The reason why many cryptocurrencies are considered securities is because there's a certain group of people promoting them as in investment. They are claiming that their cryptocurrencies will rise in value.
If you study the definition of money, and what makes a good currency, there's no kind of money that rises in value merely because you own it. Money is meant to be spent or invested, not hoarded. (Adam Smith's "Wealth of Nations" gives a much better explanation in the first few chapters than I can.)
So, the point that you have to register as a security is the point that you start convincing people to own your cryptocurrency as in investment. At that point, your cryptocurrency isn't money; because money is meant to be spent.
How do you keep the SEC out of your cryptocurrency? Invent a cryptocurrency that functions as money. You will need to figure out how to keep the value stable on a day-to-day and year-to-year basis. That means that the supply needs to expand and contract quickly based on demand. "Mining" based cryptocurrencies can not do this.
Very interesting idea. Have you heard about Basecoin and Seigniorage shares? They are trying to do exactly that: http://www.getbasecoin.com/ Are these coins securities in your opinion?
Why bother using a convoluted blockchain stablecoin rube goldberg machine where you need to jump though several hoops just to use it, when you could use a service like venmo, square, stripe, etc? What use case would justify the need for a stable coin if not for evading the law?
Simple, just look at ETH. ETH is fully programmable currency. It can be locked away in a smart contract and programmed to disburse based on various conditions. A stable ERC20 token would have all the benefits of ETH coupled with the stability of the dollar. That's an incredibly powerful concept, much, much more powerful than a simple payments API with 2-3% fees BTW.
Your comment makes me think of beanie babies during the bubble. They hardly seem like securities, or do they? Your definition implies they are if there are folks assuring you they will go up in value. Also less cray example, old cars, classic records, guitars, art etc. Is a van gogh a security? An antique first printing of moby dick? Thanks!
> You will need to figure out how to keep the value stable on a day-to-day and year-to-year basis.
This is a difficult problem that's being tackled by multiple projects, such as MakerDAO[1] (DAI) and Bitshares[2] (BTS). Also less reputable implementations like Tether[3] (USDT).
A good article for more detail is An Overview Of Stablecoins[4]
"You will need to figure out how to keep the value stable on a day-to-day and year-to-year basis. That means that the supply needs to expand and contract quickly based on demand. "
If you study the definition of money, and what makes a good currency, there's no kind of money that rises in value merely because you own it. Money is meant to be spent or invested, not hoarded. (Adam Smith's "Wealth of Nations" gives a much better explanation in the first few chapters than I can.)
So, the point that you have to register as a security is the point that you start convincing people to own your cryptocurrency as in investment. At that point, your cryptocurrency isn't money; because money is meant to be spent.
How do you keep the SEC out of your cryptocurrency? Invent a cryptocurrency that functions as money. You will need to figure out how to keep the value stable on a day-to-day and year-to-year basis. That means that the supply needs to expand and contract quickly based on demand. "Mining" based cryptocurrencies can not do this.