The following resources take a deep dive into the issues surrounding crypto-tokens and securities law and recognize that, when properly designed, some tokens may not meet the Howey test:
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Houman B. Shadab, Why Cryptoequity May Not Be Securities, Lawbitrage (Nov. 12, 2014) In this piece, NUY Law Professor Houman B. Shadab discusses a number of factors that would make certain tokens less likely to constitute securities.
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Jason Somensatto, How are Cryptocurrency Investments Different than securities Investments?, COINCENTER (Feb. 11, 2015) Distinguishes tokens sold primarily for an “consumption motive” from tokens likely to be considered securities.
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Josh Boehm, Dax Hansen and Josh Boehm Speak at Stanford Cyber Initiative About Blockchain Tokens, VIRTUAL CURRENCY REPORT (Apr. 12, 2017) Linking to a slide deck featuring analysis of token sales under securities and other laws. Also available here.
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J. Dax Hansen & Carla L. Reyes, Legal Aspects of Smart Contract Applications: Digital Asset Sales and Capital Markets, Supply Chain Management, Land Registries, Government Records and Smart Cities, and Self-Sovereign Identity (May 2017) Discusses the application of the Howey test to digital asset sales.
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A Securities Law Primer, SELC e-resource library, CoummunityEnterpriseLaw.Org. Discusses in detail the United Housing Foundation v. Forman case, which held “when a purchaser is motivated by a desire to use or consume the item purchased . . . the securities laws do not apply.”
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Brito, Jerry and Shadab, Houman B. and Castillo, Andrea, Bitcoin Financial Regulation: Securities, Derivatives, Prediction Markets, and Gambling (January 15, 2015). COLUMBIA SCIENCE AND TECHNOLOGY (2014). Proposes that certain bitcoin denominated instruments that may otherwise fall within the Howey test for investment contract be excluded if they are “bitcoin economy transactions” – transactions in which the entire use of the instrument is within the blockchain ecosystem in which the token was created.
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Peter Van Valkenburgh, Could your decentralized token project run afoul of securities laws?, COINCENTER (Sept. 20, 2016) Describes a number of elements that will make a token less likely to fit the Howey test, including building “tokens that have a use-value and are not mere speculative investments.”
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