SEC to Unveil New Guide to Assess Legal Status of Token

The document is not an official guide and, therefore, is not legally binding
04 April 2019   1360

The US Securities and Exchange Commission (SEC) has published a new guide for issuers of cryptocurrency tokens, which can be considered unofficial instructions for determining whether issued assets fall into the category of securities. The document has been drafted over the past six months by the agency's Strategic Hub for Innovation and Financial Technology (FinHub).

In particular, the document notes that when assessing the legal status of their financial instrument, tokens issuers are encouraged to pay attention to such factors as income expectations, the presence of centralized structures responsible for performing certain tasks in the network, as well as the ability to create and maintain digital asset markets.

In this context, the SEC refers to the Howie test applied to a wider range of financial instruments. From it, management included such factors as the dependence of the asset price on the actions of the project organizers, reasonable income expectations, probable areas of use, the correlation between the initial selling price of the token and its market rate of the token.

It is curious that in the context of the Howie test only one item “reasonable expectations of income from the actions of third parties” in the document is allocated several pages. As the authors note, it is this aspect that usually represents the greatest problem when analyzing digital assets.

The commission also explains how distributors of tokens, which are already in the hands of investors, should register their campaigns and whether the status of an asset, initially issued as a security, could be revised at a later stage.

Thus, in the process of revising the legal status of a digital token, the SEC applies the following criteria:

  • The distributed registry network and digital asset are developed and functioning, that is, users can immediately use a token to perform a function;
  • The token has a specific scope, not limited to market speculation;
  • The token has limited growth prospects;
  • When used as a currency, the token is able to perform the function of a means of preserving value.

The document is not an official guide and, therefore, is not legally binding. Also, it is unlikely to provide any fundamentally new legal information, only more deeply revealing the previously voiced position of the SEC representatives on this issue.

EOS to Buy $30M Worth Domain For Its Social Network

Earlier, CEO reported that his company will spent about $150M to develop Voice, and looks like "voice.com" purchase for $30M is one of the first steps
19 June 2019   71

The Block.One company, known for developing the EOS blockchain protocol, acquired a domain for its new social network Voice for $ 30 million. This is evidenced by documents published on the website of the US Securities and Exchange Commission (SEC).

Documents were provided by MicroStrategy, an analytical and mobile software provider. It follows the “voice.com” domain, registered in the GoDaddy domain name registry, was transferred to the EOS developer on May 30, 2019. After 2 days, Block.One officially announced preparations for the launch of a social network.

Block.one has made a smart strategic decision in choosing Voice.com to be the internet domain name for its new social media platform. The word ‘voice’ is simple and universally understood. It’s also ubiquitous — as a search term, it returns billions of results on the internet. An ultra-premium domain name like Voice.com can help a company achieve instant brand recognition, ignite a business, and massively accelerate value creation.
 

Marge Breya 

Senior Executive Vice President and Chief Marketing Officer, MicroStrategy Incorporated. 

The commercial model of MicroStrategy is based, among other things, on the accumulation and sale of such expensive domain names.

According to Block.One, the identification of users and the use of the EOS blockchain in the social network will help to avoid the massive influx of bots, which often affect other members of this niche. Earlier, CEO Block.One Brendan Blamer reported that his company spent about $ 150 million to develop Voice.