Re: [EXT] Re: Potential list of securities in the US [was: Unlawful Unregistered Securities, DID and VC]

I’d assume the explicit ban of trading cryptocurrencies by China would hold
up to scrutiny then given they’re the exact same outcomes. What’s the
difference between US law and Chinese law?

Similarly, in the past an initiative of the European Commission [1] stated
there exists a lot of uncertainty around usage of persistent blockchain
identifiers and the very clearly defined GDPR regulations which has
resulted in many fines. What’s different around the US securities laws and
GDPR?

These issues were both known about when the working group formed the
requirements of the did method registries and the mandate laid upon editors
by the WG clearly stated to not arbitrarily restrict methods.

It seems pretty clear that if we are to apply the rules of one jurisdiction
then it should be applied to all. Against the will of the working group.
However, when China (previous email of this thread) and the EU have
produced similar laws and legal guidance you didn’t bring this issue up.
However this isn’t the first time you’ve been concerned with the usage of
the W3C and a particular did method [2]. Could it be that you’re relying
upon a selection bias of legal rationale here to selectively discredit did
methods you don’t like so they get removed from the registries and the US
securities law issue is just the latest example of this? Furthermore, even
if we did remove the entries in question from the registries this doesn’t
invalidate the compliance of the methods themselves. They can still claim
compliance with W3C’s did core specification even if we completely remove
the registry because the did core specification placed no legal
requirements to be a compliant method. The working group recognized this
would be an a highly subjective requirement which W3C lacks expertise in
which is why you’ve received so much pushback from so many different people
on this topic. As a next step to resolve this discussion I propose that the
working group’s decision should stand as is and any further discussion
should take place in a chartered working group with the authority to modify
the registries requirements since the CCG doesn’t have authority to change
the requirements of this registry.

[1]:
https://www.eublockchainforum.eu/sites/default/files/reports/20181016_report_gdpr.pdf?width=1024&height=800&iframe=true

[2]:
https://lists.w3.org/Archives/Public/public-credentials/2023May/0040.html

-Kyle

On Sat, 17 Jun 2023 at 8:18 PM Melvin Carvalho <melvincarvalho@gmail.com>
wrote:

>
>
> so 17. 6. 2023 v 1:46 odesílatel Wayne Chang <wayne@spruceid.com> napsal:
>
>> > Perhaps we could agree collectively to confine our work to projects
>> that are unequivocally within legal boundaries.
>>
>> If this is the direction you recommend, then I would like to see
>> follow-through on the logic and further proposals to remove from the scope
>> of the W3C technologies that support an open internet, such as HTML, CSS,
>> or ActivityPub, as these technologies may see use in regimes that where the
>> rule of law heavily incorporates centralized censorship, and these tools
>> can facilitate the opposite, which would have legal uncertainty. In fact,
>> you may also want to consider descoping groups like the Privacy Interest
>> Group from the W3C as well, due to the potential illegality of its topics
>> in jurisdictions that implement lawful mass surveillance. Otherwise, you
>> might need to propose what list of countries and jurisdictions you’d like
>> to exclude from the consideration of a global standards organization to
>> keep a coherent argument.
>>
>
> This comparison doesn't hold up to scrutiny. This is because the potential
> legal issues associated with DID methods, particularly in relation to US
> securities law, are fundamentally different from the potential misuse of
> technologies like HTML or CSS in oppressive regimes.
>
> US securities law is very specific and its potential violations, such as
> selling unregistered securities (which some blockchain tokens could be
> classified as), can have concrete legal and financial ramifications. The
> laws around securities are designed to protect investors from fraudulent
> activities and to ensure fair and efficient markets. This includes legal
> requirements for transparency and providing accurate information to
> potential investors. These are clear-cut issues with clearly defined legal
> boundaries.
>
>
>>
>> Best,
>> - Wayne
>>
>> On Fri, Jun 16, 2023 at 07:45 Melvin Carvalho <melvincarvalho@gmail.com>
>> wrote:
>>
>>>
>>>
>>> čt 15. 6. 2023 v 19:42 odesílatel Drummond Reed <
>>> Drummond.Reed@gendigital.com> napsal:
>>>
>>>> Phillip captured wonderfully why I have been uncomfortable from the
>>>> start of this thread: “DIDs work with chains, not tokens.” The fact that
>>>> the DID registry includes a DID method that works with a particular chain
>>>> has nothing directly to do with any token involved with that chain.
>>>>
>>>>
>>>>
>>>> I get the potential perception issue, but when it comes to the reality,
>>>> there is no connection, and we will only confuse the market by inferring
>>>> that there is.
>>>>
>>>
>>> I appreciate the perspective that the relation between DIDs and
>>> blockchains does not directly involve tokens. However, it's important to
>>> recognize the inseparable relationship between a token and its respective
>>> chain, as the latter records the state while the token triggers state
>>> changes. They inherently function in unison.
>>>
>>> The implications under U.S. securities law are clear: if an entity
>>> offers a token for public sale with the expectation of its value
>>> increasing, it constitutes the sale of a security and legal
>>> responsibilities follow. Furthermore, promoting such a token also carries
>>> legal obligations. Noncompliance can result in severe penalties and
>>> reputational harm.
>>>
>>> Many developers express concern that DID is not a single specification,
>>> but rather over 100 different specifications, as per the method registry.
>>> When we feature these blockchains under the W3C logo, it could potentially
>>> cast a shadow on our work that is otherwise compliant with the law.  It is
>>> uncomfortable to be adjacent to this at the W3C, especially as groups tend
>>> to work on interoperable ideas.
>>> I welcome Chaals comment: "W3C should strive not to engage in illegal
>>> activity".  However, I would suggest that "striving" might not sufficiently
>>> express the gravity of this matter. Perhaps we could agree collectively to
>>> confine our work to projects that are unequivocally within legal
>>> boundaries.  That still leaves plenty of scope.  More legal ambiguous items
>>> could be registered outside the w3c.
>>>
>>>
>>>>
>>>>
>>>> =Drummond
>>>>
>>>>
>>>>
>>>> *From: *Phillip Shoemaker <phillip@identity.org>
>>>> *Date: *Thursday, June 15, 2023 at 9:37 AM
>>>> *To: *Kyle Den Hartog <kyle@pryvit.tech>
>>>> *Cc: *Melvin Carvalho <melvincarvalho@gmail.com>, W3C Credentials
>>>> Community Group <public-credentials@w3.org>, W3C DID Working Group <
>>>> public-did-wg@w3.org>
>>>> *Subject: *[EXT] Re: Potential list of securities in the US [was:
>>>> Unlawful Unregistered Securities, DID and VC]
>>>>
>>>> I don’t understand this witch hunt about securities and
>>>> cryptocurrencies that this group seems to be focused on. A few important
>>>> datapoints that have already been expressed by others, including
>>>> Christopher Allen:
>>>>
>>>>
>>>>
>>>> 1. This is one government that has an issue with these tokens. And
>>>> while it is the government that rules me and my company, we are working on
>>>> a technology that has global impact.
>>>>
>>>>
>>>>
>>>> 2. This is about tokens, not chains. So saying that while Binance has
>>>> an issue with the SEC, and their token might be considered a security by
>>>> the SEC, this doesn’t mean that the chain that takes these tokens is in
>>>> violation or in any way suspected of doing bad things. A chain is not a
>>>> token.
>>>>
>>>>
>>>>
>>>> 3. DIDs work with chains, not tokens. So until we understand that a
>>>> chain is “bad”, we should not entertain this conversation.
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> - - -
>>>> Phillip Shoemaker
>>>> Executive Director, Identity
>>>> E: phillip@identity.org
>>>> M: 1.408.835.8444
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> On Jun 15, 2023, at 8:06 AM, Kyle Den Hartog <kyle@pryvit.tech> wrote:
>>>>
>>>>
>>>>
>>>> Why is this just being brought up now? China explicitly banned all
>>>> cryptocurrencies in September 2021 [1]. If we’re going to impose
>>>> restrictions for a single jurisdiction we should for all therefore every
>>>> did method that relies upon a cryptocurrency should be removed under this
>>>> logic. Do you agree that’s a fair extension of your logic? Or should we be
>>>> more subjectively selective, against the consensus of the DID WG which
>>>> explicitly stated the registries were not to be used in this way? Won’t
>>>> this just lead to a select few number of did methods being allowed based
>>>> upon a non-unanimous definition of legality? Within the US this is still
>>>> being interpreted by the judicial system about whether these even are
>>>> securities.  Globally, there’s a patchwork of legal interpretations. I’ve
>>>> pointed to China’s laws as one example but what about the regulations that
>>>> suggest an immutable identifier is actually illegal under GDPR’s framework.
>>>> Wouldn’t that mean all did methods, blockchain keys, and nostr identifiers
>>>> are illegal and therefore should be unreferencable at W3C? Or are we not
>>>> wanting to slip this far down the slippery slope we’re creating with this
>>>> interpretation?
>>>>
>>>>
>>>>
>>>> [1]:
>>>>
>>>>
>>>> https://asia.nikkei.com/Spotlight/Cryptocurrencies/Chinese-crypto-activity-slows-but-not-dead-despite-ban
>>>> <https://www.google.com/url?q=https://asia.nikkei.com/Spotlight/Cryptocurrencies/Chinese-crypto-activity-slows-but-not-dead-despite-ban&source=gmail-imap&ust=1687446422000000&usg=AOvVaw2jmE9pjfnIT5XdpbJqxFFZ>
>>>>
>>>>
>>>>
>>>> On Fri, 16 Jun 2023 at 2:17 AM Melvin Carvalho <
>>>> melvincarvalho@gmail.com> wrote:
>>>>
>>>> I was looking for a potential list of securities, that may be used
>>>> improve the did method registry, and closest I came to was this article,
>>>> there may be better:
>>>>
>>>>
>>>>
>>>>
>>>> https://beincrypto.com/full-list-cryptos-securities-sec-lawsuit-binance-coinbase/
>>>> <https://www.google.com/url?q=https://beincrypto.com/full-list-cryptos-securities-sec-lawsuit-binance-coinbase/&source=gmail-imap&ust=1687446422000000&usg=AOvVaw3w57XnaieOgUJnVX71pbr8>
>>>>
>>>>
>>>>
>>>> criteria: an investment of money, in a common enterprise, with an
>>>> expectation of profit derived predominantly from the efforts of others
>>>>
>>>>
>>>>
>>>> List:
>>>>
>>>>
>>>>
>>>> Cosmos (ATOM)
>>>> Binance Coin (BNB)
>>>> Binance USD (BUSD)
>>>> COTI (COTI)
>>>>
>>>> Chiliz (CHZ)
>>>> Near (NEAR)
>>>> Flow (FLOW)
>>>> Internet Computer (ICP)
>>>> Voyager Token (VGX)
>>>> Dash (DASH)
>>>> Nexo (NEXO)
>>>>
>>>> Solana (SOL)
>>>> Cardano (ADA)
>>>> Polygon (MATIC)
>>>> Filecoin (FIL)
>>>> The Sandbox (SAND)
>>>> Decentraland (MANA)
>>>> Algorand (ALGO)
>>>> Axie Infinity (AXS)
>>>>
>>>>
>>>>
>>>> Prominent cryptocurrencies previously declared securities by the SEC
>>>> include:
>>>>
>>>> Ripple (XRP)
>>>> Telegram’s Gram (TON)
>>>> LBRY Credits (LBC)
>>>> OmiseGo (OMG)
>>>> DASH (DASH)
>>>> Algorand (ALGO)
>>>> Naga (NGC)
>>>> Monolith (TKN)
>>>> IHT Real Estate (IHT)
>>>> Power Ledger (POWR)
>>>> Kromatica (KROM)
>>>> DFX Finance (DFX)
>>>> Amp (AMP)
>>>> Rally (RLY)
>>>> Rari Governance Token (RGT)
>>>> DerivaDAO (DDX)
>>>> XYO Network (XYO)
>>>> Liechtenstein Cryptoasset Exchange (LCX)
>>>> Kin (KIN)
>>>> Salt Lending (SALT)
>>>> Beaxy Token (BXY)
>>>> DragonChain (DRGN)
>>>> Tron (TRX)
>>>> BitTorrent (BTT)
>>>> Terra USD (UST)
>>>> Luna (LUNA)
>>>> Mirror Protocol (MIR)
>>>> Mango (MNGO)
>>>> Ducat (DUCAT)
>>>> Locke (LOCKE)
>>>> EthereumMax (EMAX)
>>>> Hydro (HYDRO)
>>>> BitConnect (BCC)
>>>> Meta 1 Coin (META1)
>>>> Filecoin (FIL)
>>>> Binance Coin (BNB)
>>>> Binance USD (BUSD)
>>>> Solana (SOL)
>>>> Cardano (ADA)
>>>> Polygon (MATIC)
>>>> Cosmos (ATOM)
>>>> The Sandbox (SAND)
>>>> Decentraland (MANA)
>>>> Axie Infinity (AXS)
>>>> COTI (COTI)
>>>> Paragon (PRG)
>>>> AirToken (AIR)
>>>> Chiliz (CHZ)
>>>> Flow (FLOW)
>>>> Internet Computer (ICP)
>>>> Near (NEAR)
>>>> Voyager Token (VGX)
>>>> Nexo (NEXO)
>>>> Mirrored Apple Inc. (mAAPL)
>>>> Mirrored Amazon.com, Inc. (mAMZN)
>>>> Mirrored Alibaba Group Holding Limited (mBABA)
>>>> Mirrored Alphabet Inc. (mGOOGL)
>>>> Mirrored Microsoft Corporation (mMSFT)
>>>> Mirrored Netflix, Inc. (mNFLX)
>>>> Mirrored Tesla, Inc. (mTSLA)
>>>> Mirrored Twitter Inc. (mTWTR)
>>>> Mirrored iShares Gold Trust (mIAU)
>>>> Mirrored Invesco QQQ Trust (mQQQ)
>>>> Mirrored iShares Silver Trust (mSLV)
>>>> Mirrored United States Oil Fund, LP (mUSO),
>>>> Mirrored ProShares VIX Short-Term Futures ETF (mVIXY)
>>>>
>>>>
>>>>
>>>> These instruments should not be promoted under the w3c banner, imho
>>>>
>>>>
>>>>
>>>