

45
00:02:37,720 --> 00:02:40,839
Speaker 1: then from a regulation standpoint, that would impose upon them

46
00:02:41,000 --> 00:02:43,519
Speaker 1: a lot of obligations in terms of disclosure and who

47
00:02:43,520 --> 00:02:46,400
Speaker 1: can buy. And so the question of whether these are

48
00:02:46,440 --> 00:02:50,440
Speaker 1: actually securities and the law governing whether these are securities

49
00:02:50,560 --> 00:02:52,679
Speaker 1: or not is of a pretty big stakes for a

50
00:02:52,720 --> 00:02:55,480
Speaker 1: lot of people, huge stakes, and it actually gets to

51
00:02:55,960 --> 00:03:00,399
Speaker 1: some really interesting legal theory which we are now going

52
00:03:00,400 --> 00:03:02,600
Speaker 1: to go on to discuss. And I think you have

53
00:03:03,120 --> 00:03:05,800
Speaker 1: you have the guest with you, right, Yes, I'm very

54
00:03:05,840 --> 00:03:08,799
Speaker 1: excited to bring in Peter van Walkenberg. He's the head

55
00:03:08,840 --> 00:03:13,400
Speaker 1: of research at Coin Center, which is a cryptocurrency think

56
00:03:13,440 --> 00:03:17,000
Speaker 1: tank in Washington, d C. He's going to help us

57
00:03:17,000 --> 00:03:20,200
Speaker 1: wade through the thicket of regulations which may or may

58
00:03:20,240 --> 00:03:22,840
Speaker 1: not apply to I C O S. So, Peter, thank

59
00:03:22,880 --> 00:03:25,639
Speaker 1: you very much for joining us. Hey, thanks for having me, guys.

60
00:03:25,800 --> 00:03:28,399
Speaker 1: I've been chuckling this whole time listening to you guys.

61
00:03:28,480 --> 00:03:33,400
Speaker 1: I also work with the SEC in quotation marks. Do

62
00:03:33,440 --> 00:03:36,360
Speaker 1: you work with the SEC not in quotation marks as well?

63
00:03:38,200 --> 00:03:42,840
Speaker 1: Hopefully I can only imagine Peter that for as many

64
00:03:42,960 --> 00:03:46,880
Speaker 1: ads as Tracy and I get on social networks and

65
00:03:46,880 --> 00:03:50,800
Speaker 1: in our email, you must see like ten times as

66
00:03:50,960 --> 00:03:53,160
Speaker 1: many of these pitches for I c o s than

67
00:03:53,240 --> 00:03:56,240
Speaker 1: basically anyone else in the world. I tell you ad

68
00:03:56,240 --> 00:03:58,720
Speaker 1: blocking software is important when you have my job in

69
00:03:58,720 --> 00:04:01,800
Speaker 1: my Google search history, it's really it's it's critical. It's

70
00:04:01,840 --> 00:04:04,680
Speaker 1: not just a luxury. And I don't mean to starve

71
00:04:04,720 --> 00:04:07,040
Speaker 1: the media companies that our revenue, but I just can't

72
00:04:07,040 --> 00:04:10,080
Speaker 1: look at this stuff all day. So before we dive

73
00:04:10,160 --> 00:04:14,400
Speaker 1: into securities law and how these decisions are actually made, Peter,

74
00:04:14,480 --> 00:04:16,440
Speaker 1: maybe you can just give us an overview of where

75
00:04:16,520 --> 00:04:19,200
Speaker 1: we stand right now when it comes to the legal

76
00:04:19,240 --> 00:04:22,520
Speaker 1: definition of I c o S. Yeah, okay, so there

77
00:04:22,600 --> 00:04:26,040
Speaker 1: there just isn't one. And that makes sense, and it's

78
00:04:26,080 --> 00:04:28,320
Speaker 1: not too surprising because it's a brand new thing and

79
00:04:28,360 --> 00:04:30,600
Speaker 1: it's sort of an informal term that the community came

80
00:04:30,680 --> 00:04:33,000
Speaker 1: up with. I don't know who in the community, somebody

81
00:04:33,040 --> 00:04:35,920
Speaker 1: who I really would love to have a stern talking

82
00:04:35,960 --> 00:04:39,279
Speaker 1: to about two years ago because it sounds like I

83
00:04:39,400 --> 00:04:41,359
Speaker 1: p O and somebody said, oh, well, we're going to

84
00:04:41,400 --> 00:04:44,440
Speaker 1: create an initial batch of these new tokens or coins,

85
00:04:45,000 --> 00:04:47,120
Speaker 1: and we're going to release them to the public and

86
00:04:47,200 --> 00:04:48,880
Speaker 1: have an offering, and so we'll call it an initial

87
00:04:48,920 --> 00:04:53,720
Speaker 1: coin offering and it won't confuse anybody, and people will

88
00:04:53,760 --> 00:04:57,680
Speaker 1: be excited about it, which I think really is terrible branding,

89
00:04:57,839 --> 00:05:00,960
Speaker 1: because if you have a good ah argument that your

90
00:05:00,960 --> 00:05:03,560
Speaker 1: thing is in a security, and some people do, and

91
00:05:03,600 --> 00:05:05,600
Speaker 1: I think some people don't. But if you have a

92
00:05:05,640 --> 00:05:08,080
Speaker 1: good faith argument that your thing is in a security,

93
00:05:08,080 --> 00:05:11,960
Speaker 1: why the hell would you use the term or you know,

94
00:05:12,120 --> 00:05:14,120
Speaker 1: a head nod to the term for the thing that

95
00:05:14,160 --> 00:05:17,719
Speaker 1: the SEC regulates as securities I p O s. It

96
00:05:17,800 --> 00:05:20,800
Speaker 1: just makes no sense. So there's no legal definition of

97
00:05:20,800 --> 00:05:24,920
Speaker 1: I c O because it's just this emergent term. It's

98
00:05:24,960 --> 00:05:29,760
Speaker 1: like slang in our space. There's varying treatment of what

99
00:05:29,839 --> 00:05:32,360
Speaker 1: an I c O is or might be or should

100
00:05:32,360 --> 00:05:37,080
Speaker 1: be under the law, and that's because we have flexible

101
00:05:37,120 --> 00:05:39,800
Speaker 1: standards for a lot of things in US law, and

102
00:05:39,920 --> 00:05:44,080
Speaker 1: sometimes new things that seem like they were unregulated actually

103
00:05:44,160 --> 00:05:48,640
Speaker 1: fit into an existing flexible standard and then are actually regulated.

104
00:05:48,760 --> 00:05:51,599
Speaker 1: And one of these flexible standards and we're you know,

105
00:05:51,640 --> 00:05:53,800
Speaker 1: we've been dancing around it, and this this talk so

106
00:05:53,880 --> 00:05:57,440
Speaker 1: far is the standard for when something is a security

107
00:05:57,680 --> 00:06:00,559
Speaker 1: and then therefore regulated like a security in the US.

108
00:06:01,000 --> 00:06:03,320
Speaker 1: So in Europe, just just as quick background, they have

109
00:06:03,400 --> 00:06:05,480
Speaker 1: a much more black letter test. They have a civil

110
00:06:05,560 --> 00:06:07,920
Speaker 1: law background instead of a common law background, and they

111
00:06:07,960 --> 00:06:11,200
Speaker 1: basically have a statute that enumerates these things are securities

112
00:06:11,200 --> 00:06:14,839
Speaker 1: and it's you know, equity shares, its pensions, etcetera. In

113
00:06:14,880 --> 00:06:16,960
Speaker 1: the US, we have that black letter list in the

114
00:06:17,800 --> 00:06:20,960
Speaker 1: Securities Law Securities Act rather, but we also have an

115
00:06:21,040 --> 00:06:24,919
Speaker 1: undefined term in that in that list called investment contract.

116
00:06:25,720 --> 00:06:30,120
Speaker 1: And that undefined terms like you know, Joe Tracy, what's

117
00:06:30,120 --> 00:06:33,040
Speaker 1: an investment contract to you? What's an investment contract to me?

118
00:06:33,120 --> 00:06:36,880
Speaker 1: You know, it's it doesn't have a really definitive common meaning.

119
00:06:37,240 --> 00:06:39,680
Speaker 1: So that term had to be defined by courts to be,

120
00:06:39,880 --> 00:06:42,120
Speaker 1: you know, narrow enough not to cover all things that

121
00:06:42,160 --> 00:06:44,800
Speaker 1: people invest in, but broad enough to cover the sort

122
00:06:44,839 --> 00:06:46,960
Speaker 1: of things that we want to make sure investors are

123
00:06:46,960 --> 00:06:49,279
Speaker 1: protected from, the things that really look kind of like

124
00:06:49,360 --> 00:06:52,440
Speaker 1: schemes where you rely on somebody else to make profits.

125
00:06:53,000 --> 00:06:56,039
Speaker 1: And so that term was defined in a ninety six

126
00:06:56,320 --> 00:06:58,640
Speaker 1: i think is forty six case. It was about a

127
00:06:58,640 --> 00:07:00,719
Speaker 1: guy who was selling tracks of and in an orange

128
00:07:00,720 --> 00:07:05,640
Speaker 1: grove to suckers in New England and promising them that

129
00:07:05,680 --> 00:07:08,080
Speaker 1: he'd maintain the fruit and sell it at market and

130
00:07:08,120 --> 00:07:10,880
Speaker 1: give them the profits of the fruit that grew on

131
00:07:10,920 --> 00:07:13,240
Speaker 1: the track of land in the orange grove that the

132
00:07:13,280 --> 00:07:16,080
Speaker 1: New England investor purchased. Just to pause here, because I

133
00:07:16,120 --> 00:07:20,000
Speaker 1: think this is sort of the critical case that people

134
00:07:20,320 --> 00:07:22,720
Speaker 1: will be talked about today when they try to gauge

135
00:07:22,720 --> 00:07:26,240
Speaker 1: whether something is a security or not. We are talking

136
00:07:26,280 --> 00:07:30,400
Speaker 1: about the theoretical regulation of I C O s. And

137
00:07:30,480 --> 00:07:37,600
Speaker 1: it all stems from someone selling tracts of oranges in Florida. Yeah,

138
00:07:37,880 --> 00:07:40,800
Speaker 1: tracks of an orange grove. So how he would invite

139
00:07:40,800 --> 00:07:43,120
Speaker 1: people down to his Florida hotel and take them on

140
00:07:43,120 --> 00:07:45,040
Speaker 1: a tour of the groves, and people would say, oh,

141
00:07:45,080 --> 00:07:47,200
Speaker 1: these orange groves are beautiful, and how he would say,

142
00:07:47,240 --> 00:07:49,480
Speaker 1: it's funny you should say that these orange groves are

143
00:07:49,600 --> 00:07:51,960
Speaker 1: for sale. And then he'd sell you a tract of

144
00:07:52,120 --> 00:07:54,880
Speaker 1: land in the orange grove. And he'd also have you

145
00:07:54,920 --> 00:07:57,080
Speaker 1: sign a contract where you say, I appoint how he

146
00:07:57,240 --> 00:07:59,640
Speaker 1: and his staff to go pick the fruit and sell

147
00:07:59,680 --> 00:08:01,840
Speaker 1: it at and give me the profits, and how he's

148
00:08:01,840 --> 00:08:05,160
Speaker 1: obligated to give me the profits. And this combination of

149
00:08:05,200 --> 00:08:08,720
Speaker 1: the nominal interest in property and the agreement to maintain

150
00:08:08,840 --> 00:08:11,840
Speaker 1: the property and sell the oranges for profit, at least

151
00:08:11,840 --> 00:08:13,520
Speaker 1: in the eyes of the Supreme Court and in the

152
00:08:13,640 --> 00:08:16,240
Speaker 1: sec who brought the case of the Supreme Court, looked

153
00:08:16,360 --> 00:08:19,440
Speaker 1: like an investment contract of the type that we'd normally

154
00:08:19,480 --> 00:08:23,000
Speaker 1: regulate as a security. It fit this test, and it

155
00:08:23,080 --> 00:08:26,000
Speaker 1: makes sense because you're not really just buying land in Florida.

156
00:08:26,360 --> 00:08:30,080
Speaker 1: You're kind of buying a fractional interest in how He's

157
00:08:30,120 --> 00:08:33,120
Speaker 1: orange grove, literally a fraction of the land and the grove,

158
00:08:33,400 --> 00:08:36,840
Speaker 1: but also a fraction of the profitable, hopefully profitable efforts

159
00:08:36,840 --> 00:08:39,640
Speaker 1: of Howie in running in a successful orange grove. So

160
00:08:39,880 --> 00:08:42,440
Speaker 1: this is like a flexible test that's there to reach

161
00:08:42,520 --> 00:08:46,360
Speaker 1: things that aren't like stock certificates evidenced in papers kept

162
00:08:46,360 --> 00:08:49,320
Speaker 1: in the basement of the DTCC in New York, but

163
00:08:49,360 --> 00:08:53,440
Speaker 1: instead things that are basically similar in economic relationships between

164
00:08:53,440 --> 00:08:57,440
Speaker 1: buyer and seller, but evidenced in other ways, more informal ways.

165
00:08:57,720 --> 00:09:00,800
Speaker 1: And so it makes sense that when people start selling tokens,

166
00:09:01,080 --> 00:09:03,839
Speaker 1: you have like a nominal interest in a property and

167
00:09:04,000 --> 00:09:06,600
Speaker 1: sometimes where you don't just get the token, like it's

168
00:09:06,600 --> 00:09:08,560
Speaker 1: not just bitcoin you don't just get a bitcoin. You

169
00:09:08,600 --> 00:09:11,720
Speaker 1: also get a token and promises from somebody who says

170
00:09:11,720 --> 00:09:14,600
Speaker 1: they're going to develop this thing into something as successful

171
00:09:14,600 --> 00:09:18,600
Speaker 1: as bitcoin or as as awesome as ethereum or whatever.

172
00:09:19,120 --> 00:09:22,520
Speaker 1: Between owning the token and relying on the person who

173
00:09:22,559 --> 00:09:25,200
Speaker 1: who sold you the token to make the network that

174
00:09:25,280 --> 00:09:28,439
Speaker 1: powers the token better, it starts to look like owning

175
00:09:28,480 --> 00:09:30,880
Speaker 1: the land and the orange grove and relying on Howie

176
00:09:30,920 --> 00:09:34,000
Speaker 1: to make the orange grove profitable. How much does a

177
00:09:34,040 --> 00:09:38,920
Speaker 1: transferability of your interest in either an orange grove or

178
00:09:38,960 --> 00:09:42,360
Speaker 1: a token play into whether or not those are classified

179
00:09:42,400 --> 00:09:47,320
Speaker 1: as securities. It's a great question. It's not formally in

180
00:09:47,360 --> 00:09:50,280
Speaker 1: the test. So the test is, was there an investment

181
00:09:50,320 --> 00:09:53,760
Speaker 1: of money in a common enterprise with an expectation of

182
00:09:53,760 --> 00:09:56,679
Speaker 1: profits derived from the efforts of a third party promoter.

183
00:09:57,400 --> 00:10:00,480
Speaker 1: Notice nowhere in that test is it say transferability, even

184
00:10:00,480 --> 00:10:04,440
Speaker 1: though what we come to expect is when something's highly

185
00:10:04,520 --> 00:10:08,880
Speaker 1: liquid and highly transferable asset, you can sell it, and

186
00:10:08,960 --> 00:10:11,720
Speaker 1: you can sell it with greater ease, and if demand

187
00:10:11,920 --> 00:10:15,280
Speaker 1: rises for this thing, you might make profit from it.

188
00:10:15,360 --> 00:10:17,959
Speaker 1: And the fact that it's liquid and easily sold or

189
00:10:18,000 --> 00:10:22,720
Speaker 1: easily transferable might be in disha of people's feelings about

190
00:10:22,720 --> 00:10:25,760
Speaker 1: how profitable they are. And to put some like less

191
00:10:26,160 --> 00:10:30,880
Speaker 1: vague meat on those bones, just look at cryptocurrencies and

192
00:10:31,120 --> 00:10:33,960
Speaker 1: tokens and I c o s, which are all you know,

193
00:10:34,440 --> 00:10:38,920
Speaker 1: these transfer like extremely liquid transferable assets that anybody can

194
00:10:38,960 --> 00:10:42,000
Speaker 1: sell and you can sell them on very easy to

195
00:10:42,120 --> 00:10:45,160
Speaker 1: use exchanges that look a lot like you know, online

196
00:10:45,240 --> 00:10:48,280
Speaker 1: stock trading. And because they're so easy to transfer, I

197
00:10:48,280 --> 00:10:50,200
Speaker 1: think a lot of people think, oh, I could buy

198
00:10:50,240 --> 00:10:52,120
Speaker 1: some of this and then just wait for the price

199
00:10:52,160 --> 00:10:55,080
Speaker 1: to go up a little and sell high, you know.

200
00:10:55,559 --> 00:10:59,200
Speaker 1: And so so maybe that transferability enters into this legal

201
00:10:59,240 --> 00:11:02,439
Speaker 1: test because it it bolsters one's expectation of profits. Whereas

202
00:11:02,480 --> 00:11:05,440
Speaker 1: if you buy something immobile that you'll have difficulties selling,

203
00:11:05,920 --> 00:11:07,920
Speaker 1: maybe you really bought it because you just wanted to

204
00:11:07,960 --> 00:11:10,840
Speaker 1: have it, not because you're expecting of making a quick profit.

205
00:11:12,080 --> 00:11:15,520
Speaker 1: I'm kind of curious. You mentioned in the beginning that

206
00:11:15,640 --> 00:11:18,600
Speaker 1: you think there are projects that have a good faith

207
00:11:18,720 --> 00:11:22,359
Speaker 1: argument to not being securities. But the way you described

208
00:11:23,040 --> 00:11:25,800
Speaker 1: how we test is like basically, any I c O

209
00:11:25,920 --> 00:11:30,040
Speaker 1: I can think of seems to fall into this category,

210
00:11:30,400 --> 00:11:33,880
Speaker 1: especially the aspect of the third party which promises to

211
00:11:33,920 --> 00:11:37,480
Speaker 1: sort of develop the network. The projects that you think

212
00:11:37,520 --> 00:11:42,000
Speaker 1: maybe don't or aren't categorized as securities. How are they different? Yeah,

213
00:11:42,280 --> 00:11:45,320
Speaker 1: So you know, you wouldn't be alone if you thought

214
00:11:45,320 --> 00:11:48,080
Speaker 1: that most I c o s are securities. And you know,

215
00:11:48,320 --> 00:11:51,280
Speaker 1: Jay Clayton, Chairman of the SEC, said as much in

216
00:11:51,320 --> 00:11:54,880
Speaker 1: his Senate Banking testimony about a month ago that every

217
00:11:54,880 --> 00:11:57,160
Speaker 1: I c O I've seen as a security. But then

218
00:11:57,200 --> 00:11:59,520
Speaker 1: you gotta ask, are we talking about the I c

219
00:11:59,640 --> 00:12:03,000
Speaker 1: as we've seen this last year? Because two thousand seventeen

220
00:12:03,160 --> 00:12:06,760
Speaker 1: was really like the top of the growth curve for

221
00:12:06,840 --> 00:12:08,160
Speaker 1: I c o s I think, and I think we're

222
00:12:08,160 --> 00:12:11,320
Speaker 1: seeing a retrenchment now. And it's when it really entered

223
00:12:11,320 --> 00:12:15,040
Speaker 1: the public consciousness. We had token sales going all the

224
00:12:15,040 --> 00:12:17,200
Speaker 1: way back to two thousand fourteen. I think the first

225
00:12:17,320 --> 00:12:20,960
Speaker 1: was master coin. Ethereum had a token sale to sell

226
00:12:21,000 --> 00:12:25,480
Speaker 1: ether back in two thousand. In those early days, there

227
00:12:25,559 --> 00:12:28,079
Speaker 1: wasn't all the hype. You didn't have Floyd Mayweather sitting

228
00:12:28,080 --> 00:12:30,160
Speaker 1: on his private plane with a table full of money

229
00:12:30,240 --> 00:12:32,560
Speaker 1: saying and buy this, I c oh, it's gonna make

230
00:12:32,559 --> 00:12:35,079
Speaker 1: me rich and it'll make you rich to You didn't

231
00:12:35,200 --> 00:12:39,679
Speaker 1: have liquid secondary markets where you could instantly go. You know,

232
00:12:39,880 --> 00:12:42,079
Speaker 1: you you have your marker of a token that in

233
00:12:42,120 --> 00:12:44,480
Speaker 1: the future will be valuable like Bitcoin or Ether might

234
00:12:44,520 --> 00:12:47,040
Speaker 1: be valuable. You know, Querry, whether that's true or not,

235
00:12:47,120 --> 00:12:49,760
Speaker 1: but you have this marker. You wouldn't be able to

236
00:12:49,760 --> 00:12:52,200
Speaker 1: transfer it or sell it easily if you bought Ether

237
00:12:52,280 --> 00:12:54,000
Speaker 1: in the pre stale you were kind of just waiting

238
00:12:54,040 --> 00:12:57,240
Speaker 1: for Ether to exist as a network for smart contracts.

239
00:12:57,559 --> 00:13:00,160
Speaker 1: You weren't able to go onto an exchange and and

240
00:13:00,280 --> 00:13:03,240
Speaker 1: fence it and sell it to somebody else. Today, when

241
00:13:03,280 --> 00:13:07,280
Speaker 1: people do I c O s, there's almost always relatively

242
00:13:07,440 --> 00:13:10,760
Speaker 1: soon after the initial coin offering a market where you

243
00:13:10,760 --> 00:13:12,760
Speaker 1: can go trade it and you can do day trading.

244
00:13:13,080 --> 00:13:15,400
Speaker 1: And this also means that people can do nasty things

245
00:13:15,440 --> 00:13:17,760
Speaker 1: like pump and dump scams and all that sort of thing,

246
00:13:18,040 --> 00:13:20,640
Speaker 1: all before there's even a product or any kind of

247
00:13:20,640 --> 00:13:24,080
Speaker 1: real functionality behind the token. So on the on the

248
00:13:24,120 --> 00:13:26,120
Speaker 1: side of like what I'd say, are the good guys

249
00:13:26,160 --> 00:13:28,560
Speaker 1: here are first of all, and it's really important to

250
00:13:28,600 --> 00:13:30,920
Speaker 1: point out anybody who didn't do an I c O

251
00:13:31,080 --> 00:13:33,280
Speaker 1: but has a token, because there are plenty of projects

252
00:13:33,360 --> 00:13:36,840
Speaker 1: that released cryptocurrencies or tokens and they're developed by open

253
00:13:36,880 --> 00:13:40,080
Speaker 1: source developers, so there's no single company behind them, but

254
00:13:40,160 --> 00:13:41,839
Speaker 1: they you know, a bunch of people work together to

255
00:13:41,880 --> 00:13:44,720
Speaker 1: build a network that describes the scarce token, and they

256
00:13:44,760 --> 00:13:46,800
Speaker 1: never sold them to anyone. They came into the world

257
00:13:46,880 --> 00:13:49,440
Speaker 1: through mining, just like bitcoins come into the world through

258
00:13:49,480 --> 00:13:53,000
Speaker 1: mining as a reward for people who were providing useful

259
00:13:53,040 --> 00:13:56,559
Speaker 1: services to the network, who actually made this decentralized network function.

260
00:13:57,000 --> 00:13:59,120
Speaker 1: So I think that doesn't look like a security at

261
00:13:59,160 --> 00:14:01,720
Speaker 1: all to me. You'd have trouble making the investment of

262
00:14:01,760 --> 00:14:04,760
Speaker 1: money pronged because people didn't actually buy the tokens. They

263
00:14:04,800 --> 00:14:07,640
Speaker 1: got them as a reward for contributing to a network resource.

264
00:14:08,240 --> 00:14:10,800
Speaker 1: And you'd have trouble making the expectation of profits prong

265
00:14:11,000 --> 00:14:14,240
Speaker 1: because this is really a network that actually accomplishes some work,

266
00:14:14,320 --> 00:14:16,440
Speaker 1: like you can actually use bitcoin to send money to

267
00:14:16,920 --> 00:14:19,600
Speaker 1: you know, a foreign country at at a low fee

268
00:14:19,640 --> 00:14:22,200
Speaker 1: compared to alternatives using the dollar of things like that.

269
00:14:22,640 --> 00:14:25,880
Speaker 1: And so those two factors, the usefulness and the fact

270
00:14:25,920 --> 00:14:28,640
Speaker 1: that it's you know, not something that people invested in

271
00:14:28,640 --> 00:14:31,120
Speaker 1: in in a centralized way, and also the fact that

272
00:14:31,160 --> 00:14:33,760
Speaker 1: it's backed up by a big network of participants, like

273
00:14:33,760 --> 00:14:35,720
Speaker 1: a whole bunch of people around the world. Mind Bitcoin,

274
00:14:35,960 --> 00:14:38,280
Speaker 1: they don't all work for the same company. They're like

275
00:14:38,400 --> 00:14:42,160
Speaker 1: individuals who are unaffiliated and just enjoy the technology and

276
00:14:42,200 --> 00:14:46,120
Speaker 1: just enjoy providing this network service. The Bitcoin network. It's

277
00:14:46,240 --> 00:14:49,560
Speaker 1: very different than W. J. Howe who had an orange

278
00:14:49,560 --> 00:14:51,440
Speaker 1: grove and was asking people to give him money for

279
00:14:51,440 --> 00:14:54,640
Speaker 1: his orange grow It's more like the gold industry writ large.

280
00:14:55,080 --> 00:14:57,760
Speaker 1: So so that's that that's what I think really doesn't

281
00:14:57,760 --> 00:15:00,400
Speaker 1: look like a security And then there's some middle ground

282
00:15:00,560 --> 00:15:04,920
Speaker 1: where things now function a lot like Bitcoin on the network,

283
00:15:05,160 --> 00:15:08,080
Speaker 1: but in the early days they had a sale and

284
00:15:08,240 --> 00:15:11,440
Speaker 1: just to be totally frank and open. That's Ethereum. I

285
00:15:11,480 --> 00:15:15,600
Speaker 1: think Ethereum is as decentralized as Bitcoin. You know, generally speaking,

286
00:15:15,640 --> 00:15:17,960
Speaker 1: there's there's places we can argue about whether it's a

287
00:15:18,000 --> 00:15:20,560
Speaker 1: functioning decentralized network in the same way as Bitcoin, or

288
00:15:20,560 --> 00:15:24,560
Speaker 1: whether there's some liabilities or benefits that they have over Bitcoin.

289
00:15:24,920 --> 00:15:27,720
Speaker 1: But the long and short of it is it's decentralized.

290
00:15:27,760 --> 00:15:29,760
Speaker 1: It's a bunch of people around the world running the

291
00:15:29,800 --> 00:15:33,480
Speaker 1: Ethereum open source software, and that's what makes Ether scarce,

292
00:15:33,560 --> 00:15:35,760
Speaker 1: and that what makes it valuable as a as a

293
00:15:35,760 --> 00:15:38,680
Speaker 1: tool for running smart contracts. But go back to the

294
00:15:38,680 --> 00:15:41,520
Speaker 1: early days of ethereum, and they did have a sale,

295
00:15:41,640 --> 00:15:43,720
Speaker 1: and you did in the very early days of ethereum

296
00:15:43,840 --> 00:15:47,280
Speaker 1: rely on the efforts of those sellers to deliver the

297
00:15:47,360 --> 00:15:50,200
Speaker 1: tokens to you once the network was live, so there

298
00:15:50,280 --> 00:15:53,920
Speaker 1: was that moment of trust. But again I think it

299
00:15:53,960 --> 00:15:57,240
Speaker 1: was really early with ethereum. Most people were buying them

300
00:15:57,240 --> 00:15:59,840
Speaker 1: to use because they were excited about the idea of

301
00:16:00,000 --> 00:16:02,520
Speaker 1: a global virtual machine, which is one way of thinking

302
00:16:02,560 --> 00:16:05,120
Speaker 1: of Ethereum. And then once they got them, they actually

303
00:16:05,200 --> 00:16:07,840
Speaker 1: used them to write smart contracts, and we're seeing tons

304
00:16:07,840 --> 00:16:11,240
Speaker 1: of smart contracts and ethereum. You can't usually use a

305
00:16:11,320 --> 00:16:13,880
Speaker 1: stock certificate to do anything. It's just there as a

306
00:16:13,960 --> 00:16:16,360
Speaker 1: marker of your investment. So this looks like something I

307
00:16:16,360 --> 00:16:19,360
Speaker 1: think radically different. And then at the far far end

308
00:16:19,360 --> 00:16:21,960
Speaker 1: of the spectrum, I think, very far away from Ethereum

309
00:16:21,960 --> 00:16:26,040
Speaker 1: and from Bitcoin are things where there is no product,

310
00:16:26,160 --> 00:16:29,240
Speaker 1: there is no service or functionality that the token gives you.

311
00:16:29,560 --> 00:16:34,320
Speaker 1: There is rapid and I think somewhat disgusting promotion of

312
00:16:34,360 --> 00:16:38,680
Speaker 1: the thing as an investment, sometimes from celebrities, sometimes from

313
00:16:38,720 --> 00:16:41,440
Speaker 1: you know, market watchers, sometimes from people who are pumping

314
00:16:41,440 --> 00:16:44,880
Speaker 1: and dumping, and you really are relying on just this

315
00:16:44,960 --> 00:16:48,200
Speaker 1: promoter to make good on their promises of building something

316
00:16:48,240 --> 00:16:50,240
Speaker 1: that's going to be valuable in the future, and maybe

317
00:16:50,280 --> 00:16:52,120
Speaker 1: you don't even know what it's supposed to do. You've

318
00:16:52,120 --> 00:16:54,000
Speaker 1: just been told that it's going to be valuable. Those

319
00:16:54,040 --> 00:16:56,680
Speaker 1: things on the far end, I think totally your securities,

320
00:16:56,880 --> 00:16:59,640
Speaker 1: and I worry about the reputational risk of those things

321
00:16:59,680 --> 00:17:03,280
Speaker 1: looking like obvious securities that haven't complied with US laws

322
00:17:03,880 --> 00:17:08,480
Speaker 1: harming the real innovations because it could trigger overbearing regulation

323
00:17:08,640 --> 00:17:12,040
Speaker 1: with respect to things like ethereum and bitcoin. Well, so Peter,

324
00:17:12,160 --> 00:17:14,800
Speaker 1: A lot of people think that there hasn't been enough

325
00:17:15,000 --> 00:17:18,000
Speaker 1: regulation so far, and they're sort of scratching their heads

326
00:17:18,040 --> 00:17:21,159
Speaker 1: as to why the sec has, you know, in some cases,

327
00:17:21,200 --> 00:17:23,439
Speaker 1: been dragging its feet on this issue. So are you

328
00:17:23,560 --> 00:17:27,959
Speaker 1: saying that it's definitely not a blanket case that all

329
00:17:27,960 --> 00:17:30,720
Speaker 1: I c o s are securities, that it's more nuanced

330
00:17:30,760 --> 00:17:33,560
Speaker 1: than that. Yeah. I do think it's more nuanced than that,

331
00:17:33,960 --> 00:17:36,399
Speaker 1: And I think some people are confused about the difference

332
00:17:36,440 --> 00:17:39,960
Speaker 1: between I c o s and cryptocurrencies. So just to

333
00:17:40,040 --> 00:17:42,879
Speaker 1: be clear, I don't think any of the running cryptocurrencies

334
00:17:42,880 --> 00:17:46,320
Speaker 1: like bitcoin and ethereum should fall under SEC jurisdiction. I

335
00:17:46,320 --> 00:17:49,360
Speaker 1: think they actually fall under CFTC jurisdiction, which we can

336
00:17:49,400 --> 00:17:52,240
Speaker 1: talk about at another time, within the realm of I

337
00:17:52,400 --> 00:17:55,359
Speaker 1: c O s where people have actually sold an initial

338
00:17:55,440 --> 00:17:57,800
Speaker 1: distribution of tokens to the public. I think a lot

339
00:17:57,840 --> 00:18:01,160
Speaker 1: of them qualify as securities, and I disagree. I think

340
00:18:01,160 --> 00:18:03,480
Speaker 1: the SEC has actually done a lot of work going

341
00:18:03,560 --> 00:18:06,960
Speaker 1: after these things. They came out with a report last

342
00:18:06,960 --> 00:18:10,400
Speaker 1: summer where they were sort of like, hey, everyone, pay attention,

343
00:18:10,520 --> 00:18:12,800
Speaker 1: We're about to do some stuff here because a lot

344
00:18:12,800 --> 00:18:16,680
Speaker 1: of these token sales are securities issuance. And after that

345
00:18:16,880 --> 00:18:19,960
Speaker 1: so they didn't they didn't police anything retroactively. They didn't

346
00:18:20,200 --> 00:18:23,200
Speaker 1: go after anyone who's sold tokens before that report, which

347
00:18:23,240 --> 00:18:25,520
Speaker 1: I think is it's not something that the SEC has

348
00:18:25,560 --> 00:18:27,280
Speaker 1: to do. If they wanted to, they could go after

349
00:18:27,280 --> 00:18:29,560
Speaker 1: people retroactively, but I think it's it's a prudent thing

350
00:18:29,600 --> 00:18:32,440
Speaker 1: to do. Look like, announced your position as an agency,

351
00:18:32,640 --> 00:18:34,920
Speaker 1: some of these things are securities, and then if people

352
00:18:34,960 --> 00:18:38,439
Speaker 1: continue to not follow securities laws when they are making

353
00:18:38,480 --> 00:18:41,280
Speaker 1: something that looks like what you just wrote a report about,

354
00:18:41,560 --> 00:18:44,000
Speaker 1: then go after them. And that's what we've seen. We

355
00:18:44,040 --> 00:18:48,360
Speaker 1: saw several I think thoughtful and well placed enforcement actions

356
00:18:48,440 --> 00:18:51,880
Speaker 1: against first obvious scams, and then some people who were

357
00:18:51,880 --> 00:18:54,320
Speaker 1: maybe a little too naive and didn't realize that what

358
00:18:54,359 --> 00:18:57,879
Speaker 1: they were doing was issuing the security. Peter, Let's say

359
00:18:58,080 --> 00:19:00,879
Speaker 1: Tracy and I decided to do an I c O

360
00:19:01,240 --> 00:19:04,760
Speaker 1: for the Odd Lots podcast, and maybe it was something

361
00:19:04,840 --> 00:19:08,600
Speaker 1: like coin holders got some share of the profits, and

362
00:19:08,640 --> 00:19:11,879
Speaker 1: maybe you had to pay, or you had to subscribe

363
00:19:11,880 --> 00:19:14,560
Speaker 1: to the podcast, you had to use the coins. Is

364
00:19:14,560 --> 00:19:18,760
Speaker 1: odd Lots profitable? We'll address that later. But let's say

365
00:19:18,800 --> 00:19:22,919
Speaker 1: we're like spoken like a true lawyer. Let's say like,

366
00:19:23,000 --> 00:19:26,200
Speaker 1: obviously this is a security. We're not even gonna pretend

367
00:19:27,040 --> 00:19:31,000
Speaker 1: otherwise this is a security. Are the rules in place

368
00:19:31,160 --> 00:19:34,560
Speaker 1: clear enough such that even if we totally wanted to

369
00:19:35,280 --> 00:19:38,359
Speaker 1: abide by securities law, we knew which side of the

370
00:19:38,400 --> 00:19:41,040
Speaker 1: Howie test we were on, that there's a clear path

371
00:19:41,160 --> 00:19:44,240
Speaker 1: for us to do it. Or is it still vague

372
00:19:44,280 --> 00:19:46,760
Speaker 1: such that even if you want to be on the

373
00:19:46,880 --> 00:19:50,280
Speaker 1: right side of the law, there's still some ambiguity. No, yeah,

374
00:19:50,359 --> 00:19:53,840
Speaker 1: at that point, it's seperate clear. If if you're transparently

375
00:19:53,880 --> 00:19:57,360
Speaker 1: saying you know, we're selling odd lots profits come get

376
00:19:57,400 --> 00:20:00,320
Speaker 1: them they're hot, then you're obviously selling the secure already,

377
00:20:00,480 --> 00:20:02,919
Speaker 1: and if you admit to that, then you just comply

378
00:20:03,000 --> 00:20:07,080
Speaker 1: with securities laws. It doesn't matter that the evidence of

379
00:20:07,119 --> 00:20:11,240
Speaker 1: the fractional ownership interest i e. The security or the

380
00:20:11,280 --> 00:20:14,800
Speaker 1: share is something that exists on a blockchain as a token,

381
00:20:15,560 --> 00:20:18,520
Speaker 1: or is something that is a bearer certificate like in

382
00:20:18,600 --> 00:20:20,920
Speaker 1: the what is it the Second die Hard movie where

383
00:20:20,960 --> 00:20:25,080
Speaker 1: they're like stealing bearer bonds, or is a registered instrument

384
00:20:25,200 --> 00:20:28,200
Speaker 1: that trades on NASDAC and there's a copy of the

385
00:20:28,240 --> 00:20:31,000
Speaker 1: certificate kept in the basement of the dt c C.

386
00:20:31,840 --> 00:20:35,560
Speaker 1: These are just different technologies for recording that fractional ownership interest.

387
00:20:36,040 --> 00:20:38,639
Speaker 1: It doesn't matter what technology you use. That doesn't I

388
00:20:38,640 --> 00:20:41,480
Speaker 1: mean it's gonna matter for maybe efficiency purposes or other things.

389
00:20:41,520 --> 00:20:44,560
Speaker 1: It's not going to impact your legal calculus. Your legal

390
00:20:44,600 --> 00:20:47,199
Speaker 1: calculus is the same in all cases you're selling securities.

391
00:20:47,440 --> 00:20:51,440
Speaker 1: You need to file with the SEC to have a registration,

392
00:20:51,520 --> 00:20:55,159
Speaker 1: a public filing, or you can take advantage of some

393
00:20:55,240 --> 00:20:59,960
Speaker 1: of the other alternatives to public filings public registration, which

394
00:21:00,000 --> 00:21:02,640
Speaker 1: are things like reg D Rule five oh six, where

395
00:21:02,640 --> 00:21:04,560
Speaker 1: you say I'm only gonna I'm only going to sell

396
00:21:04,640 --> 00:21:08,040
Speaker 1: this to accredited investors in a kind of private placement,

397
00:21:08,119 --> 00:21:10,560
Speaker 1: so I don't need to do a full registration or

398
00:21:10,600 --> 00:21:13,280
Speaker 1: maybe reg a plus where you can sell to the

399
00:21:13,320 --> 00:21:16,760
Speaker 1: general public and not do a full registration and full disclosures,

400
00:21:16,760 --> 00:21:18,920
Speaker 1: but you can only raise up to fifty million dollars

401
00:21:19,280 --> 00:21:22,640
Speaker 1: selling your fractional interests in odd lots profits. Those are

402
00:21:22,680 --> 00:21:25,160
Speaker 1: all really standard ways of complying, and we have seen

403
00:21:25,359 --> 00:21:29,680
Speaker 1: some token sellers go down this route. Some people have said, look,

404
00:21:30,240 --> 00:21:32,760
Speaker 1: the thing I'm trying to build long term is decentralized

405
00:21:32,800 --> 00:21:34,639
Speaker 1: like bitcoin and ethereum. I don't think it will be

406
00:21:34,680 --> 00:21:37,560
Speaker 1: a security, but as I'm trying to build it, I

407
00:21:37,600 --> 00:21:39,919
Speaker 1: want to raise money and the people who invest in

408
00:21:39,960 --> 00:21:41,880
Speaker 1: it are going to rely on me to build it well.

409
00:21:42,280 --> 00:21:45,719
Speaker 1: So in that period where I'm selling this future token,

410
00:21:46,600 --> 00:21:49,719
Speaker 1: I'm gonna sell it as a security nakedly, and let

411
00:21:49,760 --> 00:21:52,040
Speaker 1: me say, look, you're relying on me to deliver something

412
00:21:52,080 --> 00:21:55,320
Speaker 1: that's going to be profitable to you, this future network,

413
00:21:55,359 --> 00:21:59,679
Speaker 1: with this decentralized token, and in the meantime until the

414
00:21:59,720 --> 00:22:02,560
Speaker 1: network is decentralized, I'm going to comply with all securities

415
00:22:02,600 --> 00:22:04,080
Speaker 1: laws because I have to because I don't want to

416
00:22:04,080 --> 00:22:07,760
Speaker 1: break the law. And we've seen people sell tokens like

417
00:22:07,840 --> 00:22:11,240
Speaker 1: file coin, sold tokens for decentralized file storage network that

418
00:22:11,240 --> 00:22:13,600
Speaker 1: will exist in the future through regg D Rule five

419
00:22:13,680 --> 00:22:16,760
Speaker 1: or six filing where they only sold to accredited investors. Now,

420
00:22:16,760 --> 00:22:19,400
Speaker 1: some people don't like that because it means that only

421
00:22:19,520 --> 00:22:21,800
Speaker 1: rich people get to buy a future interest in what

422
00:22:21,880 --> 00:22:26,120
Speaker 1: could be transformational technology. And I'm sympathetic to that viewpoint

423
00:22:26,200 --> 00:22:29,000
Speaker 1: that that's maybe not healthy and it's kind of in egalitarian,

424
00:22:29,600 --> 00:22:32,520
Speaker 1: But that's just a problem that you're having, you know,

425
00:22:32,560 --> 00:22:34,880
Speaker 1: anybody who has a problem with this, With the way

426
00:22:34,880 --> 00:22:39,320
Speaker 1: we do investor protection almost all speculative but also you know,

427
00:22:39,400 --> 00:22:43,160
Speaker 1: high risk, high return investments are restricted to accredited investors

428
00:22:43,160 --> 00:22:45,639
Speaker 1: these days, whether their tokens or not, and you know

429
00:22:45,720 --> 00:22:48,679
Speaker 1: that does have problems, but it's also a way of

430
00:22:48,680 --> 00:22:52,320
Speaker 1: protecting mom and pop. Peter van Velkenberg, thank you for

431
00:22:52,440 --> 00:22:55,359
Speaker 1: your insight on this and well we look forward to

432
00:22:55,440 --> 00:23:01,240
Speaker 1: having you on our advisor page. Bed I CEO, really

433
00:23:01,240 --> 00:23:05,160
Speaker 1: appreciate your intent only with my consent. Peter van Valkenberg,

434
00:23:05,240 --> 00:23:07,679
Speaker 1: head of Research at their Points, thanks for having me

435
00:23:07,720 --> 00:23:23,760
Speaker 1: guess so Joe I don't know whether to be horrified

436
00:23:24,040 --> 00:23:28,240
Speaker 1: or impressed that basically a seventy year old legal precedent

437
00:23:28,640 --> 00:23:33,200
Speaker 1: is now applicable to all sorts of new types of things,

438
00:23:33,280 --> 00:23:37,240
Speaker 1: including initial coin offerings, you know, these things that basically

439
00:23:37,240 --> 00:23:41,320
Speaker 1: rely on this brand new technology that no one who

440
00:23:41,359 --> 00:23:45,640
Speaker 1: is thinking about Orange Groves in Florida was considering back then.

441
00:23:46,119 --> 00:23:49,320
Speaker 1: I think I'm impressed. I like the idea that there's

442
00:23:49,359 --> 00:23:53,160
Speaker 1: just sort of these general principles that we can apply. Mean, sure,

443
00:23:53,200 --> 00:23:55,639
Speaker 1: at some point they are going to be completely different

444
00:23:55,640 --> 00:23:59,159
Speaker 1: types of organizations maybe, and we'll have to come up

445
00:23:59,200 --> 00:24:02,159
Speaker 1: with something more specific. And I'm sure obviously regulators are

446
00:24:02,160 --> 00:24:05,040
Speaker 1: going to keep refining things. But I like the Howie test.

447
00:24:05,080 --> 00:24:07,600
Speaker 1: It's sort of simple, the idea of a third party

448
00:24:07,920 --> 00:24:11,600
Speaker 1: endeavoring on behalf of the partners for profit. I think

449
00:24:11,680 --> 00:24:15,280
Speaker 1: it's a pretty good rule that probably not much reason

450
00:24:15,359 --> 00:24:18,200
Speaker 1: to upgrade it. Well, I guess we'll get to find out,

451
00:24:18,359 --> 00:24:21,040
Speaker 1: um just how applicable it is too. I c O

452
00:24:21,160 --> 00:24:24,520
Speaker 1: s right, because the SEC has talked about sent well,

453
00:24:24,680 --> 00:24:27,640
Speaker 1: it has actually sent a bunch of letters to various

454
00:24:27,720 --> 00:24:30,800
Speaker 1: I c O operators asking for more information, so they're

455
00:24:30,800 --> 00:24:33,399
Speaker 1: clearly taking an interest in all of this. So I

456
00:24:33,400 --> 00:24:36,680
Speaker 1: imagine we'll be hearing a lot more about how relevant

457
00:24:36,720 --> 00:24:40,440
Speaker 1: the Howie test is to the current period very soon. Yeah,

458
00:24:40,480 --> 00:24:44,359
Speaker 1: I think there's gonna be a lot in Also, you

459
00:24:44,480 --> 00:24:49,679
Speaker 1: have to figure that market conditions end up having a

460
00:24:49,720 --> 00:24:52,399
Speaker 1: sort of forcing effect on these things. So right now,

461
00:24:52,640 --> 00:24:55,359
Speaker 1: Q one was a pretty brutal year for all things crypto,

462
00:24:55,400 --> 00:24:57,760
Speaker 1: and if that continues, you're gonna have a lot more

463
00:24:57,800 --> 00:25:01,120
Speaker 1: people who have lost more money, and I imagine you'll

464
00:25:01,160 --> 00:25:04,639
Speaker 1: live lawsuits and people saying, oh, I bought into this.

465
00:25:04,800 --> 00:25:07,720
Speaker 1: I didn't realize I was security and I shouldn't all

466
00:25:07,840 --> 00:25:09,960
Speaker 1: kinds of things. So I think it's going to be

467
00:25:10,000 --> 00:25:12,800
Speaker 1: a pretty interesting year on the legal front. And I

468
00:25:12,840 --> 00:25:15,200
Speaker 1: just want to make one more point that I love

469
00:25:15,240 --> 00:25:18,800
Speaker 1: how it always comes back to Florida. Yeah, we have

470
00:25:18,920 --> 00:25:23,320
Speaker 1: a long and rich history of covering a Florida financial

471
00:25:23,359 --> 00:25:26,639
Speaker 1: market developments. It's just so perfect that these sort of

472
00:25:26,880 --> 00:25:30,520
Speaker 1: questions about what is a legitimate investment offering comes back

473
00:25:30,560 --> 00:25:34,160
Speaker 1: to this weird Florida orange grove where other people came

474
00:25:34,160 --> 00:25:36,199
Speaker 1: down and they're like, oh, yeah, buy some oragines and

475
00:25:36,240 --> 00:25:38,800
Speaker 1: we'll we'll we'll sell the oranges for you and give

476
00:25:38,840 --> 00:25:43,200
Speaker 1: you money. It's just it's perfect. It's very Florida. Yeah, absolutely,

477
00:25:43,720 --> 00:25:46,440
Speaker 1: all right, Well this has been another episode of the

478
00:25:46,480 --> 00:25:49,320
Speaker 1: Odd Thoughts Podcast. I'm Tracy Alloway. You can find me

479
00:25:49,359 --> 00:25:52,440
Speaker 1: on Twitter at Tracy Alloway and I'm Joe wi Isn't all.

480
00:25:52,480 --> 00:25:55,640
Speaker 1: You could follow me on Twitter at the Stalwart and

481
00:25:55,760 --> 00:25:59,480
Speaker 1: you should follow our producer tofur Foreheads add four HEAs

482
00:25:59,520 --> 00:26:02,560
Speaker 1: t as well as the Bloomberg head of podcast, Francesco

483
00:26:02,640 --> 00:26:05,760
Speaker 1: Levie at Francis Good Today. Thanks for listening.