I realise I am sticking my neck out here and only want to open up discussion; certainly not criticising anyone or demanding any changes…
On closer reading of the pages on daedaluswallet.io today, I’m worried the disclaimer language in the page footers would allow SEC auditors to legally argue that assets managed with Cardano represent an “investment contract” and are therefore subject to regulation, e.g.:
You are fully and solely responsible for evaluating your investments , for determining whether you will exchange blockchain assets based on your own judgment, and for all your decisions as to whether to exchange blockchain assets with Cardano. …
Past performance is not indicative of future results. Any investment in blockchain assets involves the risk of loss of part or all of your investment . The value of the blockchain assets you exchange is subject to market and other investment risks …
This reads like a cautious lawyer copied a standard disclaimer from an ad for a mutual fund (an example investment understandably well regulated by the SEC) into the Daedalus pages, without thinking of the legal & regulatory implications unique to cryptocurrencies.
Saying that Daedalus is used to obtain something that may “rise and fall in value” and especially with the word “investment” repeated over and over again, wouldn’t such language create opportunities for the SEC to rule that ADA is in “investment contract” if this is how we keep introducing Cardano to the public?
Most readers will already know this but I remember when such a claim was made about Ripple (2020-02-27: Lawsuit Alleging Ripple’s XRP Is Unregistered Security Moves Forward). IOHK & the Cardano Foundation have always stood apart from companies like Ripple who’ve held out the idea to buyers that XRP was a way they could make a lot of money, and therefore the Cardano community deserves to be immune from claims that ADA itself is an investment contract.
As I understand it (I am not a lawyer) SEC regulations about “investment contracts” are currently only targeting ICOs (SEC: Spotlight on Initial Coin Offerings (ICOs)) and won’t necessarily apply to the cryptocurrencies themselves unless there are particulars about them that subject those tokens to such regulation (e.g. the Howey Test).
Nobody would argue that the SEC is going to introduce further regulation this space, but I am sure Cardano’s goal would be that only its blockchain applications are regulated, and not ADA itself (2019-06-25: Investopedia: How SEC Regs Will Change Cryptocurrency Markets)
Without these disclaimers, the documentation & writing already circulated has long established that ADA is for use in a “settlement layer” and is purchased by a market price relative to supply & demand. According to the language of the Howey decision itself (SEC v. Howey Co., 328 U.S. 293 (1946)) that doesn’t imply an “investment contract” at all.
So at least until the SEC may be granted broader powers to regulate all cryptocurrencies, why not trim those disclaimers from any use of the term “investment” and other investment-like characterisations of Cardano … unless it would somehow suit the Cardano developers, promoters & ADA holders to be regulated as such?