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In re S7-27-15 (Transfer Agent Regulations) |
Originator: John Wooten <@JFWooten4>
Discussion: https://github.com/WhyDRS/SEC-Comments/discussions/14
Status: Draft
live: 1 Feb 2025
file: S7-27-15
href: https://www.sec.gov/files/rules/concept/2015/34-76743.pdf
Federal Holiday Regarding Questionable Custodianship Operations
- Independent audit from Government Accountability Office, reporting to the House Comm. Fin. Servs.
- Momentary market incentive sandboxing sessionwhere clearinghouses pay fines for any failures
[email protected] cc: [email protected] cc: [email protected]
Comments on S7-27-15: Strengthening American Leadership in Securities Industries
Hi,
The recent executive order promoting innovations asked our government to "identify all regulations, guidance documents, orders, or other items that affect the digital asset sector." Accordingly, we request a review of certain ownership exemptions under UCC Article 8 and transfer agent regulations in general. Transfer agents are the most direct means investors have for transacting in the market for stocks. Our National competitiveness in capital markets may depend on the regulations governing digital-asset providers of these services given a TAD.
We hope the new Crypto Task Force will consider rules directly protecting investor portfolios in the case of clearing agency insolvencies. Hopefully, an updated set of transfer agent governance will spur an innovative "market structure, oversight, consumer protection, and risk management" that empowers the Commission to protect an overlooked industry sector of increasing importance after the market events of four years ago, when several brokerages popular with retail elected to change access to certain securities to position close only without warning.
FOIA Services,
Please see the request in note 8XYZ9.
In good faith, John Wooten Member, WhyDRS
The Commission
100 F Street NE
Washington, DC 20549
Dear Secretary,
When I was a boy in high school, I began researching the stock market. At the time, I was working a minimum-wage job at Subway every spare weeknight or weekend double. I'd walk about half an hour to and from the store in the latter case when my mom was caught up at work. In the fleeting moments I had between classes and later athletics, I turned all my spare attention to our great investing industry because it promised a way out of the daily servitude.
In just one brief lifetime, we've seen our great nation's market system attract and expand to households from all ends of society. While only the affluent and wealthy might have had access to the securities of a distant physical past, today's most meager investors can trade on a fair playing ground with the same opportunities for growth.1
Or at least, it's supposed to be a fair equivalency. Because I was only 16 after months of researching the market, brokers wouldn't extend an account under my name. It was these early trades outside my own control that shaped my underlying passion for efficient securities markets, and my resolve that an investor's portfolio shouldn't be outside of their control. Indeed, I expect quite reasonably that a stock be registered and owned outright in my name when I pay good money to its seller. Do you agree that one's portfolio should be their own property?
Unfortunately, this is not the case in today's market functions, no matter your age. Indeed, it hasn't been the case since the unstructured monopolization of the clearing and settlement market many decades ago, despite both the Commission's and Congress' best efforts.2 For decades this reality has narrowly averted public catastrophe.3 --perhaps here, additional examples would be helpful -- But we can no longer ignore the pressing realities of these systemic idiosyncratic risks.
We have come dangerously close to the collapse of the entire system.
The rules, as they are today, [would require shorts] to deliver to them [Main St] 270 million shares, while only 50 million shares existed.
There is a hole in the system that we immediately have to stop.
— Thomas Peterffy
Fourteen American States have introduced legislation undermining the conceit and constructions DTCC's agents introduced into the 1994 Universal Commercial Code.4 Quite soon, a select few States intend to reconstitute the right of investors to their own portfolios as a due property law. When this happens, I am extremely concerned with the solvency of Cede & Co. should any number of institutional custodians relocate to such jurisdictions to reap the enhanced protections promised by our shared ideologies.
I am writing to you on behalf of WhyDRS, a decentralized unincorporated nonprofit association of thousands of individual investors. We are both the first American DUNA and a recently approved public 501(c)(3) charitable organization. Our Association stemmed largely from the unprecedented shutdown of market operations on 28 Jan 2021.5 Four years later, our great financial system still faces a well-known sweltering threat able to subvert even the most prudent rules set by this great Commission.
--Providing some citations:
https://www.c-span.org/program/house-committee/gamestop-hearing-part-1/588548
https://www.c-span.org/program/house-committee/gamestop-hearing-part-2/589320
https://www.sec.gov/files/staff-report-equity-options-market-struction-conditions-early-2021.pdf
Newman, Neal F., GameStopped: How Robinhood’s GameStop Trading Halt Reveals the Complexities of Retail Investor Protection (May 21, 2023). Fordham Journal of Corporate and Financial Law, Vol. 28, No. 2, 2023, Texas A&M University School of Law Legal Studies Research Paper No. 23-16, Available at SSRN: https://ssrn.com/abstract=4459285--
We sincerely appreciate staff's diligent efforts over the past few years of our collective outreach.6 It is a beautiful and appreciated reality that our incredible American institution provides a publicly accessible way to submit issues for public comment, and assurance that those submissions will not only be displayed publicly in kind but that they will be reviewed and considered by bright financial minds. Your response to our pressing concerns directly shaped the XYZ growth of our decentralized market of blockchain transfer agents XYZABC.7 We respectfully submit to the Commission that now is the time to take action on the years of work industry innovators have built since the advent of widespread blockchain technologies in the past decade.
Wall Street stunned our community when they unilaterally seized our ability to acquire a public security subject to no restrictions by the Commission. From this shock, our driving and unwavering objective centered around understanding the "Rube Goldberg" machine Congress expects staff to effectively oversee on a daily basis. The further many community members dove into market structure, the clearer it became that its reliance on a single fallible party exposes all investors to significant risk.
Since this awakening, we've made every effort to share and collectively inform the public about the material difference in ownership rights under direct individual securities registration, as compared to street-name registration.8 Historically, the Commission specifically responded when "many firms were thinly capitalized" under an SRO structure that was "unprepared" with outdated systems that "were essentially the same as those utilized" a decade prior.9 We hope that ongoing rulemaking will continue weighing the present risks of securities entitlements held through a central clearing counterparty and subsequent centralized depository nominee, an overarching market structure common across nations and commonly entangled with a net settlement system (the "Custodial Structure").10
As the Commission knows, this led to one nominee owning virtually all American securities once DTC organized its nominee Cede & Co. over five decades ago.11 Namely, the concentration of nearly all investment assets into a partnership trust presents unworkable conflicts of interest in the expansion of collateral lending facilities, be they direct or implicated by operational policies.
This point will become more readily apparent as further evidence documents in this comment. One key public article detailing the centrality of this fact exists on our website: "The DTC/Ceding Ownership – Choice without a Choice." As the Commission knows, our great American capitalist system relies on voluntary exchange of goods and services. Issuers cannot avail themselves of this basic benefit of free markets because there exists no competitor to DTCC. In fact, such a proposition has been coercively deemed unactionable by some of our nation's leading "Too Big to Fail" banks. We sincerely appreciate staff highlighting these facts in an exceptionally revealing image from the concept release at 45:
Over the years, we've come to greatly appreciate staff's perpetual diligent efforts to explain these structural nuances to the investing public. I, for one, would have had to pay many hundreds of thousands of dollars in either collegiate expenses or legal fees to comprehend information made freely available through Commission rulemaking, interpretive actions, and public statements. For these grand efforts by your many teams, I sincerely appreciate the immense decentralized power of securities regulation through direct acting agents. Might the present system of increasingly singular execution chokepoints for stock trading directly limit our democracy's ability to govern intermediaries? Namely, can we truly oversee an institution so opaque yet irreplaceable that the select few at its helm decree credit policy so central to market operations?
In the last ten years, certain blockchain technologies have emerged through the work of no central solicitor. Indeed, communities themselves both spawn up around the promise of these innovations and actively participate in building their future successful implementations. This work removes the need for centralized trust and explicitly obviates the function of DTCC and its subsidiaries. In a book profiling the DTCC at the brink of the Great Recession, the corporation's founding CEO wrote:
I thought throughout these years that as much as I despised monopolies, a DTC monopoly would be benign. Why? After all, monopolies tend to raise fees to customers unduly, let products or services slide in quality and ignore developing services for small customers... All of these developments, along with user desires that DTCC expand its capabilities in order to reduce financial firms' costs and risks, produced a DTCC that is now larger and more complex than the sum of its former parts at the time of their consolidation.
— William T. Dentzer, Jr.
More and more, today's investors do not trust in either the DTC or its largest members' solvencies, as will be shown in coming evidence. Should the Custodial Structure face any shortcomings in operational liquidity, Cede faces not only the very real prospect of failing, but also a pre-existing central plan for "bankruptcy replacement" by another surviving Custodial Structure.12 Such a course of action would immiserate hundreds of millions of custodial investment accounts.
To prevent this blatant theft, there appears to be no alternative course of action than the migration of securities holdings onto a blockchain and, specifically, the Stellar network.13 I would like to submit this point to the Commission today but make no further technical elaborations in this letter. In coming to this conclusion, I have extensively contemplated alternatives since my foray into Web3 research and development eight years ago. Four years ago, I began building an open-source alternative to the Custodial Structure on this blockchain. This system was materially ready for public deployment upon the submission of my first letter to the Commission two years ago, albeit canonically.
Some of our most concentrated financial institutions will attack this proposed free transaction scheme. They probably have a fiduciary duty to do so, which is fine. Certain DTC employees stopped speaking to me long ago. Indeed, even my laundry machine is older than the proposed blockchain network. I've sunk my life into discovering the most efficient system, and I plan to explain the logic of this choice in another letter.
Since the start of our research and development into the Custodial Structure, all local efforts came from volunteers. Individual investors en masse contributed selflessly their insights and revelations, whether it was a few hours parsing legalese showcasing abundant naked shorting14 or many days absorbing years of market research.15 This decentralized collaboration lead to our present DUNA structure whereby all communications take place in the open and public light of transparency, a trait direly needed in today's markets.
This aligns directly with the blockchain solutions staff contemplate as either a replacement to the Custodial Structure or implementation of a TAD system across private and public markets.16 The founding ethos of these decentralized digital ledgering networks perpetually stemmed around "allowing any two willing parties to transact directly with each other without the need for a trusted third party."17 However, the entire Custodial Structure revolves around trusted third parties, some so systemically-important that banking regulators deem them too big to fail.
To sum, we are building on top of well-defined cryptographic norms of both collaboration and transactional custody, defining a system that brings everyone into the same market playing field. This work introduces a sorely-needed working alternative to the linchpin single custodian entrusted with practically all American securities, as more and more investors demand direct custody of their investments. I will not elaborate extensively on this technology yet, as I find its principles to be our greater concern giving the looming safety holes in the CCP Regume.
Growing up, I was not the kind of child to play sports or explore the outdoors willingly. I recall one year in middle school where my Mom would lock me outside the house for half an hour a day. She got quite flustered when I sat in the garage working on trivial phone apps. It was that tendency to find electronic solitude each day that lead me into our great market system as an individual investor. But despite great advancements in computer technology, many legacy financial functions still rely on faulty physical verification protocols.
While these range in severity from DTC offering confirmation meetings and calls to medallion stamps, the core challenge remains anchored in the legacy regime's centralization. With Cede as the nexus of all market activity, investors often-unwillingly but coercively need to vest power and control to Wall Street's whimsical hypothecation facilities, which I will not extensively explore in this letter.
This tendency towards efficient digital systems held top-of-mind for me when I waited at least thirty minutes in a courthouse line last November. I was frustrated by the heinous events just north of Pittsburgh last year, and I hoped that my vote of confidence in our President could help our cross-institutional protocols serve American investors, not Wall Street elites. Might we follow in the current Administration's objective "to maintain self-custody of digital assets" which are ou familiar securities themselves?18 --just after reading through this, thinking it may be handy to add a small disclaimer to the already effective section at the top trying to draw the line between views which represent the collective and those which are personal. Something that shouldn't need to be said but perhaps still could be considering how new the concept of a DUNA is--
In accordance with this Executive interest in sectors related to support "stability of the financial system, individual privacy, and the sovereignty of the United States," I find it meaningful to consider the Congressional implications19 of a shift towards decentralization.
The Working Group's report shall consider provisions for market structure, oversight, consumer protection, and risk management.
— The White House
--I do not think this footnote is currently used (below) is intention here to add section about overvoting and truncation? I'd be happy to pen that in if so. I do see that later on you describe it briefly and link to a similar page on your own site--
Here's the (now removed) archive. The document walks through six options, with one of them just being to throw away the broker's vote.
chat ion the @chvss CBDC study and implications in re {{id}} for quote setup
given "no further actions may be taken to develop or implement" a CBDC {{id}}
Despite best offers from staff throughout an administration of intense individual investor advocacy, many of our structural market problems remain. We applaud the Commission for their exemplary efforts in XYZ_REG_NMS_tick_yya and implementing the universal proxy.20
These well-intentioned policies chip away piecemeal at the larger challenges of a securities industry operated on the basis of a single opaque, concentrated, and overbearing private corporation. This structure perpetuates a radically inefficient extractive system full of coercive risks, compared to a decentralized ledger system.
Our market's tabulators should not need multiple different methods to remedy the overvoting of beneficial share entitlements.21 These inefficiencies only exist because of the rampant propagation of clearing Failures to Deliver ("FTDs") since the 1994 amendment of the Uniform Commercial Code ("UCC").22
As the Commission knows, Article 8 of the UCC created these entitlements in 1994, legally separating investors from what was previously their property so that brokers could employ them for their own collateral. However, as we'll find meaningful later, the DTC's lawyers already had States make the requisite custodianship operational efficiency change in 1972.23 Upon an electronic-record modernization update in 1978, the UCC contained all required intermediary rights and protections to offer margin accounts and associated hypothecation products.24
The extension of Article 8 to uncertified shareholder interests did not have anything to do with the problems of secured lenders. Instead, it grew out of the so-called "paperwork crunch" which came to a head in the late 1960s in the securities industry... financial intermediaries and other bailees will presumably have records showing which notices were received when. Nothing in the revised Article 8 affects this.
Holy fucking shit, they can't have FTDs because "Under revised Article 8, there can be only one registered pledge of an uncertificated security at a time." at 883. Statute citation is note 114.
Plainly, there were no FTDs before the 1994 amendments to the UCC. --I wonder if SEC comm staff aware of this? I would expect that they would be, it's a pretty major part of the infrastructure history--
The ULC argues in infra note 41.
Information on how the system worked for custodianship and immobilization is in 61 to 64.
In segueing to institutional failings, let's incorporate the change in tone from a prominent case study of growing direct registration. This is also an example of growing needs for the DRS system to compete with the custodial holding infrastructure, now possibly thanks to the efficiencies availed by blockchain.
(In Establishing Standards)
[^]: See, e.g., uncertainty and standardization in the reporting of Direct Registration System holdings at one well-known issuer, available at https://www.drsgme.org/drs-reporting. A third-quarter 2022 filing states a specific number of shares "directly registered with our transfer agent." Compare this specificity to the "held by record holders" language used in reports thereafter. Should the DTCC's FAST agreements be required to delineate directly registered shares?
Specific reports probably just remove:
- Q3: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001326380/000132638022000137/gme-20221029.htm
- Q4: https://www.reddit.com/media?url=https%3A%2F%2Fpreview.redd.it%2Fa-collection-of-drs-statements-v0-nfekl3sb6r4c1.png%3Fwidth%3D1186%26format%3Dpng%26auto%3Dwebp%26s%3De4f4019421439ae9ee54bd59f58b61735b18936d
I share the Commission's stated public view that Coinbase Global, Inc.25 ("Coinbase") presents a brazen overstepping of "well-established principles of the federal securities laws."26 It shook me to the bone when I heard Coinbase's chief legal counsel say that their only licensure was state money transmission reporting at SFVegas 2021.27 As a user of this centralized platform since 2017, I found enforced policies and procedures meaningfully questionable, as at least three accounts I control have been unilaterally shut down or meaningfully restricted.28
These instances concern me because I am a law-abiding American citizen who's gone out of my way to report otherwise pseudonymous, unregulated, and profitable on-chain trading venues.29 Moreover, the accounts of family members I've seen restricted, all of whom live in similar circumstances, by and large, came without any advanced warning or corrective action avenues. As someone who's had many links to the financial system permanently severed before,30 this unilateral, opaque, and coercive central control from Coinbase surprised me given their public-facing mission to "increase economic freedom in the world."31
See subsequent Form 4 filings:
- $1.82 billion sale on list date and subsequent day
- USV rep duplicate fix
- USV rep duplicate
- USV named
All of them are at https://www.secform4.com/insider-trading/1679788-12.htm, but the link may be unstable.
Around the time Coinbase decided to close down its longstanding nonprofit initiative, I helped my partner open a Coinbase account so that she could deposit U.S. dollars onto the Stellar network. The purpose of these funds was to invest in an asset tradable on a decentralized exchange. When opening the account, we answered all questions indicating such intentions, provided all requested PII, and linked her bank account.
Within a few months, it was time to acquire the asset I wanted my partner to invest in. The price was ready to break out, so we started depositing funds into the account. Over the course of at least three months, my partner deposited her savings with Coinbase to acquire USD Coin ("USDC") and subsequently withdraw those tokens onto her blockchain wallet, as established offline and initialized through a hardware security device. These funds originated in part from her full-time employment and in part from a parental graduation gift upon her completion of college last year.
At least three initial deposits from Coinbase into my partner's wallet went fine, and she slowly accumulated the target asset. At no point did my partner send any assets to other wallets through a direct transfer. Moreover, she never interacted with any smart contracts that could implicate "impermissible activities." It was a very simple distributed-ledger account that received funds and used them to acquire assets.
Then, my partner received a bonus from work roughly equivalent to half her portfolio. Thereafter, she deposited a majority of the funds into Coinbase, where we expected to wait a couple of days for the transfer to clear.32 On 14 Oct 2024, she received this email, given with original emphasis:
Coinbase takes several steps to keep your account safe, and we actively monitor for unusual activity and scams that may affect our customers. Based on this monitoring, we are concerned you may have sent, or are trying to send, crypto to a fraudulent person or platform. Out of an abundance of caution and to protect you against potential losses, we have temporarily limited your ability to send additional crypto until November 14, 2024. This restriction will be removed automatically after the set time period elapses.
This was extremely concerning given my past experiences trading financial assets. I began acquiring this particular asset for my partner months prior because I knew it would materially increase in value. Indeed, in a transaction four days before this communication, I invested the last of my USDC savings into this asset given its technical breakout setup.33
My partner had been asked to submit facial scans and identification documents to Coinbase before, so we were surprised by the recurrent request to complete a "government check" of her physical credentials. We completed this document submission and liveness ascertainment at least three times so as to satisfy Coinbase. We received an affirmative acceptance by an automated system, but the Coinbase interface still said my partner could not transfer her USDC for an entire month "as a precautionary measure, to protect you against potential loss."
In the interim waiting period, Coinbase maintained my partner's ability to buy the target asset through their centralized exchange interface. However, the only available trading option required at least a 1% commission on top of a three-figure trading fee. Comparatively, the free decentralized exchange on the network offers the same service without the risk of front-running.34 Accordingly, and in the capitalist principle of not supporting businesses which I despise, I refuse to trade on a centralized exchange what can otherwise be transacted on a decentralized exchange.35
Over a week later on the 23rd, my partner received an email declaring that Coinbase had "completed your account review, and buy/send/deposit services remain disabled at this time." When logging into the Coinbase website, she was greeted with a new message stating her account could no longer send any assets at any time as "a precautionary measure, to protect you against potential loss." Since this was worded similarly to the last message, I assumed she could transfer them later, such as the original November date given such comprehensive disclosure of personal information.
At the time, my partner had no other option to deposit funds into her wallet in a timely manner. Indeed, transferring back to her bank account would take days before another days-long wait to any alternatives, which then imposed their own holding-period transfer restrictions. Thus, she was stuck with the funds sitting in her account, unable to send them anywhere they could be bridged over to the decentralized exchange. Does the Commission tolerate this lethargic processing of customer deposits?36
Upon checking back on the account on the original release date three weeks later, I found the same message that all transfers were disallowed. This was quite frustrating because the price of the target asset had increased by more than 30% while we waited for the deposit to process. Notwithstanding, I meticulously checked the account each day thereafter, until a new message appeared over two weeks later on the 29th:
We are reviewing your account. This process can take up to 3 days.
At this point, the value of the target asset had increased by a factor of six. This was materially concerning because the profit on that trade would have been approximately twice my partner's pre-tax annual income. In the next three days, the target asset continued to appreciate while Coinbase reviewed her account.
Sluggish financial intermediaries are no surprise to our community. Many international investors have needed
First BTC top too
Still restricted
The "intermediation failure" part can be laid out without explicit DTCC reference through the other institutions. It will just need to lightly implicate that this is all based on the links commonly underlying the whole framework.
The one item I'd like to add in a footnote here or in the 144 no-action: There was a call between Coinbase and staff discussing their purported TA/ATS structure, which gives rise to clearing agent participation. They claim to ignore this and argue that it does not apply—hurr durr >?>WAS>—lol at App. A ¶ 24, available at https://assets.ctfassets.net/c5bd0wqjc7v0/2pW56ln6rPJ7koLHlu2L8G/5041e0166c408698b621fde543539d76/2023-04-19_Coinbase_Wells_Submission.pdf#page=68. ¶ 25 talks on DAS.
16 Jan 2025: Email System issue impacting deposits, payments, and transfers "We began experiencing a disruption impacting the processing of some deposits, payments, and transfers, which is due to a technical issue with one of our service providers."
Implicates the 400k monthly chat from May 2024 (most likely on the 28th without checking the calendar) (spanned into June 12). "Specifically, this has delayed processing of some transactions, including direct deposits and Early Pay credit for direct deposits, as well as electronic payments and transfers (ACH)." [emphasis added]
As with the Coinbase interface and other private markets, we can harp here on the identity flaws and inefficiencies by means of the:
16 Jan 2025: At least a third request to submit ID to "activate crypto transfers," which initially started as a requisite to log in, despite material existing Roth assets— which, of course, can't even link to the main bank account....
- The request initially began as a requirement just to log in.
- The system still does not allow linking to the main bank account.
Same as Green Dot/Citi
Adjustment to account letter dated January 6, 2025, stated the savings bond "was redeemed for an incorrect amount."
The actual amount was 40% less, with $100 being redeemed as $59.76.
The account was debited into overdraft due to human error discrepancy. The message was signed "SSS" from the bank's "Centralized Operations."
6 Nov 2024 email: "Login to your account to avoid a $25 inactivity fee" stated, "Our records show that it has been approximately six months since you have logged into your SoFi Investment account(s). Please log in by end of day 11/15/2024 to avoid a $25 inactivity fee."
A $25 fee was charged on 20 Nov 2024, effected by selling 0.1 shares of the account on 21 Nov. The remainder was sold, and the account was closed on 25 Nov.
Email dated 6 Dec 2023 indicated, "Crypto services ending soon" and "SoFi will be discontinuing crypto services on December 19, 2023."
"You have until January 28, 2024, to sell your crypto holdings and close your crypto account."
This resulted in the disposition of Lumens bought at or about the price level on June 17, 2022. They were sold and credited to the broker account on 29 Jan 2024 (~20 x 51).
It also offers a stellar place to insert arguments against central intermediation of the transfer process.[^cb] Hopefully, these and additional emotional arguments around the last FOIA in OCC (24-01211-E) and more recently 25-00185-FOIA will push the Commission toward the 501(c)(3)'s side. :)
Recently, inadequate administrative procedures of an unreliable central broker cost me and my partner $100k in the last couple of months.
Transferred ACH into account at the start of the year. Wanted to put it into a 2024 Roth contribution (cannot make this internal transfer until the end of the period—just for investing in our great nation's assets, which aren't even truly owned...). Can't—need to wait at least three weeks for cash to settle for "protection of my account," even though banking Reg E specifically puts liability on the intermediary.
- Extrapolates into the Coinbase argument (still unresolved) and client verification and ID problem solved by crypto/Nakamoto.
- 17 Dec 2024: Dental procedure.
- 14 Jan 2025: Check issued and dated but arrived at the dentist's office even though insurance directed it to the home address.
- 24 Jan 2025: Received it after a handwritten address was read incorrectly by the mail system and delivered to one of our neighbors, who opened the check.
Also parallels Green Dot failure and impact on unprocessed autopay → cancellation, need to "call my bank."
I started drafting this letter in true form after an opening community discussion37 in our growing public GitHub collaboration system. Thereafter, we discussed the contents and implications of these policy amendments at depth.38 More broadly, we've been discussing the necessary structural changes and adoption plans for the better part of a year in our collective Discord server, as is additionally common in modern blockchain development groups.39
Indeed, we've produced a mountain of pioneering research, actively clarifying meaningful ownership concepts40 alongside the Commission's helpful stewardship. Remarkably, as someone new to the community these last couple of years (canonically), all this action took place with no central coordinator, no compensation mechanism, and no legal offices. We live in a very different time than the days past when our current systems originated.41 Given the burgeoning environment... does the Commission believe XYZ is more masculine... now is the time for a new and tested system?
Regardless of the risk surrounding SROs, millions of American investors risk the insolvency of transfer agent nominees --do you think it's worth expanding here on the idea that in UK there is a forced legal disclosure from TAs stating plainly that in case of nominee insolvency they are responsible to make investors whole, but for US TA operations there is no similar requirement?-- (or third-party administrators, as the case may be). Given the frequent complex relationships between such custodians and broker-dealers, any mishandling of securities lending practices could place the most direct form of employer-sponsored retirement savings in risky hands. Given Wall Street has been known for decades to mismark short positions as long,42 do staff believe that nominee administrators' model of grabbing investor services "at no charge or for a modest fee"43 can sustain the bookkeeping prudence costs associated with largely state-overseen holding compliance?
Our shared developments these past few years have shown me just how efficiently online forums and collaborative working tools organize otherwise disparate individual investor and financial-system advocates. With this basis, we can directly, specifically, and immutably process thoughts and inspirations into production codebases processing material amounts of value, such as Bitcoin.44 Given DTCC has recently proposed a TAD-like collective securities ownership framework, we respectfully submit that any such system should be required to be open-sourced under a copyleft free software license to foster this collective collaboration.45
I really don't see a need to formally acknowledge this because it is a complete joke. That said, I think the competition arguments are apparent, and we can clearly infer the proprietary nature of much of it. The issue stems from the organizational setup—everything in terms of the study was conducted with no notice to the Commission or industry. That's a larger issue that ties into the whole open-source operations argument (so tackle in a separate location).
-
Collective SS mod interview of Conn in case of no shares in Cede: https://www.youtube.com/clip/UgkxV1YeRljQHPcN4NO5aBdj1HPS7apnbNrC
-
Independent PB research of "kill switch" as introduced: https://www.youtube.com/clip/Ugkxd0_I3EmB6m2oRNnJ2kTku32HTsIleI34 On a FUCKING SLOW DOWN PIT STOP at https://www.dtcc.com/-/media/Files/Downloads/issues/Unscheduled_Close.pdf That references:
-
Original document mentioned on June 4 was amended on Dec 30, 2024. Removed the ability of issuers to access Security Position Reports or the Issuer Agent Portal (grom change at 6).
-
Fine and the Bob clip: https://www.youtube.com/clip/UgkxX1DN63sYrhFeAXBDM76mAyRXQBl-TGME
And then, simply to compare the fragility of these institutions with the decentralized, scalable, global ledger technology existing on blockchain.
As for the slowdown arguments, we could start with a reference to 279 with how they themselves have proposed these things. Alternatively:
Chat on how I came into markets and industry and sector and all that last year through two major investor-focused reform efforts aimed at promoting the stability (transparency, and inclusivity) of our financial system.
How Wall St has again and again tried to isolate themselves from idiosyncratic risks and force Main St into potential bankruptcy and such through the liquidation stack, which directly ties into the blatant protection under UCC.
Petitions for Rulemaking: Amend Clearing Agency Rules for Consistent Close-Outs [File No. 4-842] https://www.sec.gov/files/rules/petitions/2024/petn4-842.htm https://github.com/orgs/WhyDRS/discussions/2#discussioncomment-10537423
File No. SR-OCC-2024-001, which has at least three major Reddit threads: https://www.sec.gov/comments/sr-occ-2024-001/srocc2024001.htm
Allowing massive institutions, many of which are worth hundreds of billions of dollars, to have priority over security entitlements belonging to individual investors creates massive distortions in the marketplace that could ultimately hasten a large economic crash. But even if this were not the case, an important question for policymakers remains: Is a system truly worthy of saving if it would happily sacrifice individual investors' wealth to save allegedly too-big-to-fail institutions?
— The Heartland Institute
quote from full context https://heartland.org/wp-content/uploads/2024/01/1-26-24-UCC-Article-8-State-Legislative-Alert_Final.pdf and article https://heartland.org/publications/protecting-private-property-through-the-uniform-commercial-code
Don Grande, Esq. co-authored the State action letter above and {[leading advocate section... to policy via context Last year]}. ^ as a possible fn: he also wrote https://heartland.org/opinion/you-dont-own-what-you-think-you-own/ with his wife
"
the Article 8 revisionsdid not do anything to reduce the likelihood of systemic risk"
changes from lawmakers PENDING in South Dakota, Tennessee, North Dakota, Iowa, New Hampshire, Oklahoma, Utah, Texas, Arkansas, Montana, Louisiana, Wyoming, Connecticut, and Pennsylvania46
They also mention DRS at 1:24:00 and retirement implications. Bob Chatten on "UCC9??? I have only focused on UCC8" regarding the 1978 amendments.
Firstly, we can cite these MF's absolute nothingball of deception: : See https://wooten.link/ULC-fraud
which starts off with:
UCC Article 8 gives priority to those lenders who extend secured credit to the clearing corporation to provide the liquidity that might be needed to settle a given day's trades if one of the brokers or banks fails to perform its obligations to deliver securities sold or make payment for securities purchased.
at 2
and then it's a radical extrapolation to FTDs from the FOIA data request debunk.
Individual margin was already growing rapidly, and
These shouldn't need to be directly quoted.
1994 UCC Article 8 revision
The Code Title... varies
UCC 8-503 and UCC 8-511.
8-503 mentions the 2 exceptions giving certain secured creditors priority over entitlement holders in 8-511 so we strike that reference to 8-511.
in 8-511 we strike the 2 exceptions (b) and (c).
We also suggest addressing the jurisdiction/choice of law provisions usually found in 8-110 (and a conforming change to UCC 9-305).
// banking lobby threats in Tennessee {{state-stopping}}
The larger big source is the NY Fed response to "EU Clearing and Settlement Legal Certainty Group" European Commission International Market and Services DG / Financial Services Policy and Financial Markets at https://wooten.link/fed-certainty
§ I.1.b.ii ¶ 10 at 8: in re question
Where securities are held in pooled form (e.g. a collective securities position, rather than segregated individual positions per person), does the investor have rights attaching to particular securities in the pool? they write: No. The security entitlement holder does not have rights attaching to particular securities in the pool, he has a pro rata share of the interests in the financial asset held by its securities intermediary to the amount needed to satisfy the aggregate claims of the entitlement holders in that issue. This is true even if investor positions are "segregated."
See also great taking at 45 which is § III ¶ 12 The other quotes get into control and specifically "an investor is always vulnerable to a securities intermediary that does not itself have interests in a financial asset sufficient to cover all of the securities entitlements that it has created in that financial asset" but then you're diving into the two exceptions tacked by the "margin" BS ULC reply at n.15.
[don-dict-fn-pending]: Namely, leading advocates promote [doing XYZ above]. These legal experts also endorse [509*11 cross-ref].
{{euromoney}}:: https://www.euromoney.com/article/b1322h65c9hbf8/prime-brokerage-the-day-the-music-stopped
In discussing foreign regulations which mimic the State bankruptcy proceeding exceptions, Euromoney wrote that "brokers can claim ownership of all cash and securities held with them even if the account is not in debt and securities are being held long."47
Quote from prof at 6 https://jhfinance.web.unc.edu/wp-content/uploads/sites/12369/2016/02/Hedge-Funds-as-Liquidity-Providers-Evidence-From-The-Lehman-Bankruptcy.pdf
GT source on JPM secured credit at: https://img1.wsimg.com/blobby/go/1ee786fb-3c78-4903-9701-d614892d09d6/taking-feb24-screen2.pdf#page=66 which incorporates the defense safe harbor: https://www.creditslips.org/files/lehman_brothers_holdings_inc.__14.pdf and the ruling https://www.nysb.uscourts.gov/sites/default/files/opinions/198038_134_opinion.pdf
We should get the Caselaw links ideally.
File No. SR-DTC-2006-1648
https://www.sec.gov/comments/sr-dtc-2006-16/dtc200616-42.pdf
"The DTC ... [is] attempting to make... rules... for transfer agent non-members... [who] are direct competitors of DTC." https://www.reddit.com/r/Superstonk/comments/pw0opj/computershare_is_a_competitor_to_the_dtc_comment/ (likely won't be cited but interesting to note).
Modern context at 13 in File No. SR-DTC-2020-017.
https://doi.org/10.21033/pdp-2021-02
Implicates chiefly as a prerequisite the self-custody arguments made here.49
Ideated to segue into the no-action, pending 144A(e).
- Comments suggested for the most transparent due process.
- No comments on DEX trading.
- Introduce routing conundrum from FxDAO discussion at wooten.link/1558.
- Discuss mandated execution paths and central intermediaries named in Reg SHO, NMS.
- Limited transactions effecting ATS.
- Commodities not in 15c3-3 (dodged interoperability).
- "Digital asset security definition is controversial."50
- Traditional TA ledger vs. TA blockchain distinctions remain unclear or uncovered.
- Statement generalized but fact-specific on applications over written questions.
Minimize investor exposure to:
- "risk loss/theft"
- "broker financial losses"
Further Correspondence Documented in Email Around ID's Timeframe51
No distinguishing between type of digital asset securities given "truly securities"
Requisitioning control over the entire industry by a single corporation, which exists with for-profit stakeholders, either directly or indirectly.
In the former case, we have a public corporation that outed in their S-1 filing (no citation) that they will "[insert quote on saving the world crap]... [insert very compelling different quote about making one billion monies]."
Central DTCC DA study cited later, requisitioning control over the entire industry by a single corporation that exists with for-profit stakeholders, either directly or indirectly.
In the former case, we have a public corporation that outed in their S-1 filing (no citation) that they will "[insert quote on saving the world crap]... [insert very compelling different quote about making one billion monies]."
v. the board on DTCC I don't think we touched on this yet. Perhaps implicate it lightly with identification and name-dropping of the select few worst offenders thereto.
--will need to reformat section into direct response to the DTCC blockchain study which has been mentioned a few times already--
The diagram on 112 is simple and fantastic, in my opinion. It doesn't cover custody, but it doesn't need to be appreciated—types of assets and implied claims therein.
I also think the tokenization explainers on 113 are fantastic. "Tokenization has the potential to unlock the benefits of programmable, interoperable ledgers to a wider array of legacy financial assets," with a graphic to the right establishing where relevant data is stored (ideally, a public read blockchain, but similar to DTCC, this is unspecified). SIDEBAR - WhyDRS could use articles breaking down tokenization in a similar way but from a custodial perspective, relating it to a title deed in a safe if holding the private key.
"The benefits of tokenization extend far beyond and are independent of native crypto assets like Bitcoin, as well as the public, permissionless blockchain technology those assets have popularized" - (114) Spoke too soon. Giving away the game here, aren't they? --> Leads into the unified ledger section you highlighted --> Must "be developed under the auspices of central banks."
"Cybersecurity Threats: Certain types of DLT solutions (public, permissionless blockchains) are vulnerable to hacking and other cybersecurity attacks, which could pose risks to the security of tokenized Treasuries" - (118) Maybe in the case specifically of a Treasury issued by a nation-state, I could appreciate the point here. Typically, public permissionless is my preference.
Under concerns, they include: Increased Complexity and Opacity: − Tokenization leads to more composability, which could significantly add complexity and opacity to the financial system from new and non-traditional assets being added to the digital financial ecosystem. − Improperly coded smart contracts can rapidly trigger unwanted financial transactions with unintended consequences.
Page 120 is borrowed from https://www.dtcc.com/-/media/DASCPWhitePaper.pdf, which I don't think I'd read before—some new homework.
Treasury study on DA https://home.treasury.gov/system/files/221/CombinedChargesforArchivesQ42024.pdf#page=107
- Network rails as independent means of exchange re 109, implicating JFWooten4/free-markets#6 🤝🏿
- Id. at n. A and banking protections implications not given in the K case
- Use the "even small incremental improvements in a very large market like the Treasuries market can be impactful at scale" argument on 114 as a contra to S7-23-22
This (personal part) should frame paying bribes53 to financial intermediaries to transfer fiat value (maybe word more nicely to dollars) for the purpose of sovereign use on-chain (but wording there probably needs to align more towards libre principles in a triad).
As discussed on TS https://lnns.co/fE5ZXkHvVeJ -
Banger quotes:
- "DTCC and the BIS Will likely require the central bank and tokenized USD (CBDC) to play a pivotal role in a future tokenized payments and settlements infrastructure" at 124 Contrasts with E.O. and drives directly into CB arg
That said, it goes against https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology/ EO 14178
This whole point is covered well enough by XX Facts § II.54
Man, that is a good source.
Per their trading API at https://docs.cdp.coinbase.com/get-started/docs/overview
Parallels the securities interfaces we see from SIP providers as interfaced middlemen.
Compare with the banking approach of never having any kind of public tech by nature of private and proprietary system competition.
Original CB image says "maximize your trading with Coinbase advanced API."
Make an API key "to connect, build, and trade."
Initiated Dec 18, 2024, from CB. Still awaiting KYC. To WF due to no support for LR via either manual or Plaid as the only option. Estimated standard 2-day transfer.
On Dec 20, 2024, WF performed an RTP instant transfer to LR. Placed on hold until Dec 27, 2024.
Received at least three calls from LR and a compliance email mandating a call by Dec 26, 2024, at 3 PM ET: "Please give us a call today 12/26 before 3 PM EST," stated in virtual 'secure' webmail at 10:49 AM ET. "We are reaching out to ask for your help verifying some information."
Possibly a good idea to start with the natural monopoly conversation and implications of a shared standard like NSCC-ish.
If ultimate economic power is to be placed in the hands of commercial corporation, as is now the trend, democracy will live only in words, not in reality, for corporate governance of such organization is the antithesis of democracy—or of equity and justice, for that matter.
—Dee Hock
I agree with the late Visa network founder's thesis that the infrastructure underlying our markets should not lie in the corruptible hands of a select few industry intermediaries. We've seen the further and further consolidation of DTCC and its natural squashing of transfer-agent innovation. Now is the time for a new, parallel rail available to investors seeking direct custody of their investment securities. It is my understanding that the present administration made a promise to keep us fortified from Wall Street's "predatory short selling," resulting in the FTD problem.55
As the Commission knows, I am also the founder of a registered transfer agent operating using the public open-source blockchain system communicated in previous letters. As shared, I have built this system over the course of many years of technical analysis, regulatory study, and Pythonic implementation.56 As the primary contributor to these efforts, I still both retain all shares in the agent and control the licensing nature of my work.
I have chosen to release the vast majority of Syndicate GitHub code under expressly permissive copyleft free software licenses.57 This allows any agents to deploy our securities management infrastructure on top of the blockchain for fast, accurate, and automatic record-keeping, including on-chain restrictive-legend removals under 17 C.F.R. § 230.144. By the nature of this open-source technology, the parent agent corporation cannot restrict or otherwise manage oversight into agents deploying the permissionless-ethos system.
Accordingly, it's my intention to donate my shares in the company to WhyDRS, presuming that's something the community would like to happen. I am still weeding through the legalities and tax implications of this transfer given the treatment of interest under 26 U.S.C. § 1361(b)(1)(B), inter alia. Notwithstanding, I intend to give out the details here in a manner that grants the Association binding and enforceable control over the company.
Firstly, I would appreciate a reply from staff within 90 days as to the ownership of a blockchain transfer agent by the DUNA, as such a nonprofit arrangement mimics existing regulatory-oversight schemes availed of Federal recognition. Implications from the Commission's response to this gift could materially assist community members with an analysis of whether or not to accept the shares. Namely, this combination of equals into a superstructure for public infrastructure quite directly raises the participatory and reputational bar for our ongoing social efforts toward efficient markets.
--Love this John, I wish I'd seen it sooner to compliment you on the gumption and forethought to see direct comment from the SEC on this intention.--
Secondly, maybe we can introduce putting this out to comment again.
What we need should DTC fail is nothing short of a completely new (inter)national market system.58 I find the prospects of such a market controlled by one private corporation bleak. Given past experience shows the centralizing tendency of good clearing infrastructure,59
Here we can introduce the shared inter-agent standard available as an open stock transfer protocol.
In this interview calling for a tightening of brokerage credit: (https://www.marketscreener.com/quote/stock/INTERACTIVE-BROKERS-GROUP-50014/news/Thomas-Peterffy-Talks-Trump-M-A-Cryptocurrencies-48573820/ - don't href) Just refer as with Bloomberg Radio "last month."
A free market economy is the only way to efficiently run a society.
I'm afraid that the markets are becoming overextended, and... a downturn is a very big risk becaue margin balances have been growing very very quickly.
Bitcoin falls, say, 30, 40, 50 percent from one day to the next. There'd be many bankruptcies. The clearing corps would be unable to pick up the pieces, and... all the bad debt would be transferred to the clearing members.
— Thomas Peterffy
Similar power track as running validators, which we should introduce on a single-entity basis with triad implications.
^Should include a footnote related to setting a reorganization record so other nations can follow jurisprudence on TAs implementing TAD3 and investors uncovering government roles.
Lumen alignment footnote given the network effect and its corresponding impact on price in a market for layer-1 utility tokens can href https://www.youtube.com/watch?v=OrpHfZcywJw&list=PLD_o9ntBnmGam9BuoTr_4cjPOksi1Dl1A&t=92 in support of former claim
Also, I guess it would be irresponsible not to say that "I have unsuccessfully applied for funding from the SDF or its related projects engaging in the disbursement of the network's native layer-1 utility token at least three times, and I personally do not particularly plan to apply for such financial support again"
This will obviously need to lie somewhere else as we expand our Association relations with industry participants. Nonetheless, I'm inking down any live thoughts from the cold calls.
(Media replied) "Information you are seeking is proprietary."
Unreachable
"I don't know who would be in control of that" when asking about technology operations. Held extensively while the operator tried to connect. Couldn't determine a person at the organization associated with technology modernization or operations.
No email reply
No reply
No email reply
Has software for book-entry.
"Wouldn't be something we would work with."
"We use a very basic software that helps transfer between the investor, the broker, and the DTC."
"Not interested, thank you anyway."
No email reply
No email reply
"Don't have a department for this." "Don't have email access." "Don't have any concerned department for this." "Only separate line for employee stock." "No other..."
No email reply
Presumes a transitory framing of collaborating with brokers by positioning as replacing the DTCC and empowering them with a more efficient clearing and settlement system.
- Received a legal document from WF authorizing signatures with wet signatures.
- Did not require medallions or ID certifications.¶
- As commonplace in past chats, they rely on obtaining a "[legal] opinion from a big law firm, and if something goes wrong, they just sue the big law firm."
Emailed DTC only. Did not conduct a call for that offering. (Implications of past TA email fraud on a $9M wire item.)
Bank DWAC'd it out and can DWAC back to own custody via physical certificate.
"I've been trying to get this done for a week. It's really stressing me out."
Trustee may hold bond proceeds until project milestones. Interest paid post-bulk fundraising.
These can be subverted in a footnote based on leadership actions that "jeopardized the safety, soundness, and stability of the United States financial system" per H.Res. 1574, as referenced in this video.
probably limit in scope as far as possible with ITP per https://discordapp.com/channels/1102309240145707049/1336149183253712957/1336154168871616624
- Margining methodologies
- Broker charge methods
- Emergency adjustment processes
- Certificate issuance custody processes
- Insurance and transfer operations
- Red teaming and cyber resilience
We would greatly appreciate it if the Commission could kindly put this subject up for review in a new proposed rule by the second quarter. (## Careful here)
Recently, my partner hit a cat on her drive home from work. Reflecting on the moment, she remarked that she "knew she was supposed to brake" but was in a late-night panic after a hard day. On approach, she swerved to avoid the cat, but unfortunately, it ran in the direction she swerved.
Segway to "Just washed my car."
There was a small mud spot on the tire, but I didn't have a tire cleaning product. Once I finished, I drove it into the garage and tried to clean it. Even though there was only one dirty area, I had to wipe down the whole tire because it was too dark to see the blemish.
The Commission introduced the Central Certificate Service ("CCS") in the context of the Unsanctioned Practices Study ("UPS").60
Might we consider “hitting the brakes” on the markets while we publicly review the full extent of ownership diffusion across the industry? (phrased more diplomatically in reference to the Commission). Might this approach allow us to uncover the best course of action if an extensive external audit reveals a material commandeering of American investor assets?[Dole]
[Dole]: See in re DE case
Highlights the paramount importance of maintaining confidence in our financial systems and the United States dollar
TBD, but the easiest hook point will probably be its universal basis of quantification; try to customize with any crypto securities team quotes given time.
It might be close, but I know this will sink the hook in well.
Then let's extrapolate this into making the SRO clearing numbers transparent so that everyone can see the baseline market data on top of the limited existing FTD and SIP disclosures. This draws along the parallel of seeing the flooring light past Moozooz's obstruction without touching the existing gated systems. So, to add to the three negotiating fronts, we can introduce circular data access—a natural aspect of the TAD system—given that investors would require access to the same ownership information collaboratively shared between agents in a cooperative system.
Please wrap it up with something a little more inspirational from the depths of an equality standpoint. Everything here started around a radical change in social monetary and financial system organization with Nixon's depegging, and I want so dearly to convey that sentiment in saving securities themselves from the same fate. 💜
On the central clearing of Treasuries in 2023, Pierce writes:
Federal Reserve Chairman Ben Bernanke explained that: "[T]he historical record shows that clearinghouse arrangements have generally withstood even severe crises. This solid performance reflects good planning and sound institutional structures but also some degree of good luck, as crises have also revealed important vulnerabilities, vulnerabilities which prompted subsequent reforms by both the private and public sectors." Good luck is not a strategy, so why can I be confident that Treasury clearinghouses will perform even in times of market stress?
Peirce and Uyeda dissent on last month's electronic modernization through (inline) XBRL and custom XMLs:
Like any technology, specific structured data languages can become obsolete—similar to how the "write once, read many" technological storage format (i.e., CD-ROM) for broker-dealer books and records remained a rule requirement far beyond its useful life.
https://www.sec.gov/newsroom/speeches-statements/peirce-uyeda-statement-focus-report-121624#_ftn6
Footnotes
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: See, e.g., Cite Robinhood triplicate from discussion on fractionalized share pushback from the industry. I know we all know the truth here, but there isn't a better way to introduce the narrative imo. https://www.sec.gov/edgar/browse/?CIK=1783879&owner=exclude https://www.sec.gov/Archives/edgar/data/1783879/000162827921000323/filename1.htm , available at https://www.sec.gov/Archives/edgar/data/1783879/000162827921000280/filename1.htm. ↩
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Cite the 1975 competition promotion info at https://www.congress.gov/94/statute/STATUTE-89/STATUTE-89-Pg97.pdf which mentions competition as a positive position item twenty times,
Naturalpath to Monopoly Paper, and BASIC replies promoting competition from the Commission staff at https://www.sec.gov/news/speech/1975/111875loomis.pdf ↩ -
See Cite the Lehman cases on a protected class. ↩
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I want direct quotes here focused by and large on the agent part. The legislative reform should stay in the main argument. https://fmlc.org/wp-content/uploads/2018/02/Issue-3-Background-paper-on-Article-8-of-the-Uniform-Commercial-Code.pdf#page=8 "security entitlements" ↩
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Cite the two hearings and the Congressional study with tenor-deep ethos ↩
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Let's carefully cite a range from the NSCC petition to OCC withdrawal to EDGART modern to things from the other side of the hall with deference to scrutinizing TAR at n/16 (see Id) ↩
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Cite explicitly and prominently the Gensler interview and anything else major, but largely the stemming function which gets set up in Id's hall circa ↩
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While "Wall Street name" is a relatively well-known concept today, the concept release first introduces the term in note 45 related to the cited "Unsafe Practices Study" for Congress, available at https://www.sechistorical.org/collection/papers/1970/1971_1201_SECUnsafe_01.pdf. At 29 therein, staff authors contemplate the failure of businesses "under a capitalistic system" before the widespread development of brokerage capital requirements. ↩
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Id. On the very next page of this document, staff write that "Treasury funds which are available in the event they are needed to accomplish the goals of SIPC are not an inexhaustible amount" and ultimately originate from taxpayer dollars. Does the Commission plan to exhaust any required SIPC funds in the event of a clearing agency failure, especially given their particularly thin capitalization as compared to the assets they hold? ↩
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See also reference to this market structure as a "CCP regime" by various world government regulators such as the European Securities and Markets Authority, a group that used the term in at least three final technical reports from 2013 to 2017 and ultimately codified it into an adopted regulation amendment with nearly three dozen mentions of the regime, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017PC0331&qid=1738728760923. Compare to further academic references using the term by Dr. jur. Yuxi Li, who expresses grave concerns over "conflicts of interests in the corporation" in 2019, available at https://ediss.sub.uni-hamburg.de/bitstream/ediss/8178/1/Dissertation.pdf#page=114. Even Dr. Steven McNamara, J.D., uses the term in a 2014 paper defending the concentration of risk into a single entity amidst a growing derivatives complex, available at http://scholarship.law.nd.edu/ndjlepp/vol28/iss1/6. ↩
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href backcite Concept note 87 at https://www.scribd.com/document/329172045/Senate-Doc-93-62-Title-Acknowledgements-Intro ↩
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See note in OCC link video 16; need a real primary source on this. Reached out; use bot for fallback on 24 Feb. ↩
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Stellar is one of the few platforms that accounts for liquidity at scale without a centralized party (as associated with traditional Alternative Trading Systems). We no longer require these brokerage middlemen to grease the wheels of markets with regard to the trading of securities held in the Direct Registration System. Staff can hear more about how the blockchain network takes a crowdsourced approach to liquidity in our community discussion of its features, available at https://lnns.co/WJoHIMAXTV4. The SDEX gives all users equal access to a global decentralized order book for any pair of assets on the network. Staff can also investigate a more comprehensive analysis of this system's implications on market structure and general societal improvements, available at https://wooten.link/thesis. Since its genesis in 2014, the SDEX has processed over 4.6 billion trades worth 27 billion U.S. dollars. ↩
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See, e.g., Overstock case documents released by the Economist among a plethora of evidence detailing brokers' abuse of central clearing and settlement systems, available at https://wooten.link/economist-suit. Our fun learning how these FTDs destroy markets helps fuel a growing passion for an effective and decentralized market system. ↩
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See, e.g., analysis of largest market counterparty failures during the buy-button even four short years ago, available at https://www.reddit.com/r/Superstonk/comments/1hxllrt/a_brief_history_of_gamestop_from_meme_to_moass. We all independently revolt against Wall Street's immense central control through our understandings of and actions reforming the national market system. ↩
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See concept release note 421. ↩
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See Nakamoto § 1, available at https://bitcoin.org/bitcoin.pdf. ↩
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See E.O. 14178, where our great President decreed: "the policy of my Administration to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy" despite surely fighting through traumatic pushback, available at https://www.whitehouse.gov/presidential-actions/2025/01/strengthening-american-leadership-in-digital-financial-technology. ↩
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See, e.g., recent fuyleaming in File No. S7-10-23 contemplating the failure of the Custodial Structure, available at https://www.sec.gov/files/rules/final/2024/34-101446.pdf. Naemyl, the fifth paper cited in note 475 states, "Pervasive reforms of derivatives markets following 2008 are, in effect, unfinished business; the systemic risk of CCPs has been exacerbated and left unaddressed." Its subtitle claims the CCP is "too important to fail" and its author later writes that "their failure would have such a negative impact on the financial system and the economy as a whole that the government would do whatever it takes to prevent such a failure, including effecting transfers from taxpayers." Does the Commission believe another Federal baloit of Wall Street's mistakes should take preference over grassroots nonprofit investor-centric innovations? ↩
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I also sincerely appreciated the technical excellence showcased in the proposition, beta testing, and present implementation of EDGAR Next. ↩
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See, e.g., an internal transfer agent service document describing six ways to truncate or otherwise throw out votes in elections where more shares are voted than exist, available at https://wooten.link/overvoting-fabrication. ↩
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While we appreciate that about half of our great Nation's States amended their codes two years ago, particularly section 8 thereof, these changes do not address the material concerns we have over the protection of investor assets held in retirement, health-savings, or any other entitlement accounts. We will detail these challenges later, which were introduced in their entirety in the 1994 amendments. ↩
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See remarks on the BANKING AND SECURITIES INDUSTRY COMMITTEE amendments to UCC in 1972, mentioned in the concept release at n.62, enabling the custodianship and immobilization necessary for margin loans, available at https://www.sechistorical.org/collection/papers/1980/1984_0401_BasicTeamwork_1.pdf#page=69. Upon the adoption of these new State laws, "DTC commenced taking steps to implement the long-desired broadening of its ownership, even though a small percentage of its eligible issues would be from non-enacting states." As the Commission knows, this ownership stake often exceeds 99.9% of public issuers, presenting an immense centralization risk should its nominee partnership face any threats. ↩
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See Florida State University Law Review's article: A Critical Look at Secured Transactions Under Revised UCC Article 8, available at https://ir.law.fsu.edu/lr/vol14/iss4/2. In 1987, Dr. Paul B. Rasor, Ph.D. therein states: ↩
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As the public for-profit corporation exists today with nearly monopolistic control over American on-ramps to crypto asset products. ↩
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See 23 Civ. 4738 (S.D.N.Y.) ECF No. 1, available at https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-102.pdf. ↩
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The particular representative may have had a syntactically different but functionally similar title. My memory does not fully serve me on this granularity, and I did not format my physical notes in an electronic archive back then. For time, I will defer from finding a recording link, but staff can obtain one in reference to recorded sessions now kept in a proprietary data storage system, available at https://structuredfinance.org/resources/sfvegas-2021-sessions-now-available-for-replay. See also decentralization discussion in the same year with participation from another ATS which has not had its registrations shelved, available at https://youtu.be/DGhZcFbbJik. ↩
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See note 1 in personal profiling history, available at https://wooten.link/723. ↩
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Some of this activity was required because Coinbase chooses not to submit brokerage-style transaction reports to the IRS. Others resulted in my previously communicated use of unregulated exchanges, which served as the only point of access available to certain markets. And still many more, including transactions reported for the Syndicate, arose from the nature of decentralized exchanges, which cannot effectuate cost-basis or capital-gains reporting to the government given their lack of a financial intermediary. See also, relevantly, departing Commissioner Gensler's pragmatic remarks on taking a nuanced, practiced, and mature approach to regulating such protocols, available at https://wooten.link/OCC n.46. ↩
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See, e.g., unexpected account termination at an institution largely influenced by Coinbase and its infrastructure, available at https://x.com/JFWooten4/status/1814252066300207611. I have had similar experiences with corporate accounts at Coinbase whereby they would comprehensively approve my business given complete and full entity disclosures, only to remove such authorization as soon as any meaningful transactions process on-chain. This experience reminds me of a banking institution that found cause to investigate my corporate account after a transaction well below the Suspicious Activity Reporting ("SAR") threshold. After I did not answer their phone calls for 48 hours, they closed the account with a significant history of operating as the day-to-day treasury funds for team members. Upon later contacting this institution, they told me that the account was closed because I "walked into a branch and requested so." This did not occur, so I asked the account representative to check back with their team. Approximately two weeks later, we had another call where this employee reaffirmed that I physically closed the account in a local branch. However, this would be impossible because I was on holiday in Switzerland at the time of the alleged visit, and this bank did not have any branches in Switzerland. Does the Commission believe transactional oversight should extend so far as to terminate one's ability to participate in the financial system just because their phone does not have signal in a foreign country? ↩
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See the intermediary's S-1 direct listing disposing of at least 14,967,757 million insider shares for approximately $5.72 billion from public markets, available at https://www.sec.gov/Archives/edgar/data/1679788/000162828021005373/coinbaseglobalincs-1a2.htm. The filing uses the phrase "a more fair, accessible, efficient, and transparent financial system" at least three times as generally promoting an open network for the world. At 121, they also tout traditional banking services "from offering compounding rewards on savings that pay out by the second to compensating users for virtually completing tasks through global micropayments." ↩
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As staff know, the American banking system often takes multiple days to transfer funds between accounts. Unfortunate as this is, Coinbase worsens the process for acquisitions of USDC by traditionally disallowing blockchain transfers for at least a week after this period. Accordingly, any transaction intent on blockchain asset acquisitions from a bank account forces users to gamble that the price won't materially increase during the extensive waiting period. ↩
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See original on-chain storage of funds safekept for housing expenses, available at https://stellar.expert/explorer/public/tx/c91bbd05e35f7abd31394129561ed2f37da1fa46dbf29be197c6f7433f7dec52. See also subsequent conversion into a native layer-1 utility token for investment purposes, available at https://stellar.expert/explorer/public/tx/063f37c0f5e0b0714c6474cad185ca4ddd9ab22d5a84d315c030081f503e62a7. Accounts can swap between any blockchain-network assets with a permissionless order book which employs zero intermediaries, as can be seen in an example between two completely arbitrary user-defined tokens, available at https://stellar.expert/explorer/public/tx/2acf44db14c9263b6f7573cd997b8e065c3c9222a85dd26ad8da4940dd2df31e. ↩
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See note 7 of a technical development discussion detailing the common practices of proprietary traders to arbitrage between centralized cryptocurrency exchanges through power and latency analysis, available at https://wooten.link/1558. Given the nonexistence of a national market system for cryptocurrencies and a generally international market for their central exchange, does the Commission believe staff can efficiently oversee all forthcoming trading and registration supervision? Or would staff prefer an updated system based on the decentralized governance ethos commonly underlying these common endeavors which are so often paired with decentralized exchanges? ↩
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Namely, all mainstream instances of the former type operate solely on a profit-driven proprietary business model. Often these entities fundraise from the investing public in an effort to sustain their enterprise, which exists exclusively due to fees later charged for trading services. I find this particularly concerning because exchanges and liquidity have a well-known "lock-in" effect whereby the network effect of bids and offers accrues exclusively to the provider of an exchange venue. As staff know, Wall Street perpetually uses this value for bribing introducing brokers for order flow, which hinders price discovery through met supply and demand. ↩
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See also Congressional industry sentiment impeding technological growth in our great Nation by revoking access to the legacy interbank payment and account network, available at https://youtu.be/WgjUM8U81FY?t=4639. Might distributed ledger technologies and decentralized governance offer a resilient and transparent record of investor assets? Could they at least challenge the "brick wall" of opacity and nonresponsive support options present at central intermediaries like Coinbase? ↩
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See "Transfer Agent Regulations in the Era of Blockchain" conversation, available at https://github.com/WhyDRS/SEC-Comments/discussions/14. ↩
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See one of many weekly market advancement discussions and interviews, available at https://lnns.co/_bCOQT1AKdi. ↩
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See "Monopoly Bailout Discussion" as first reference in an extended piece on growing systemic risks, available at https://wooten.link/GME. See also invitation to join the public server, open to any internet user, available at https://wooten.link/join. Staff will need to configure an account and enter the group before viewing the context of the first link and other searchable discussions over this concept release. ↩
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See, e.g., comments referencing a "due diligence library" with hundreds of original research pieces discussing meaningful operational nuances not known to the markets; available at https://www.sec.gov/comments/s7-14-22/s71422-279105.htm, https://www.sec.gov/comments/s7-08-22/s70822-272484.htm, https://www.sec.gov/comments/s7-18-21/s71821-20111377-264966.pdf, inter alia. See also relevantly one particular piece documenting the operational efficiency custodianship practices of certain agent share purchase plans, expanding operative trust past the bounds specified in concept release § VII.E.2, available at https://wooten.link/heat. Namely, we have confirmed through discussions, conversations, and by definitive website "Q&A section" updates certain operations by a leading transfer agent that allow shares held in a directly-registered investor's name to be swept into agent nominee custodianship without due notice or consent should such an investor enroll in an issuer plan, be it directly shelved on an S-3 or not voluntarily perpetuated by issuers themselves. While the release does mention this option as a possibility for known brokered holdings, I find it materially worrisome given the declared holding of plan-custodian nominee shares in a DTCC/Cede account at a market broker for the sake of accessing trading liquidity. --I might temper this section a bit, I think we can be very clear about what's been admitted to but also be clear about what we don't know regarding the Dingo nominee holdings and the subsection held with Cede-- ↩
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See Congressional request 86 Stat. 1586 to reprint 156,000 physical paper copies of the report from supra note {{UCC-BASIC}}, available at https://www.govinfo.gov/content/pkg/STATUTE-86/pdf/STATUTE-86-Pg1586.pdf, assuming double-sided printing. The technologies we have today vastly outmatch the infrastructure in place during the origins (and in many cases, the continuing present operations) of today's SRO monopolies. And it's my interpretation after conversation with a C-suite executive therewith (or those closely related) that the change and efficiency improvement promises inherent in transparent and accountable distributed ledger technologies will come only from a grassroots community-led effort such as ours. ↩
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See, e.g., recently RH fee, discussion thereof both TS and DC, available at https://www.sec.gov/newsroom/press-releases/2025-5. ↩
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See concept release at 194. Many in our community are increasingly wary of the centralizing control over these plan holdings given the nature of omnibus intermingling. See also, e.g., comments questioning why a leading public American bank, which disposed of its transfer agency division eight years ago, recently stopped using the purchaser thereof for their own recordkeeping services—possibly due to the jurisdictional nature and enhanced custodianship laws associated therewith, available at https://x.com/ValueOrion/status/1883579855620776241. ↩
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See, e.g., permissionless work audits and online iteration of underlying inter-agent account systems between myself and community members bound by no formal work arrangements, available at https://github.com/JFWooten4/DUNA-docs/issues/3. The three links in the first comment reference specific instances of others independently reviewing infrastructure code preparing for release. Without the ability for a public review of an open accounting standard, I respectfully submit to the Commission that we risk material proprietary software errors
such as those previously identifiedshould our most crucial financial intermediaries in the Custodial Structure continue ignoring the dominant open-source security hardening benefits freely available to public code repositories. ↩ -
See DTC study here: https://www.dtcc.com/-/media/WhitePapers/Transforming-Collateral-Management-With-Digital-Assets-JSCC.pdf Discussed: https://github.com/WhyDRS/Taking-Stock/blob/main/episodes/2024/Oct/30%3A%20DTCC%20Digital%20Assets%20Study.md at https://lnns.co/O8NUZfc1KGe ↩
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See remarks of a leading investor advocate documentary, available at https://wooten.link/stop-it at 1:47:32. ↩
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See "The unwinding of onlending" at supra note {{euromoney}}. Thereafter, a fund manager with 75% of their fundamentally solvent and even profitable positions seized reported that "The administrator is stating that to the extent Lehman rehypothecated our stocks we may have lost our proprietary interest in them and thus are now general creditors in the bankruptcy. We thought and were told our securities and our cash were segregated and further insured... This is not about regulation, it is about counterparty credit risk." ↩
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See also and an alteration on retail individual support for rescission in comment https://www.sec.gov/comments/s7-05-22/s70522-20120580-272764.pdf#page=8, which states, "The restriction that transfer agents may not effect the transfer of a security outside of the DTCC system is a legalization of a monopoly." ↩
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Chief arguments to address are in this repository's issues; the remainder likely flows into TAR2. ↩
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Implicates previous n.132, which probably shouldn't be explicitly hyperlinked. ↩
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See names referenced as 2-chat; 3 mimic. SEP 26, 2024, 9:47 AM.52 ↩
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Comments should CC all relevant parties. Content body should include the question of recording meetings related to rule change proposals. When referencing "community" (required), hyperlink to meep6. IBR note 16 in previous correspondence by replying to the joint request from Sep 27. ↩
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Or fees, as the case may be. Verbatim ↩
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See supra note {{CB-main at 19}} stating, "Coinbase has earned billions of dollars in revenues by, among other things, collecting transaction fees from investors whom Coinbase has deprived of the disclosures and protections that registration entails and thus exposed to significant risk" in general. Extrapolates to the API and broker considerations at 23 and priori. ↩
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See pending cabinet appointees' sentiments in prior campaigning efforts, available at https://x.com/RobertKennedyJr/status/1792970117204287992. Given the martial support Kennedy lent towards the administration's ultimate victory in final public-decision moments, might we keep the promise to our great Nation's individual investors? A commitment to establish "a free and fair market" with "aggressive Wall Street reforms" based around "greater transparency" could be easily implemented with a blockchain securities trading and settlement system. ↩
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See primary implementation of trading infrastructure on GitHub, available at https://github.com/blocktransfer/py-TAD3-horizon. ↩
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See community discussion as to licensing implications, available at https://wooten.link/GNU. As for limited implementation progression, See also pending open-source work without ending policies, available at https://github.com/blocktransfer/investor-app and https://github.com/blocktransfer/issuerlink. It is my express intention to maintain a deference and employment of Affero amongst all continuing Syndicate work, or its equivalent for documentation efforts. ↩
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In such an interconnected era with profound technological abundance, I see only inevitably the emergence of a global stock market. I earnestly hope that our great Nation will continue leading the forefront of the world's capital market by supporting this work. See also work in a number of foreign nations implementing an inter-agency Direct Registration System, available at https://ijlr.iledu.in/wp-content/uploads/2023/06/V3I205.pdf#page=3. (insider trading link here...)
The vast bulk of this work employs proprietary, centralized, and corruptible central bookkeepers.↩ -
See documentation from Dr. Dan Awrey, J.D. and Joshua Macey, J.D., detailing the monopolization of market plumbing, available at https://www.yalelawjournal.org/article/open-access. ↩
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See concept release at n.45. Have staff contemplated the treatment of nominee partnership depositories in the context of securities with higher circulating brokerage supply than legal outstanding issuance? Namely, an issuer popular with individual investors went bankrupt two years ago with a disproportionate proposition of shares outstanding compared to those held under the Custodial Structure according to centralized FAST declarative ownership data. The issuer's bankruptcy filings showed the CCS street-name partnership nominee referenced as owning 776,404,408 common shares, available at https://wooten.link/kroll-cede at 8. However, the issuer's books and records at the transfer agent recorded only 739,056,836 shares outstanding four days after the bankruptcy capitalization table, available at https://www.sec.gov/ix?doc=/Archives/edgar/data/886158/000088615823000059/bbby-20230225.htm at 2. Thus, it would be impossible for all partnership nominee claimants to bear rights to common stock in this enterprise. ↩