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WSGR disagrees. And where are you finding 70 years of settled law on securities that later become primarily valued via use in commercial transactions? > Our cu

WSGR disagrees. And where are you finding 70 years of settled law on securities that later become primarily valued via use in commercial transactions? > Our current view is that once the value of the tokens is primarily driven by their commercial usage, rather than by the efforts of the token sponsor or other developers, the tokens should no longer be deemed to be securities. The SEC has not yet addressed this question.

Alex3917 9y ago
The Howey Test, from 1946, is about whether assets that are classified as real estate, currencies, 'utility tokens', etc., can also be classified as securities. http://consumer.findlaw.com/securities-law/what-is-the-howey-test.html http://consumer.findlaw.com/securities-law/what-is-the-howey... The entire point is that you can't get out of going to prison by saying "Our thing is X, therefore it can't also be Y."
- paulsutter 9y ago
  Yes and where's an example of a onetime security which was later considered not-a-security? From your own link: > The final factor of the Howey Test concerns whether any profit that comes from the investment is largely or wholly outside of the investor's control. If so, then the investment might be a security. If, however, the investor's own actions largely dictate whether an investment will be profitable, then that investment is probably not a security. WSGR's position: once tokens are used primarily for commerce, the value will be determined by commercial usage and not by the offerors, so that: > Tokens that are solely utility tokens should not be securities. If a token-based platform is fully developed and the tokens are widely used commercially on that platform, the tokens generally should not be securities.
  - Alex3917 9y ago
    > WSGR is claiming that once tokens are used primarily for commerce, the value will be determined by commercial usage And they're wrong. If a token is primarily used for commerce then it's value might come primarily from that usage, or it might not. But it certainly isn't some sort of get-out-of-jail-free card.
    - tptacek 9y ago
      I don't see how you're disagreeing with WSGR here. You seem to be saying that even after a token becomes broadly useful in its intended setting (say, storing files), it might still get most of its economic value from speculation. WSGR agrees, and seems to go out of its way to say that coins would likely remain securities under those conditions.
      - deleted 9y ago
        [deleted]

Alex3917 9y ago

The Howey Test, from 1946, is about whether assets that are classified as real estate, currencies, 'utility tokens', etc., can also be classified as securities. http://consumer.findlaw.com/securities-law/what-is-the-howey-test.html http://consumer.findlaw.com/securities-law/what-is-the-howey... The entire point is that you can't get out of going to prison by saying "Our thing is X, therefore it can't also be Y."

paulsutter 9y ago
Yes and where's an example of a onetime security which was later considered not-a-security? From your own link: > The final factor of the Howey Test concerns whether any profit that comes from the investment is largely or wholly outside of the investor's control. If so, then the investment might be a security. If, however, the investor's own actions largely dictate whether an investment will be profitable, then that investment is probably not a security. WSGR's position: once tokens are used primarily for commerce, the value will be determined by commercial usage and not by the offerors, so that: > Tokens that are solely utility tokens should not be securities. If a token-based platform is fully developed and the tokens are widely used commercially on that platform, the tokens generally should not be securities.
- Alex3917 9y ago
  > WSGR is claiming that once tokens are used primarily for commerce, the value will be determined by commercial usage And they're wrong. If a token is primarily used for commerce then it's value might come primarily from that usage, or it might not. But it certainly isn't some sort of get-out-of-jail-free card.
  - tptacek 9y ago
    I don't see how you're disagreeing with WSGR here. You seem to be saying that even after a token becomes broadly useful in its intended setting (say, storing files), it might still get most of its economic value from speculation. WSGR agrees, and seems to go out of its way to say that coins would likely remain securities under those conditions.
    - deleted 9y ago
      [deleted]