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How to foster a token culture
on a global scale.
Token Regulation Summit, Vienna
October 2017
Peter Van Valkenburgh
Why Securities Laws and Crypto-tokens?
● Securities Laws are Heavy Duty Regulation.
≠
≠
Why Securities Laws and Cryptocurrencies?
● Securities Laws are Heavy Duty Regulation.
ICOs, Token Sales, and Presales may...
Why US Securities Laws?
● If you have any US purchasers you are subject to US Securities Law
● US Securities Law are the M...
Why are US Securities Laws Broadly Applied?
● Definition of Security includes undefined term: “investment contract”
● Term...
The Howey Test
“An investment contract for purposes of the Securities Act
means a contract, transaction or scheme whereby ...
Two question token classification
exercise:
1.Why is the token desirable?
○Utility vs. Investment
2.What backs up that val...
Utility vs. Investment
“commodity for personal
consumption.” ~ Foreman
“commercial purpose” ~ Reves
Protocol vs. Issuer
efforts of the issuer are not
“undeniably significant” ~Noa
Whyisthetokenvaluable?
UtilityInvestment
What creates that value?
Protocol Issuer
Bitcoin
Ether
Ether Presale
Token
SAFT f...
Whyisthetokenvaluable?
UtilityInvestment
What creates that value?
Protocol Issuer
Bitcoin
Ether
Ether Presale
Token
SAFT f...
Whyisthetokenvaluable?
UtilityInvestment
What creates that value?
Protocol Issuer
Bitcoin
Ether
Ether Presale
Token
TheDAO...
Questions?
Peter Van Valkenburgh
peter@coincenter.org
@valkenburgh
How to foster a token culture on a global basis
How to foster a token culture on a global basis
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How to foster a token culture on a global basis

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How to foster a token culture on a global basis

  1. 1. How to foster a token culture on a global scale. Token Regulation Summit, Vienna October 2017 Peter Van Valkenburgh
  2. 2. Why Securities Laws and Crypto-tokens? ● Securities Laws are Heavy Duty Regulation.
  3. 3. ≠ ≠
  4. 4. Why Securities Laws and Cryptocurrencies? ● Securities Laws are Heavy Duty Regulation. ICOs, Token Sales, and Presales may subject developers to securities regulation. Several Scams have drawn attention to this area. Several vocal pundits have already suggested that all token/crypto crowd sales qualify as unregistered securities issuance.
  5. 5. Why US Securities Laws? ● If you have any US purchasers you are subject to US Securities Law ● US Securities Law are the Most Broadly applied. ● In other jurisdictions, there is generally an enumerated list of what arrangements constitute a “security,” in the US there is a flexible and court-adjudicated test. ● Other jurisdiction may take their lead from the SEC. ● The US Securities and Exchange Commission is already investigating Paycoin. The DAO got the attention of some staff. ● The SEC has charged Josh Garza of Paycoin with securities fraud and released a report explaining how The DAO was a security.
  6. 6. Why are US Securities Laws Broadly Applied? ● Definition of Security includes undefined term: “investment contract” ● Term has been defined by Federal Courts via a flexible multi-part test ● Courts have sought to ensure that definition is inclusive to reach: “the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits” ● Primary Case is SEC v. W. J. Howey Co. ● From that case we get the Howey Test for a Security
  7. 7. The Howey Test “An investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person [1] invests his money in [2] a common enterprise and [3] is led to expect profits [4] solely from the efforts of the promoter or a third party, [exclusionary factors] it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise.”
  8. 8. Two question token classification exercise: 1.Why is the token desirable? ○Utility vs. Investment 2.What backs up that value? ○Protocol vs. Issuer
  9. 9. Utility vs. Investment “commodity for personal consumption.” ~ Foreman “commercial purpose” ~ Reves
  10. 10. Protocol vs. Issuer efforts of the issuer are not “undeniably significant” ~Noa
  11. 11. Whyisthetokenvaluable? UtilityInvestment What creates that value? Protocol Issuer Bitcoin Ether Ether Presale Token SAFT for StorageToken TheDAO Tokenized VC Fund Dollar-Backed Coin PerfectDAO? Bitcoin Forks? StorageToken Marketing Coin Concert Ticket Coin Gold-Backed Coin Stable Coin
  12. 12. Whyisthetokenvaluable? UtilityInvestment What creates that value? Protocol Issuer Bitcoin Ether Ether Presale Token SAFT for StorageToken TheDAO Tokenized VC Fund Dollar-Backed Coin PerfectDAO? Bitcoin Forks? StorageToken Marketing Coin Concert Ticket Coin Gold-Backed Coin Stable Coin ?
  13. 13. Whyisthetokenvaluable? UtilityInvestment What creates that value? Protocol Issuer Bitcoin Ether Ether Presale Token TheDAO Tokenized VC Fund SAFT for StorageToken Dollar-Backed Coin PerfectDAO? Bitcoin Forks? StorageToken Marketing Coin Concert Ticket Coin Gold-Backed Coin Stable Coin
  14. 14. Questions? Peter Van Valkenburgh peter@coincenter.org @valkenburgh

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