Crypto Czar David Sacks Says NFTs and Memecoins Are Collectibles, Not Securities (fortune.com) 55
Non-fungible tokens and memecoins are neither securities nor commodities, according to White House crypto czar David Sacks. Instead, he defines them as "collectibles." From a report: "It's like a baseball card or a stamp," Sacks said in an interview with Fox Business on Thursday, referencing Trump's explosively popular memecoin. "People buy it because they want to commemorate something."
The famous venture capitalist's comments touched on a long-running debate about the crypto industry in general: how exactly to treat different digital assets. Some argue that digital assets are securities, which are tradable financial assets like stocks. But others say they're commodities, or raw materials that can be bought and sold, like gold and wheat. The classification differences have vast regulatory implications. "There's a few different categories here, so defining the market structure is important," said Sacks.
The famous venture capitalist's comments touched on a long-running debate about the crypto industry in general: how exactly to treat different digital assets. Some argue that digital assets are securities, which are tradable financial assets like stocks. But others say they're commodities, or raw materials that can be bought and sold, like gold and wheat. The classification differences have vast regulatory implications. "There's a few different categories here, so defining the market structure is important," said Sacks.
That's novel, but maybe not true (Score:4, Insightful)
If you follow the development of certain memecoins (such as SHIB), they're often sold with some future promise of functionality. They may also have a staking mechanism for future emissions. Neither of these properties are typical of collectibles.
Re:That's novel, but maybe not true (Score:4, Insightful)
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Re:That's novel, but maybe not true (Score:4, Insightful)
Re:That's novel, but maybe not true (Score:5, Informative)
Any memecoin defined by a smart contract can metamorphosis into something entirely different in the future. It can even lead to a separate block chain. There's no way to differentiate between a memecoin that isn't going anywhere and one that is (or will).
If it's an attempt to establish a hands-off regulatory scheme for crypto then so be it, but that doesn't mean this definition of memecoin behavior is accurate.
Truth to Power? (Score:5, Insightful)
Re: Truth to Power? (Score:4, Insightful)
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Exactly this. Purchasers of the bribe coin can be completely anonymous, but can prove they own it if they want to.
This is a bribery vehicle that enemies of the US can use to directly bribe Donald Trump. Much cleaner way to bribe him than the DJT stock.
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Basically the same thing as the mortgaged back to securities from 2008 but instead of houses worthless numbers on a computer.
When not if the bubble bursts it's going to take us all down with it. And I just hope I'm dead before it happens. We really really really fucked up in Novem
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Basically the same thing as the mortgaged back to securities from 2008 but instead of houses worthless numbers on a computer.
100% correct. Crypto-anythings run on precisely two modes: money laundering for illegal goods (illegal drugs, KP, ransomware demands, etc.) and Greater Fool Theory.
It will crash, and many people will lose everything in the process. Just like the fraudulent "mortgage backed securities," and every pump-and-dump stock and commodities scam ever.
Re:That's novel, but maybe not true (Score:4, Informative)
My fear is that will happen sooner than later. Most cryptocurrencies have a signature algorithm that can be completely compromised by Shor's Algorithm. All it takes is for some party, could be a nation state, could be anyone well-heeled, and once there is any concrete proof that a signature was forged moving currency from one wallet to another, every single cryptocurrency will be worth zero.
This is only a matter of time.
Re: That's novel, but maybe not true (Score:2)
For this to happen, QCs capable of running Shor's algorithm need to not be a scam either, and this is far from certain. The progress in applying the Shor's algorithm in recent years seems abysmal, despite the explosive increase in qubits' quantity.
Using a scam to defeat another scam... might not be the best tactics.
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I don't like what's happening, but real estate is almost 20x the value of crypto, I'm not convinced a crypto collapse will be nearly as bad as the real estate collapse was.
We e already weathered some pretty big crypto collapses (granted, when it was worth half as much), and it's been fine.
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Nobody's gonna release ETFs based on memecoins. The asset class performs exceedingly poorly, and securities such as ETFs are nowhere near agile enough to profit from them.
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Basically the same thing as the mortgaged back to securities from 2008 but instead of houses worthless numbers on a computer.
When mortgage backed securities when bad it affected the real estate market which sucked for everyone. When NFT backed securities go bad, who cares?
Re: That's novel, but maybe not true (Score:2)
When the bank holding your life savings has a portfolio full of these NFTs, you WILL care.
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But collectibles are also sold with the promise that their value will increase. Collectible "gold" coins, presidential plates, all the American Mint crapalogue.
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They don't spawn extra copies of themselves, signify governance power over a private entity, or anything else that tokens may do (depending on the underlying contract).
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I feel like this is the whole "no tax on tips" thing. I don't think that Trump really wanted to alleviate tax burdens on restaurant servers, but to make it so that gratuities paid to Supreme Court justices can't be taxed: https://www.bakerlaw.com/insights/bribe-vs-tip-the-implications-of-snyder-v-united-states-for-companies/
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Not sure about the SCOTUS simile, but yes it does look like it's an attempt to push the SEC to stop attempting to treat crypto as securities.
Re:That's novel, but maybe not true (Score:5, Informative)
The irony is that "collectibles" have their own tax rate and it's considerably higher than capital gains. Most people would pay a 15 or 20% long-term capital gains rate on securities they sell but collectibles are taxed at a 28% rate.
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If I buy a rare comic book with intent to sell it at a profit later, does that make it a security?
Still some capital gains tax when you sell (Score:2)
It might not be taxed anywhere near securities, but there is a capital gains tax on the selling of collectables. It's 28% I believe.
And that's why they defined them as collectables (Score:4, Interesting)
It might not be taxed anywhere near securities, but there is a capital gains tax on the selling of collectables. It's 28% I believe.
You are right on the collectable tax rate, but taxes on securities can be much less - especially if you held them long term.
I think that's why they defined them as collectables - to obtain maximum capital gain from them.
It's probably also that they do not want to overwhelm regulators having to sift through a giant memecoin swamp. Who wants to have a job 24x7 monitoring every buyer and seller of FartCoin.
To collect a collectible (Score:3)
you have to *possess* it. You can't possess an NFT; it doesn't even confer *copyright*.
What an NFT is, is an identifiable (if trivial) set of non-tangible rights in a commercial money making scheme which you purchase in expectation of making a profit. In other words, it's a textbook example of a security.
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An NFT is basically a piece of data on some public database somewhere (a database that relies on currently-difficult-to-compute math to prevent the records from being tampered with) that a bunch of people have agreed means "this guy over here owns this digital file"
Re:To collect a collectible (Score:5, Insightful)
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But the bookmark is signed! With a chain of blocks!
It would be very funny if someone at Google "accidentally deleted" the Google Drive account associated with these NFTs.
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You claim you can't possess an NFT and compare it to copyright (which has nothing to do with NFTs by the way), and then call it a non-tangible right, ... which is precisely what an entire class of IP is which very much can be possessed.
Look there's lots of stupid arguments against NFTs. But you very much possess the NFT itself (which is the register on the block chain pointing to something). Whether that something is worth having, whether it infers copyright, or anything else like that is completely irrelev
Czar of Collectables? (Score:1)
Why do we have a Czar of Collectables?
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Re:Czar of Collectables? (Score:4, Insightful)
You seem surprised? The entire cabinet is a rogues gallery of assholes, DEI hires, and incompetents. We have an anti vaxxer with admitted brain damage leading the department of health.
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I must be new here but abuse of the Troll mod?
'I don't like your opinion, so I am going to give you a minus 1'.
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You must be new here. That's the "your point is so insightful I'm threatened by it" mod.
Have I got a deal for you... (Score:2)
Can I interest anyone in a collection of Beanie Babies?
How about an image on a blockchain that totes belongs to you and can't just be downloaded?
Re: Have I got a deal for you... (Score:3)
What numbers did you guys get?
I Agree (Score:2)
One rule that is typically true for collectibles is the original "vintage" model is worth much more than newer versions. Baseball cards from the 1930s might be worth millions, but anything sold over the past 30 years won't com
So it's... (Score:2)
"It's like a baseball card or a stamp," Sacks said in an interview with Fox Business on Thursday, referencing Trump's explosively popular memecoin. "People buy it because they want to commemorate something."
Sounds like someone doesn't want Trump to be responsible for selling a scam Hawk Tuah coin that will be worthless by saying "it's for the commemoration!"
Who nominated this Crypto Tzar anyway?
WTF... (Score:1)
Then why the fuck is the US government trying to create a digital reserve of "collectables"?
Lol (Score:2)
This shit is collectable, buy it quickly!
Are you smooth brains happy with your decision?
Rarity is a hallmark of collectibles (Score:2)
Well, yes? (Score:4, Informative)
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I certainly hate to agree with a 'crypto czar', but yes. Their value isn't as a medium of exchange.
They remain incredibly stupid, though.
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This actually is a good take. They are not securities, just collectible items. Their entire worth is from perceived scarcity and perceived value.
"Artificial scarcity and the perception that some future greater fool might believe it has increased in value" might be a more accurate way of putting it.
At any rate, we at least know what these digital assets are not: They're not securities because they don't actually confer ownership in anything beyond the digital token itself. They're also not commodities because they serve no other utilitarian purpose (and it's arguable that even as a medium of wealth exchange they kind of suck), unlike say, a bag of
That's right, they want to commemorate... (Score:1)
Getting grifted out of their USD.
George Washington would like a word with you (Score:2)
George Washington
You've been warned.