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Author Topic: Article on legal backing for an Asset Exhange  (Read 2066 times)

JZA

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Article on legal backing for an Asset Exhange
« on: November 18, 2015, 12:29:08 pm »

Thoughts on this article: cointelegraph.com/news/115676/nxt-asset-exchange-and-farla-webmedia-legal-concerns

I do see some of the points that Bass Wisselink do and I think this is important to address it either now or in the future. Also want to know some of the community general thoughts.
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Peter2516

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Re: Article on legal backing for an Asset Exhange
« Reply #1 on: November 18, 2015, 05:51:00 pm »

This article comes to mind: http://www.coindesk.com/bitcoin-regulation-lessons-early-days-skype/ some quotes:

"Something that looks like a duck and quacks like a duck must be treated like a duck. If Skype looked like a phone company and sounded like a phone company, then it must be a phone company."

"The enemy is the bureaucracy, which asks for volumes of data, licence requirements and bad old-fashioned paperwork. Bureaucrats, trying to understand a new technology and with plenty of time on their hands. The enemy is time and getting the product to market early. Businesses should also be open to engaging with regulators, simply to keep the debate on the right side. It should be no more than that and certainly shouldn’t be central to any company’s external communications."

"Companies need to just carry on doing what they are doing, if they can make a case for themselves that they don’t need regulation, they shouldn't even go near it. People do what they love best: regulators like regulations and want to apply them. If they didn’t, they would have a different job. So, asking for advice is framing the discussion. Once again, companies should read the rules, argue why they are not covered by the rules and use that analysis as a defence, but they should only ask for permission if they are sure it is necessary.

Furthermore, companies shouldn’t ask a lawyer. Expecting a lawyer to find a loophole in the law and to state it on paper simply won’t happen. People should read, understand and learn it themselves. They can test their argument on a lawyer, indeed on anyone, but should not expect anyone else to come up with it."
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JanSako

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Re: Article on legal backing for an Asset Exhange
« Reply #2 on: November 19, 2015, 04:05:28 pm »

Great topic, one that will keep us awake for a while (or should, if you are a crypto business entrepreneur  ???)

A few years back I was representing an NGO running what some saw as bit of a 'disruptive' service in Central California. We were present at over 100 cities, and each of these have Municipal code that is a bit different form the rest  ;D.
Lot's of fun dealing with different level of officials, the conclusion: They are people too!

Looking back at what worked and what did not:

- read the rules, understand them, read them again to make sure you really understand
- position your business so that it is covered by the most favorable rule you can find. Keep in mind that there is probably a rule somewhere that says something like 'if not covered by above, the activity is prohibited'.
- if you cannot legally operate in one jurisdiction, find another one where you can, or change your business activity
- be clear and spell it out why you are covered by that favorable regulation
- do not look for loopholes, just don't. They tend to be closed real fast once you are even moderately successful and visible. It is easy to change a regulation if all you do is 'close loopholes'.

The competition loves to point out these loopholes to the regulators, and they close them fast because it is embarrassing for them that the loopholes were there in the first place.

- Advise your users and 'investors' if you know what you do is illegal in some jurisdictions

Let me elaborate on the last part:

Rant mode: ON

Yes, everyone is responsible for their own actions. That also goes for you if you deliberately withhold information that would cause me not to use your service or invest with you. Knowing I will be breaking a law but still taking my money anyway just makes you a scammer.
Yes, the information is probably public, and I should be able to find it myself, BUT you already did.

On the other hand if you do not do your research, and I do not do my research, and we both get busted, it is my fault too, and I cannot complain.
Not knowing the law is not an excuse, no matter what we think about the law itself.

Rant mode: OFF
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JZA

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Re: Article on legal backing for an Asset Exhange
« Reply #3 on: December 25, 2015, 10:18:43 am »

I have had several discussions around the topic, here are some of the conclusions that I think are very critical:
  • Nobody can regulate something before is invented.
  • Trying to work on something new like it's something old will lead to unreasonable demands.

An even further point has been made. The internet is not like the state of law. The internet and doing things online can't be worked as an analog product. To start, if we want to form a corporation between different parties online, those might not even legally 'exist' in your country. So trying to build a company like the regular way would be impossible. If a foreigner who has never even been to your country would be very hard to prove that he/she has the ability to create a company. Normally you would do this through a proxy such as a nameholder or a law firm carrying your interest abroad. This however proves to be extremely expensive and just not very practical.

Building multiple companies online, issuing stocks and making itself of a clientelle could be way easier than actually attending the legal obligations of any particular country. The time as well could be impractical to the way DAC (Descentralized Autonomous Corporations) would come to emerge.
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printshop

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Re: Article on legal backing for an Asset Exhange
« Reply #4 on: January 06, 2016, 09:46:59 pm »

Looking back at what worked and what did not:

- read the rules, understand them, read them again to make sure you really understand
- position your business so that it is covered by the most favorable rule you can find. Keep in mind that there is probably a rule somewhere that says something like 'if not covered by above, the activity is prohibited'.
- if you cannot legally operate in one jurisdiction, find another one where you can, or change your business activity
- be clear and spell it out why you are covered by that favorable regulation
- do not look for loopholes, just don't. They tend to be closed real fast once you are even moderately successful and visible. It is easy to change a regulation if all you do is 'close loopholes'.

Good post. What is really going on is that there is a market share, and if that market share is regulated you CANNOT enter that sphere without following regulation. (Trying to get around this will cause market share to disappear, and when it is discovered where that market share has gone you will be removed from the game for not following regulation.)

WARNING: MANY TIMES NEW ENTRY IS PROHIBITED BY EXISTING MARKET PLAYERS AND THE ONLY WAY TO ENTER THE SECTOR IS TO BUY IN TO ESTABLISHED PLAYERS, THE END.

Note that this is not necessarily a) a bad thing, b) too expensive, c) difficult, d) unworthy. But it does mean certain kinds of business and funding will be relegated to niche if they are to survive.

Every play whack-a-mole? Whack-a-weasel? Whatever it's called. That's what they do. Don't be the mole.

So look, this happens all the time. Look at the Alpha exchange which came up over the last 10 or so years in Canada. It can happen. You wanna know what the price tag is?

Well maybe $2 mil to get started, and another $2 to $3 mil, minimum, to get things moving.

Hiring a team of securities lawyers is one of the first steps. It will be a long and difficult road. You will need to approach things from the side -- crowbar your way in -- and hit like a mack truck. I can give you some pointers. If anyone is interested in doing this, I know how it can be done. Hiring a a team of securities lawyers will be the first step and there will be some "jumpstarting" involved.

But, lol, who am I even talking to.... I look out and don't see anyone in the seats.

Frankly we could do it if I could get 2 or 3 major NXT players to sign on to a project like this. It could be done in a riskless fasion and would take 3-5 years to set up. It's either that or you do it alone and frankly if you guys haven't done it by now you need a kick in the pants (here's your kick). You have a golden opportunity. Actually it was mainly squandered by now. But there is still a chance.

Talk to me. I'm sure you can find my e-mail. Toodles!
« Last Edit: January 06, 2016, 09:51:11 pm by printshop »
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