(2016-09-20) Could Your Decentralized Token Project Run Afoul Of Securities Laws

Could your decentralized token project run afoul of securities laws?

Over a year ago we presented a detailed framework to a large gathering of staff at the SEC. That framework was the first comprehensive approach to analyzing Bitcoin as well as any alt-coin, cryptocurrency, or Blockchain-denominated-token under the US standard for securities classification: the Howey Test. Over the next few months we developed the slide deck from that briefing into a report that spells out the legal issues and also has a comprehensive plain English explainer of several technological and community variables in this ecosystem that can affect the outcome of that test.

These variables are explained in depth and mapped to the four prongs of the Howey test in order to create a framework for determining when a cryptocurrency resembles a security and might therefore be regulated as such

if you build a cryptocurrency or decentralized token the right way then it will not be a good fit for the US test for an investment contract, and therefore should not be classified as a security for the purposes of regulation

Those best practices are emergent and nascent in the ecosystem but they are there and widely shared in technical forums and online discussions. Here are a few:

Deviating from these emergent best practices introduces centralization into your Network:....