Lending Platform Post 5

This final post will cover the legal aspects of lending platforms.

If you've been in the cryptocurrency space for awhile, you must have heard about the cease and desist orders dropped on USITech, Bitconnect, Davorcoin and now, Genesis Mining. These platforms, according to the SEC are selling products that can be defined as securities.

What are securities? You may ask.

Well, according to Investopedia, a security is a fungible, negotiable financial instrument that holds some type of monetary value. By this definition, you can say that all cryptocurrency is basically a security. Yet there is a drawback on why cryptocurrency is not totally a security. Unlike stocks, cryptocurrencies do not have regulation imposed by a third party. This makes it very risky for investors and could make this market a living hell for newbies.

But I am not here to discuss securities. This post is about the laws you should follow when creating a lending platform. Although you are in the so-called 'Wild West', it does not mean you should break the law your forefathers fought and bled for.

So here is brief list of the laws behind cryptocurrency lending platforms:

👮 Securities Act of 1933 created during the depression as a result of American firms gaining record profits and use these to keep expanding their operation like there is no tomorrow in the 1920s. Well, that's history. It won't happen again (I hope). Anyway, this act is all about the company not engaging in fraud, misrepresentation of information and any deceptive means in the sale of their securities. It also gives the lender the right to seek physical information in the forms of documents and such concerning securities put up publicly for sales. (Bitconnect break this law)

👮 The Investment Company Act of 1940 which seeks to regulate the activities within a company in regards to investing, reinvesting, and trading publicly offered securities. Unfortunately, the SEC cannot do anything to retrieve money that is lost and does not influence how a investment company should be run.

👮 Only financial advisers should give financial advice or guidance to clients for compensation of service. In a way, anyone caught selling and promoting securities with questionable management (through paid videos, courses and advertising) are in fact posing as financial advisers. Disclaimers won't make the cut. A private lawyer will.

And that's my list. If there is any law that I missed, please comment. It will be deeply appreciated.

Next post will be... wait. This is the last one! What am I thinking?

Tomorrow we will return to the regular one post a day. Until then, keep icy. You so very nicey. Pass me lil ice tea.

Okay, I'm done.