runbathtime

If you just write the code that does money transmission and share it on github, not host it, not put it in production, then no you aren't doing money transmission, you just wrote some code and shared it. If someone takes that code and puts it in production, then they are doing money transmission.

I think people are trying to use the idea that ethereum works differently than AWS, but that doesn't matter. The point is the owners or writers of that code wrote it and put it out to the world with intent or purpose to do money transmission. They published that code, paid the gas fees to do so on ethereum. Now anyone can interact with it.

If you want to prove that ethereum is different please state step by step why it is the case.

Nice approach to explaining an IPO with the narrative, but I think it would be even more helpful to start in the beginning of a share's life when the company is first incorporated, when shares are created from nothing and assigned based on ownership. Talk about Form D filings with the SEC when shares are sold to private investors. Why stocks/equities are even labeled as securities. What are securities and why are they regulated. How private shares are valued/traded. Really the difference between a private company and a public one with respect to shares/valuation/regulation.

So the banks are lending their cash to the Fed or (repo market), and holding the treasuries (making interest) to let other banks or the Fed borrow the cash for some reason overnight.

The only thing I get from it is that banks are flush with cash and overnight rates should go lower because there is an abundance of cash being lent.

Seems like a game. Must be nice to be a banker.

That is what courts are for- to interpret the spirit of a contract. There is a point where hiding deliberate pump and dumps/ fraud/ ponzi schemes through complicated tokenomics or incompetence (we couldn't predict all the edge cases) no longer is an excuse. At this point, there is really no difference between the approach to launching these half baked algo/backed stablecoins and deliberate fraud. It could be easy for a court to make the decision that the contract was designed to be complicated on purpose to hide deliberate fraud, or at least could determine the devs were recklessly incompetent and still responsible.

Ignorance or not understanding the money transmitter rules is not a defense.

Focus directly on the entity doing the money transmission in this case- the smart contract IRON. They take in USDC and give out IRON and TITAN. IRON and TITAN are money substitutes. Money transmission includes anyone by any means conducting exchange of one type of money for another. Functionally that is what this contract is doing. The code didn't write itself, there are people behind it that released it, and they wrote it to conduct money transmission (a specific purpose). You don't even need to bring ethereum into the conversation to prove they are in violation.

I'm not sure I understand your comment about 'war on X' but I think it is a problem when there is an arbitrary application of these laws and unfair dealing that we see by regulators within the crypto industry. Maybe this is natural (self interest), and maybe it isn’t entirely their fault (limited resources).

I saw a twitter thread from a lawyer saying the SEC doesn't determine if something is a security, the courts and congress do. Then why are we obsessed with the SEC’s opinion? I speculate that we just need court cases and we do not need the regulatory authority to bring the court case. Maybe that is the problem to solve.

USDC's system didn't fail. The money transmitter (smart contract- IRON/TRON) failed, if the USDC is indeed 'locked' or not able to be transmitted. USDC can't be compelled by anyone to 'fix' this.

If USDC can revoke any p2p transaction of USDC, that means that they can revoke the transmission of movement of dollars/reserves that USDC token represents. Implicit in that, means they have ultimate control or authority of all p2p transactions or transmissions, and they are not doing kyc/aml on all p2p transactions, thus in violation of money transmitter laws.

If a code error that was made that was supposedly 'dumb' wasn't caught that tells me the people behind this acted recklessly. This code error being described wasn't just dumb, it was catastrophic- locking up all the collateral. Is this collateral locked up forever, what would make Titan trade above 0? The code wasn't even audited, suggesting no care by the devs before release. Doing money transmission without a license is criminal offense- jail and fines in this case are on the table- all it takes is actual enforcement from regulators.

USDC represents a claim on USD, but why would Circle want to help out this contract and lose 262 million?

If a stablecoin issuer like USDC can make arbitrary decisions to null any USDC token and they use that power, that is a good argument for the point that they are not following aml/kyc on every hop or transaction of USDC, even though they are allowing the transfer of dollars behind it. USDC can be charged with violating money transmission / bsa / aml/ kyc requirements.

Does this contract have a money transmission license? Selling an IRON or a TRON for USDC is money transmission. BSA requires money transmitters to be licensed in states where they operate, as well as register with FICEN, etc. How can we enforce them to comply at the state level? Can an individual sue the states to enforce compliance on the people behind this smart contract? Those that have lost money might have an incentive to start wanting money transmission rules actually enforced.

Looking up the definitions of security, financial asset, debt instrument, bank deposits, and thinking about really what tether is and the statements they make about 'backing' I come to the conclusion that tether is an unregistered security. The fact that Tether may state they have no obligation to exchange tethers for dollars on demand can be discounted by their own statements about Tether's reserves giving value to the tether tokens and the general perception by the public on what tethers are and represents.

A tether token is a financial asset. It represents a loan to Tether in return for the promise of getting a dollar back when a customer wants to withdrawal dollars from Tether. It is like a bank deposit, which is also a financial asset (a liability of the bank), not dollars themselves. Stablecoins allow anyone to trade their 'account or claim' at the Tether Bank by transferring the entire account to someone for dollars or something valuable like bitcoin on the secondary market. Tether doesn't have to satisfy demand deposit withdrawals as much as a bank because you can trade your account to someone else who accepts tether. People only accept it because you can get dollars out in the secondary market. Tether's value comes from ownership claims and confidence in Tether to be the exchanger of last resort and honor claims on dollars for tethers. Tethers are fungible (they are all 1 dollar or represent the same claim) and they can be traded, therefore it is a security. Thinking about claims and trading and what are financial assets is more useful than Howey test.

Imo the Howey test is overused to explain securities with crypto context. People just rattle off 1,2, 3, 4, talking points (the questions) without really explaining fundamentals or connecting it. In terms of Howey, Tether the company is taking your investment dollars (loan) and investing it, they are in the business of making profits (they just don't share profits), but they are expected to repay the loan of dollars you gave them, and this repayment depends on the work of others (Tether investing wisely). Tether the company is in a common enterprise with anyone that holds tethers (loans them money).

A stablecoin issuer that makes claims about converting the tokens for dollars is a money transmitter (Circle), in that like a bank they receive deposits/reserves (actual dollars). A bank receives payment instructions through checks/etc to send 'electronic money' to someone else, based on real dollar deposits. A stablecoin issuer that makes claims to token holders that they can exchange the token for a dollar is doing the same thing as a bank just a different way- the way 'electronic money' is sent is through the token on a blockhain, p2p. They do not receive payment instructions, but they do custody the dollars that can be converted on presentation of tokens. But because they issued this token, that can be moved p2p, this token represents a claim on those dollars sitting at the stablecoin issuer. So the token/blockchain is moving funds electronically. Other cryptos do not work this way, since they aren't convertible to anything. I would say any issuer of any token that makes claims to exchange some type of reserve (another crypto) is also a money transmitter by the same logic. Tether says it doesn't have to exchange tokens for dollars legally, but that doesn't mean that they don't ever. If there is no legal claim on the reserves for token holders then Tether isn't responsible for money transmission when tether is sent p2p. Tether is a money transmitter though when they sell tether for dollars, because that is a business. Cirlce (USDC) issuer is a money transmitter, but they can only do KYC/AML directly on the front (who they sell to) and on the back (who presents token back for dollars). They can't do KYC/AML in the middle, where people can do p2p hops. Even though these people are not getting 'real dollars', the token itself is the technology that allows for money transmission and represents dollars held. What about cash in the bank? When you withdraw cash you give it to anyone and it can be accepted and there is no KYC/AML. The difference is there is no counterparty to cash dollars. They are real, they are money, you can hold them in your hand. They are different than your electronic account balance at the bank, because it is virtual (a representation) and because it is a liability of the bank to you. Just because USDC (the representation) can be withdrawn into your control- meaning you do not need Circle's approval to send a payment p2p (although they control the token so do have some authority), that is not the same thing as withdrawing cash dollars. USDC is representative of cash dollars, not cash dollars themselves, thus do not have the same properties as dollars. Dollars (cash) is real money with no counter-party risk. You can give it to anyone and the transaction is settled immediately. Banks hold financial assets, financial assets that are intangible always have counter-party risk. Someone who has USDC can send it to anyone too, but it hasn't been settled, because the dollars are sitting at Circle, the issuer. Because the real dollars are always sitting with the issuer, they act just like a bank where anytime you move money from your account to someone else electronically, everyone, everytime is KYC'd/AML'd. Confusion is around separating the technology employed to move real money, which can be called electronic money, and real money. Stablecoins are just an a new technology to move electronic money, not real money. In fact, all cryptos are a new technology to move representations of something, usually dollars/currency (if it is has a price), but they are not real money themselves. There is no way to kyc/aml p2p crypto hops for a central stablecoin issuer, thus violating their own money transmission requirements and this is because the tokens are mere representations of real dollars, they have counter-party risk, they are a financial asset under the issuer's control. Even with additional regulations, they can never mold this behavior of the nature of p2p tokens under existing money transmission rules. It seems to me eventually unknown p2p transactions will be banned, and all public addresses will have to be identified by Circle, or else they will just 'delete' those coins, so it can be done, and if it can be done, it will be done. Stablecoins are only beneficial if that does not happen. Tether is your best hope of keeping status quo.

The El Salvador government is directing a state run energy company to provide 'cheap' (does that mean free?) energy to those mining bitcoin in El Salvador. Are these miners even locals or are they Americans? The miners will be getting cheap energy at the expense of the local population/ country. Maybe the miner's profits will be taxed and go back to the government for a return on investment. The thermal energy from the volacano is being pursued not because it is more efficient, but because it is more green and more moral. El Salvador making bitcoin legal tender, and forcing it to be accepted in payments, is the best thing to happen to bitcoin. The only way this can work is if the government buys the bitcoin from merchants and give them dollars, so the government is the buyer of last resort for your bitcoin. No where in the world can a bitcoiner force anyone to accept bitcoin for goods/services or exchange for dollars but El Salvador. El Salvador receives millions of dollars in aid from the US. The US tax payer is funding bitcoin mining (through energy subsidy) and funding the El Salvador government trading facility of converting bitcoin to dollars. The government bears the transactions costs/ and the volatility risk. El Salvador shouldn't receive a cent of US aid to support this, only private contributions. If the El Salvador government has enough money for bitcoin projects, they don't need US aid for humanitarian reasons. Bitcoiners who support this can no longer claim to be about freedom, as this is coercive, and is only possible through massive government spending to subsidize it that El Salvador is doing. This is only a victory for the miners being subsidized, and the bitcoiners who have a buyer of last resort. Is it really a medium of exchange if statistics show that 95% of merchants convert to dollars immediately? Is it really a victory if you have to use government force to get people to accept it?

How is changing a number not changing the code?

The autonomous claim that you have made more than once, whether true or not, does not change the fact that the smart contract is doing money transmission.

Zooming out a bit, I do agree that bitcoin is set up as a fiat money transfer system and that in order for the miners to keep making bitcoin they do need to sell it to people to make a profit, so I can't just narrow in on the production of bitcoin and ignore where profits come from. When the miners sell the bitcoin they make for dollars as a business, that is money transmission. Gold dealers are money transmitters because they sell gold (considered a currency equivalent) for dollars as a business. Gold mining companies invest to find gold as a company, when they sell the commodity for dollars for a profit I'm not sure if this is money transmission because gold is a real commodity that as consuming demand, bitcoin isn't a real commodity because it isn't 'used' so I don't think the bitcoin miners have the same benefit of selling bitcoin for dollars without being money transmitters. Bitcoin miners should be thought of as gold dealers, but also as a common enterprise issuing securities.

I would say that the protocol code is conducting money transmission and leave the argument that some humans wrote it aside.

In the docs, Uniswap says they don't currently take a protocol fee, but might add it in the future. This fee would not go to liquidity providers, but to the smart contract itself. Who would receive the protocol fee I wonder, or would the smart contract itself keep the fees, never distributing it to any human.

I haven't even brought up the can of worms of governance tokens. The protocol seems to not need a protocol fee since they can make a fee by issuing themselves governance tokens that have some privileges with the protocol and have a price. It is interesting that you say the code is immutable, but the governance tokens claim to give its holder voting rights to make changes to the protocol code like changing fees. It is a major problem that investors of Uniswap the company received the uni governance token in proportion to the funding of the company which they tell us has nothing to do with the decentralized uniswap protocol. You can't have your cake and eat it too.

I think you provided the right framework for thinking about this question. I would say that the miners are making bitcoin using raw materials, including electricity and computers, as inputs to a process. The miners are producing or issuing bitcoin, rather than buying it or finding it. Even if electricity is provided/given to a miner with the expectation of bitcoin in return, I believe they are working together in a common enterprise for profit, rather than the miner conducting money transmission.

Did Uniswap3 write itself? Are there humans that wrote the code and deployed it? Why is Uniswap3 protected with copyright law and who does that protect? Why is there a company called Uniswap? Why were they funded? Does the protocol receive tokens (sole control) and can it send them? How would you define custody?

The reason why I believe mining isn't being labeled as money transmission is because the miners never take custody of any bitcoin, they collect/handle transactions themselves, but these transactions are p2p, the bitcoin do not go into the hands or control of a money transmitter.

Where the author is correct is that the miners are the chosen ones for writing to the central ledger of bitcoin, but writing to a ledger including transactions, is not the definition of money transmission- the miner would have to take custody - which they do not.

Now where money transmission I believe is running rampant is any smart contract built on ethereum, like uniswap, that is taking custody of any token and holding that token- all of them are violating money transmission laws.

Not the unbanked population that most think of when they hear about the unbanked.

It is meant more for people that are ousted from banking or traditional payments, like pornhub or Trump, or Loomer.

The main benefit from this that I can see is that El Salvador will attract bitcoin businesses with a lot of money and other bitcoin whales who might move there and start businesses, employing locals and injecting money into the El Salvador economy.

The average person isn't going to use bitcoin and the average merchant will likely never be paid in it.

Does anyone know how the Strike app works? They say they use bitcoin to move usd to usd? Strike is the partner with the El Salvador gov that will help convert bitcoin to usd for any merchant who doesn't want the bitcoin. Merchants will be forced to accept bitcoin for payment for goods and services, and the government will basically subsidize the transaction (a huge tax on its people for the benefit of bitcoiners).

Does anyone know how Strike works? Strike is the private partner to the El Salvador government that will help convert bitcoin to usd that merchants are forced to accept.