The real nature of Bitcoin and similar currencies have been scrutinized by Edan Yago who can be called as an active and professional cryptocurrency practitioner since he had launched CommentDAO (Decentralized Autonomous Organization), which was an attempt to put together all stablecoins into a homogenous ecosystem and also the CEO and a co-founder of a software company and some others. He has tried to elucidate few main concepts in cryptocurrency to solve some discrepancies which have made SEC authorities’ minds busy. The followings are some challenging issues regarding cryptocurrency from his point of view:
Though they have tried to give Bitcoin the appearance of real exchange whose features are somehow adapted from the traditional one; there seems to be a misconception; because they cannot be matched due to their different nature.
One of those issues examined by SEC was the ownership; cryptosystems don’t refer to any specific person or entity as it can be observed in traditional financial affairs. So can one expect for the regulations to be enforced in this category too?
The other fact is the manner of looking at assets in both systems which can be claimed by a property in the traditional system but to nothing in the crypto world; to put it another way, it is given an innovative form called proof with cryptographic style and through some mathematical functions and shown in algorithmic expression.
The third remark is the misunderstanding of majority of people who take Bitcoin as a property. The reason is that they so often have heard about Bitcoin transfer between people; however, there is no actual bitcoin to be transferred. There is essentially some knowledge of mathematics which plays the role of property.
The next point is about the transfer party entities; they can be some addresses formed by a hash function; even though they can be persons too and also a token made by one of those persons which have transferability characteristic. SEC goes even further to put some regulations to these tokens too.
SEC’s concern about the secondary market of the securities is another aspect. Confusions coming from the newness of these crypto-assets leave many specialists barehanded in what to do with them. There can be great doubt in doing transactions for people when it comes to the third party who is no one, in reality, i.e., a legal person.
Fortunately, SEC did not put all the apples in one basket and remarks that despite all transparent differences between traditional and cryptocurrency, if we cannot assume them as a security due to dramatic opposite features comparing to traditional ones, they can at least be called as a security thanks to the variety in the governments’ laws and enforcement.
Taking all the above facts, SEC wishes to define some jurisdictions over these assets; although there are again the dead ends of legal entities and enforcing contracts.