Since the inception of Bitcoin in 2009, certain digital tokens (often referred to as cryptocurrencies) have been popularized as secure, decentralized and private alternatives to government-controlled currencies. More recently, various other kinds of blockchain “tokens,” representing many different kinds of assets, services or rights, have been offered in initial coin offerings. Although certain cryptocurrencies and some other blockchain tokens may not be securities as defined in the federal and state securities laws, many blockchain tokens, in view of the rights they represent, the manner in which they are marketed and the expectations of purchasers, constitute securities. If that characterization applies, offers and sales of these types of tokens must be made in a transaction registered under Section 5 of the Securities Act of 1933, or pursuant to an exemption from those registration requirements or in an offshore transaction that is not subject to the Securities Act.

This Special Report discusses potential options for structuring ICOs of tokens that constitute securities as offerings and sales pursuant to Regulation S under the Securities Act, which provides a useful safe harbor for certain offshore transactions.