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Offline monsterer

NXT have a solution to the crowd funding regulation problem
« on: November 14, 2014, 11:41:20 AM »

Don't know if you have read about one of the features of the new Monetary System in NXT?

https://bitbucket.org/JeanLucPicard/nxt/issue/136/monetary-system

MS currencies are like assets, but with much more control.

One such control is the ability for the blockchain to actually hold the funds from the sales of MS currencies. The issuer defines block height limit and reserve minimum parameters at currency issuance time. Purchases of the currency are held by the blockchain until either the currency reserve minimum is reached, at which point the NXT is paid to the issuer, or the block height is reached at which point the blockchain refunds all purchasers, and the currency is deleted.

This means that the issuer never holds the tokens which represent the currency, and furthermore, the blockchain actually pays the issuer, not individual investors.

Interesting.
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Offline fuzzy

Re: NXT have a solution to the crowd funding regulation problem
« Reply #1 on: November 14, 2014, 12:27:04 PM »
 +5%  for the foresight.
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Offline hpenvy

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Re: NXT have a solution to the crowd funding regulation problem
« Reply #2 on: November 14, 2014, 02:50:55 PM »
Interesting. Do we have something similar on our roadmap?
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Offline biophil

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Re: NXT have a solution to the crowd funding regulation problem
« Reply #3 on: November 14, 2014, 02:56:14 PM »
I've always thought the Nxt MS was a gimmick made obsolete by the asset exchange. Why don't they incorporate those features into the asset exchange instead of creating the monetary system?

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Offline biophil

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Re: NXT have a solution to the crowd funding regulation problem
« Reply #4 on: November 14, 2014, 02:59:22 PM »
Oh, and my actual question: how does this solve the regulation problem? My view is that the regulation problem is that we're trying to issue a security; escrowing the funds we raise doesn't magically make it "not a security." Or did I misinterpret your point?

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Offline monsterer

Re: NXT have a solution to the crowd funding regulation problem
« Reply #5 on: November 14, 2014, 03:01:56 PM »
I've always thought the Nxt MS was a gimmick made obsolete by the asset exchange. Why don't they incorporate those features into the asset exchange instead of creating the monetary system?

That's what I thought at first, but the use cases are different. For example, you can create a proof of work MS currency on top of this system (presumably aimed at the altcoin market) which inflates like bitcoin does, but is secured by the NXT POS system.
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Offline monsterer

Re: NXT have a solution to the crowd funding regulation problem
« Reply #6 on: November 14, 2014, 03:07:24 PM »
Oh, and my actual question: how does this solve the regulation problem? My view is that the regulation problem is that we're trying to issue a security; escrowing the funds we raise doesn't magically make it "not a security." Or did I misinterpret your point?

Disclaimer: I'm not a lawyer and this analysis is based on my assumptions.

The problem as I understand it, is that if you issue an Asset for an IPO, the issuer owns the tokens (shares) of the asset (company), and the user's buy those tokens with currency. I think this causes the IPO to fall under various different legal jurisdictions and hence all the current problems with IPO and the paid delegates bitshares currently has adopted.

With this new system, the issuer never owns the tokens (shares) and isn't even paid by the user so falls into a neat loophole in the current regulations.
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Offline Agent86

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Re: NXT have a solution to the crowd funding regulation problem
« Reply #7 on: November 14, 2014, 03:18:16 PM »
this sounds like an "assurance contract."   This type of contract has some use for money raising.  Basically if you don't get enough money to do what you were trying to do the money is returned, sort of like a kickstarter campaign that doesn't reach the goal or maybe like groupon.  I don't think it get's around any regulation.  If the goal is met and you sell something that is viewed as a security than you still sold a security.  This isn't like the self funding DAC concept as far as I can tell.

Offline monsterer

Re: NXT have a solution to the crowd funding regulation problem
« Reply #8 on: November 14, 2014, 03:30:08 PM »
this sounds like an "assurance contract."   This type of contract has some use for money raising.  Basically if you don't get enough money to do what you were trying to do the money is returned, sort of like a kickstarter campaign that doesn't reach the goal or maybe like groupon.  I don't think it get's around any regulation.  If the goal is met and you sell something that is viewed as a security than you still sold a security.  This isn't like the self funding DAC concept as far as I can tell.

I understand the key point is that when doing an IPO, you are selling something which represents a portion of the value of your company. Before you sell it, you own it. Afterwards the buyer does. In this scheme, you never owned the token representing the proportion of value in the first place.
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Offline biophil

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Re: NXT have a solution to the crowd funding regulation problem
« Reply #9 on: November 14, 2014, 07:32:18 PM »
this sounds like an "assurance contract."   This type of contract has some use for money raising.  Basically if you don't get enough money to do what you were trying to do the money is returned, sort of like a kickstarter campaign that doesn't reach the goal or maybe like groupon.  I don't think it get's around any regulation.  If the goal is met and you sell something that is viewed as a security than you still sold a security.  This isn't like the self funding DAC concept as far as I can tell.

I understand the key point is that when doing an IPO, you are selling something which represents a portion of the value of your company. Before you sell it, you own it. Afterwards the buyer does. In this scheme, you never owned the token representing the proportion of value in the first place.

I see what you're saying. I don't think that's the main regulatory problem (though I am not a lawyer either). The main problem with asset IPOs is that you're ultimately selling shares in something and making a claim that your actions will in some way make those shares valuable. I think that's essentially what makes a security a security.

You're saying that because the blockchain acts as an intermediary between the issuer and the investor, that we can wave our hands and claim that the new shares that are issued are magically not securities. I'd be very surprised if a regulatory body sees it this way. Stan and CO love to pretend that saying something differently makes it different, but if I were the SEC, I'd say "if it smells like a security and there's someone we can nail for it, we'll send out letters."

But, of course, my surprise would be accompanied by an extraordinarily wide grin. :)

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Offline bytemaster

Re: NXT have a solution to the crowd funding regulation problem
« Reply #10 on: November 14, 2014, 07:48:45 PM »
It is relatively clear that a security exists where someone sells something on the promise of future work.

It is has been stated that Bitcoin is not a security.

PTS was not sold, it was mined and is thus not a security any more than if we had announced intention to share drop on Bitcoin would turn Bitcoin into a security. 

AGS is the most grey, but here we make sure to say "no strings attached, gifts".   

BTS exists independent of any promises and trades like Bitcoin and PTS.   

We have made a significant effort to avoid selling shares based upon our promise to do something.
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