Utility tokens are still a tough sell, says SEC

Wei Lin

By Wei Lin

Reiterating their analysis of ICOs in a public statement today, regulators inadvertently endorsed projects like Bitcoin, which boast real grassroots development communities--and put centralized (read: VC-backed) astro-turf projects on notice.

SEC Weighs In

Coin Center analysis of SEC cryptocurrency guidance
"Bottom line: It is possible to fundraise by selling tokens in compliance with the securities laws and then have those tokens be clearly not securities when the promoter is no longer essential to the continued viability of the project. Here is our analysis of the guidance."

Statement on “Framework for ‘Investment Contract’ Analysis of Digital Assets”
"As financial technologies, methods of capital formation, and market structures continue to evolve, market participants should be aware that they may be conducting activities that fall within our jurisdiction. For example, market participants may engage in activities that require registration of transactions and persons or entities involved in those transactions. Even if no registration is required, activities involving digital assets that are securities may still be subject to the Commission's regulation and oversight. More specifically, the information contained in this framework may apply to entities conducting the following activities related to digital assets:

  • offering, selling, or distributing
  • marketing or promoting
  • buying, selling, or trading
  • facilitating exchanges
  • holding or storing
  • offering financial services such as management or advice
  • other professional services"

Other News

When the Price of Bitcoin Rises
"Finally, when there is no more fiat, and the chaotic transition zone between fiat and Bitcoin has been abolished, then everything will be priced in Bitcoin, and there will be no volatility, because no one uses anything other than Bitcoin to buy or sell. ... Right now, compared to the amount of fiat in the world, Bitcoin can expand and contract very rapidly over a large range, because it is small in volume. It can expand to what for many is an unimaginably high price, and then shrink down again. As it gets bigger and accumulates more mass (its price expressed in fiat), these fluctuations will become smaller and smaller. Through all of this, Bitcoin remains exactly the same; it is its users that are publishing numbers as a signal to react upon."

How Big Tech Built the Iron Cage
"Indeed, most of us don’t want to live like this, heads bent over a handheld device, twitching from one social-media outlet to another. Insidiously, though, the technologies that mediate our existence provide an illusory sense of mastery, as we tap a screen and summon brightly colored sweaters to our door. “The precise moment at which our needs are met,” Zuboff writes, “is also the precise moment at which our lives are plundered for behavioral data.” We find ourselves in an elegantly designed, frictionless trap."

The Decade of Deleveraging Didn’t Quite Turn Out That Way
"This was the decade of de-leveraging that wasn’t. A decade ago, as the world began to piece the financial system back together after an epic credit crisis, there was agreement on one thing: Too much debt had caused the crisis, and so there must be a huge de-leveraging. It has not worked out like that."

Decentralize Treasury Spending
"This process is centralized and it creates a potential single point of failure. To decentralize the process of spending from the treasury, we propose a 2-step process, where (1) a Politeia (“Pi” for short) identity key is used to generate a signed draft spending transaction and (2) this draft transaction is published on-chain, where stakeholders will vote to approve the transaction over a period of several days following it being published. Prior to the draft transaction being published on-chain, stakeholders will have the opportunity to inspect the proposed spending on the Pi platform and ensure it adheres to proposals already passed on Pi. Stakeholders will have the ability to change a single setting in dcrwallet such that they vote to approve or disapprove of draft transactions made by the Pi draft key."

Bitcoin Dev Demos the First Lightning-Enabled Bitcoin ATM
"A Lightning-enabled Bitcoin ATM as demonstrated by Weis could provide several key advantages over its predecessors. With the average Bitcoin ATM, customers looking to withdraw a typical amount of bitcoin will need to wait at least a few minutes before receiving it, over which the value of the withdrawn amount might fluctuate slightly."

Cryptography That Can’t Be Hacked
"Now a set of computer scientists has taken a major step toward this goal with the release today of EverCrypt, a set of digital cryptography tools. The researchers were able to prove — in the sense that you can prove the Pythagorean theorem — that their approach to online security is completely invulnerable to the main types of hacking attacks that have felled other programs in the past. “When we say proof, we mean we prove that our code can’t suffer these kinds of attacks,” said Karthik Bhargavan, a computer scientist at Inria in Paris who worked on EverCrypt."

PVC Security: A Diplomacy-free Solution to Safe Data Sharing Between Rational Hostiles
"Addressing this issue, an international research team with members from Alibaba and several US and Japanese universities has proposed a new MPC protocol that offers something called publicly verifiable covert (PVC) security. PVC security requires zero diplomacy between hostile parties; in fact, it exploits the same self-interest that lies behind dishonest behavior when the opportunity for industrial espionage arises during data sharing. It does this by automatically generating a publicly verifiable certificate of misbehavior if any party so much as attempts to break the rules, permanently exposing that party’s untrustworthiness to the world."

Ravencoin — Restricted Asset SEC Compliance How To(1)
"To promote the free flow of assets and ownership, in either case, Ravencoin will allow for appending externally-validated trust from interested parties such as regulators, through intermediate Qualifiers such as KYC/AML provider consortia, down to individual addresses. Issuers of assets can leverage these tags to manage how their assets can move about the chain. In this way, affirmation of an address’ status (such as KYC/AML compliant, accredited investor, or current subscriber) is possible without exposing or replicating the addressee’s Personally Identifiable Information (PII), and where the burden of establishing and maintaining trust in these qualifying tags is borne primarily by the regulated entities and regulators that require such information in the first place."