Privatizing BitAssets

[Bitcoinfan]

This post makes total sense in lieu of Ripple fines coming out...

[donkeypong]

Lawyers know NOTHING.    It is like asking a doctor if you should visit a 3rd world country.   They will list a million things that could kill you and suggest 1000 precautions that will protect you in some cases but you could still catch something and die.

It's about all they can do. In this crypto environment, there are so many legal gray areas. If an issue hasn't been decided in court before, a lawyer can only make a guess/prediction about what will happen. And hopefully, they can help you design things in such a way that you minimize these risks. A lot of it's BS, but probably worthwhile not to be on shaky ground.

[jcrubino]

Publishing a feed is perfectly fine (Yahoo, Google, and a dozen other companies do this... it is public information).

The summary for the privatized bitAssets proposal is:
         Privatized public feeds that create new public assets
         White-listed publishers but not private white-labeled assets

Is this correct?

[jaran]

Lawyers know NOTHING.    It is like asking a doctor if you should visit a 3rd world country.   They will list a million things that could kill you and suggest 1000 precautions that will protect you in some cases but you could still catch something and die.

It almost all boils (pun intended) down to "don't drink the water"....  or: "don't issue a security".    Publishing a feed is perfectly fine (Yahoo, Google, and a dozen other companies do this... it is public information).  That is what you argue if you get sick.

Yup, all they do is cover their ass which may or may not cover yours.  Every time someone mentions they need to run things by legal I know the project is dead haha.

[bytemaster]

Lawyers know NOTHING.    It is like asking a doctor if you should visit a 3rd world country.   They will list a million things that could kill you and suggest 1000 precautions that will protect you in some cases but you could still catch something and die.

It almost all boils (pun intended) down to "don't drink the water"....  or: "don't issue a security".    Publishing a feed is perfectly fine (Yahoo, Google, and a dozen other companies do this... it is public information).  That is what you argue if you get sick. 

[tsaishen]

It has been suggested before that BitAssets with feeds produced by private parties would enable greater variety of BitAssets to be created.   I would like to explore this idea further from the perspective of growing adoption.   

Today there is little incentive to market BitUSD because 100% of the profits of marketing BitUSD go to USD holders via yield or BTS holders via trading fees.  If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption.  Assume the manager got to set the market trading fees/transfer fees just like they can with any other user issued asset.

The end result would be a financial incentive to get a pegged asset released, marketed, and adopted.   The BTS network would profit by having the asset trading against BTS and other assets.   Initially this would result in a handful of attempts, but market competition would result in the best promoted and adopted variant having the highest usage and deepest markets.   Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

1) Assume anyone could create a BitAsset and publish a feed for it.
2) Assume that "anyone" could be a group of 100+ individuals which are unlikely to collude and they must agree on the feed via multi-sig.
3) Assume that this group got to set the trading fees (%) on all trading volume with the asset.

So the question is, are delegates inherently more trustworthy than any other group of individuals collaborating to publish a trusted feed?   Sure they are elected, but an election is not the only or even the best way to establish trust.   

So I contend that a market full of private market pegged assets with profit motive for a near "winner takes all" on the team that can provide the highest liquidity and best marketed variant will produce better results than relying on socialized funding of the BitAssets produced by delegates. 

Thoughts?

I am not a lawyer but...

I believe that doing this would consolidate and centralize the market rapidly into the hands of a few well heeled players.  The appeal of bitUSD would diminish quickly as any properly incorporated entity with the resources to pull this off would immediately be subject to AML/KYC regulations and would be forced to lock down the bitUSD holdings of anyone the IRS asked them to.   

Assuming that they could sustain the compliance burden, they would also find themselves immediately subject to US laws regarding virtual currency & money transmission.  http://www.fincen.gov/financial_institutions/msb/msb.registration.html (click the links labeled Regulation & FactSheet)

If they didn't comply then FinCEN could seize the company's assets globally, pretty much immediately. 

Doing it without incorporation, for instance as a DAC would mean that in theory, USA courts would disregard the DAC and treat the players as individuals who were operating a series of sole-props and engaging in a regulated activity (money transmission and investing/banking).  100% of the liability would likely rest with the players severally and I have serious doubts that the USA wouldn't treat everyone in the market under RICO statutes and seize their individual assets and likely their personages.

In short, if you want to do this, don't live anywhere near the USA and don't expect to be able to board an airplane any time in the near future.

Other than that it's a great idea!

It seems this will be one of the primary reasons why all privatized bitAssets absolutely require whitelisting. However, because you don't actually issue IOUs backed by actual fiat, I think coinbase-style expansion into more jurisdictions should be a lot faster.

It depends upon the liability for publishing a PRICE FEED.   Ultimately that is all that it comes down to, everything else is the blockchain.

Yeah maybe you're right.  Still I would talk to a lawyer before making the change if you haven't already.

[bytemaster]

It has been suggested before that BitAssets with feeds produced by private parties would enable greater variety of BitAssets to be created.   I would like to explore this idea further from the perspective of growing adoption.   

Today there is little incentive to market BitUSD because 100% of the profits of marketing BitUSD go to USD holders via yield or BTS holders via trading fees.  If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption.  Assume the manager got to set the market trading fees/transfer fees just like they can with any other user issued asset.

The end result would be a financial incentive to get a pegged asset released, marketed, and adopted.   The BTS network would profit by having the asset trading against BTS and other assets.   Initially this would result in a handful of attempts, but market competition would result in the best promoted and adopted variant having the highest usage and deepest markets.   Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

1) Assume anyone could create a BitAsset and publish a feed for it.
2) Assume that "anyone" could be a group of 100+ individuals which are unlikely to collude and they must agree on the feed via multi-sig.
3) Assume that this group got to set the trading fees (%) on all trading volume with the asset.

So the question is, are delegates inherently more trustworthy than any other group of individuals collaborating to publish a trusted feed?   Sure they are elected, but an election is not the only or even the best way to establish trust.   

So I contend that a market full of private market pegged assets with profit motive for a near "winner takes all" on the team that can provide the highest liquidity and best marketed variant will produce better results than relying on socialized funding of the BitAssets produced by delegates. 

Thoughts?

I am not a lawyer but...

I believe that doing this would consolidate and centralize the market rapidly into the hands of a few well heeled players.  The appeal of bitUSD would diminish quickly as any properly incorporated entity with the resources to pull this off would immediately be subject to AML/KYC regulations and would be forced to lock down the bitUSD holdings of anyone the IRS asked them to.   

Assuming that they could sustain the compliance burden, they would also find themselves immediately subject to US laws regarding virtual currency & money transmission.  http://www.fincen.gov/financial_institutions/msb/msb.registration.html (click the links labeled Regulation & FactSheet)

If they didn't comply then FinCEN could seize the company's assets globally, pretty much immediately. 

Doing it without incorporation, for instance as a DAC would mean that in theory, USA courts would disregard the DAC and treat the players as individuals who were operating a series of sole-props and engaging in a regulated activity (money transmission and investing/banking).  100% of the liability would likely rest with the players severally and I have serious doubts that the USA wouldn't treat everyone in the market under RICO statutes and seize their individual assets and likely their personages.

In short, if you want to do this, don't live anywhere near the USA and don't expect to be able to board an airplane any time in the near future.

Other than that it's a great idea!

It seems this will be one of the primary reasons why all privatized bitAssets absolutely require whitelisting. However, because you don't actually issue IOUs backed by actual fiat, I think coinbase-style expansion into more jurisdictions should be a lot faster.

It depends upon the liability for publishing a PRICE FEED.   Ultimately that is all that it comes down to, everything else is the blockchain. 

[bitsapphire]

It has been suggested before that BitAssets with feeds produced by private parties would enable greater variety of BitAssets to be created.   I would like to explore this idea further from the perspective of growing adoption.   

Today there is little incentive to market BitUSD because 100% of the profits of marketing BitUSD go to USD holders via yield or BTS holders via trading fees.  If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption.  Assume the manager got to set the market trading fees/transfer fees just like they can with any other user issued asset.

The end result would be a financial incentive to get a pegged asset released, marketed, and adopted.   The BTS network would profit by having the asset trading against BTS and other assets.   Initially this would result in a handful of attempts, but market competition would result in the best promoted and adopted variant having the highest usage and deepest markets.   Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

1) Assume anyone could create a BitAsset and publish a feed for it.
2) Assume that "anyone" could be a group of 100+ individuals which are unlikely to collude and they must agree on the feed via multi-sig.
3) Assume that this group got to set the trading fees (%) on all trading volume with the asset.

So the question is, are delegates inherently more trustworthy than any other group of individuals collaborating to publish a trusted feed?   Sure they are elected, but an election is not the only or even the best way to establish trust.   

So I contend that a market full of private market pegged assets with profit motive for a near "winner takes all" on the team that can provide the highest liquidity and best marketed variant will produce better results than relying on socialized funding of the BitAssets produced by delegates. 

Thoughts?

I am not a lawyer but...

I believe that doing this would consolidate and centralize the market rapidly into the hands of a few well heeled players.  The appeal of bitUSD would diminish quickly as any properly incorporated entity with the resources to pull this off would immediately be subject to AML/KYC regulations and would be forced to lock down the bitUSD holdings of anyone the IRS asked them to.   

Assuming that they could sustain the compliance burden, they would also find themselves immediately subject to US laws regarding virtual currency & money transmission.  http://www.fincen.gov/financial_institutions/msb/msb.registration.html (click the links labeled Regulation & FactSheet)

If they didn't comply then FinCEN could seize the company's assets globally, pretty much immediately. 

Doing it without incorporation, for instance as a DAC would mean that in theory, USA courts would disregard the DAC and treat the players as individuals who were operating a series of sole-props and engaging in a regulated activity (money transmission and investing/banking).  100% of the liability would likely rest with the players severally and I have serious doubts that the USA wouldn't treat everyone in the market under RICO statutes and seize their individual assets and likely their personages.

In short, if you want to do this, don't live anywhere near the USA and don't expect to be able to board an airplane any time in the near future.

Other than that it's a great idea!

It seems this will be one of the primary reasons why all privatized bitAssets absolutely require whitelisting. However, because you don't actually issue IOUs backed by actual fiat, I think coinbase-style expansion into more jurisdictions should be a lot faster.

[BunkerChainLabs-DataSecurityNode]

I agree that voting for feed producers that get paid each time they publish a feed with a minimal interval between feed publishings would incentivize things nicely and keep them separate from delegate responsibilities.

This is a great idea.

Now you are catching on... the way we bootstrap is to give established players a profit incentive to bring us customers

Dammit.. I spent like a full minute hypnotized by this guy!

I am very excited about this new features.. already has rgcrypto and I trying to think of ways we could potentially incorporate it into MineBitShares.

[joele]

In short, if you want to do this, don't live anywhere near the USA and don't expect to be able to board an airplane any time in the near future.

Other than that it's a great idea!

[tsaishen]

It has been suggested before that BitAssets with feeds produced by private parties would enable greater variety of BitAssets to be created.   I would like to explore this idea further from the perspective of growing adoption.   

Today there is little incentive to market BitUSD because 100% of the profits of marketing BitUSD go to USD holders via yield or BTS holders via trading fees.  If BitUSD were a privately owned asset then the manager of that asset (responsible for publishing the price feed) could make money directly proportional to adoption.  Assume the manager got to set the market trading fees/transfer fees just like they can with any other user issued asset.

The end result would be a financial incentive to get a pegged asset released, marketed, and adopted.   The BTS network would profit by having the asset trading against BTS and other assets.   Initially this would result in a handful of attempts, but market competition would result in the best promoted and adopted variant having the highest usage and deepest markets.   Ultimately the market would settle on one or two variants and the rest would die off or be special purpose.   

1) Assume anyone could create a BitAsset and publish a feed for it.
2) Assume that "anyone" could be a group of 100+ individuals which are unlikely to collude and they must agree on the feed via multi-sig.
3) Assume that this group got to set the trading fees (%) on all trading volume with the asset.

So the question is, are delegates inherently more trustworthy than any other group of individuals collaborating to publish a trusted feed?   Sure they are elected, but an election is not the only or even the best way to establish trust.   

So I contend that a market full of private market pegged assets with profit motive for a near "winner takes all" on the team that can provide the highest liquidity and best marketed variant will produce better results than relying on socialized funding of the BitAssets produced by delegates. 

Thoughts?

I am not a lawyer but...

I believe that doing this would consolidate and centralize the market rapidly into the hands of a few well heeled players.  The appeal of bitUSD would diminish quickly as any properly incorporated entity with the resources to pull this off would immediately be subject to AML/KYC regulations and would be forced to lock down the bitUSD holdings of anyone the IRS asked them to.   

Assuming that they could sustain the compliance burden, they would also find themselves immediately subject to US laws regarding virtual currency & money transmission.  http://www.fincen.gov/financial_institutions/msb/msb.registration.html (click the links labeled Regulation & FactSheet)

If they didn't comply then FinCEN could seize the company's assets globally, pretty much immediately. 

Doing it without incorporation, for instance as a DAC would mean that in theory, USA courts would disregard the DAC and treat the players as individuals who were operating a series of sole-props and engaging in a regulated activity (money transmission and investing/banking).  100% of the liability would likely rest with the players severally and I have serious doubts that the USA wouldn't treat everyone in the market under RICO statutes and seize their individual assets and likely their personages.

In short, if you want to do this, don't live anywhere near the USA and don't expect to be able to board an airplane any time in the near future.

Other than that it's a great idea!

[fuzzy]

I agree that voting for feed producers that get paid each time they publish a feed with a minimal interval between feed publishings would incentivize things nicely and keep them separate from delegate responsibilities.

This is a great idea.

Now you are catching on... the way we bootstrap is to give established players a profit incentive to bring us customers

Amazing gif...
Very respect yellow.

[jcrubino]

Privatized assets still could be gamed.

I would like to know if there is a reason a large exchange could not: release an asset, buy both sides, sell as an etf on their exchange market  as a "special fund".  The exchange would not even have to market it as Bitshares, and Bitshares might receive a 1500 + 500 payout every year they do this while the Exchange keeps the both sides of the contract in balance based on their exchange data.  They would only have to come up with a spv wallet (not even bitshares related, just for for bean counting) if they were to make the fund available off the exchange and most users would not know the difference between the special fund coin and the Bitshares issued asset.

If this type of plan is successfully implemented Bitshares would be missing out on a whole lot of fees after such a fund reached a total of $1,000,000 in trades at a 0.2% fee never mind the prudent profits from front running the "smart contract".

[Stan]

I agree that voting for feed producers that get paid each time they publish a feed with a minimal interval between feed publishings would incentivize things nicely and keep them separate from delegate responsibilities.

This is a great idea.

Now you are catching on... the way we bootstrap is to give established players a profit incentive to bring us customers

You have no idea. 

Better start reinforcing with duct tape now.

[yellowecho]

I agree that voting for feed producers that get paid each time they publish a feed with a minimal interval between feed publishings would incentivize things nicely and keep them separate from delegate responsibilities.

This is a great idea.

Now you are catching on... the way we bootstrap is to give established players a profit incentive to bring us customers