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> ... which made a significant effort to stay on the right side of the rules and only allow crypto tokens that operated in ways that are closely analogous to e.

> ... which made a significant effort to stay on the right side of the rules and only allow crypto tokens that operated in ways that are closely analogous to e.g. frequent flier miles. They list ICOs by the fistful. I sorted alphabetically and only had to go as far as AAVE to find the first obviously-a-security. They really didn't try and stay on the right side of anything. Frequent flyer miles are generally considered to fall under the IRS rebate rule. They're considered rebates on purchases. There's no investment of money (they're a rebate on a purchase), there's no common enterprise, there's no expectation of profit derived from the efforts of others (after all airlines generally devalue miles 10-20% year over year). It fails all prongs of the Howey test. Not to mention you don't own your frequent flyer miles, the airline program does. If you find me a crypto token that operates 'like a frequent flyer mile' I'll happily tell you why you didn't. > They wrote a great many blog posts giving their perspective and calling for regulatory clarity. They wrote a lot of blog posts, I'll give you that. They have regulatory clarity, they just don't like it. [1, 2, lots of case law]. [1] https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets https://www.sec.gov/corpfin/framework-investment-contract-an... [2] https://www.sec.gov/litigation/investreport/34-81207.pdf https://www.sec.gov/litigation/investreport/34-81207.pdf

lmm 3y ago
> There's no investment of money (they're a rebate on a purchase) Seems pretty dubious when there are well-documented cases of the miles being worth a lot more than the purchase (from the famous pudding guy onwards). Hell, mine explicitly advertises the option to "buy miles". > there's no common enterprise, there's no expectation of profit derived from the efforts of others Miles become more or less valuable depending on how well the airline is doing, exactly like how these tokens tend to go. > Not to mention you don't own your frequent flyer miles, the airline program does. The whole point of Howey is that the details of the ownership structure don't matter, the overall economic effect is what does.
- davorak 3y ago
  > Miles become more or less valuable depending on how well the airline is doing, exactly like how these tokens tend to go. You can sell your token in this case right, but you can not sell the airline miles, not in the rule/tos of the miles program, at least that is my understanding. >> Not to mention you don't own your frequent flyer miles, the airline program does. >The whole point of Howey is that the details of the ownership structure don't matter, the overall economic effect is what does. This does not seem the structure or details of ownership, it is flat out whether you own the miles or not. If you have an example of token that acted more like an airline miles and there is an action against it or because of it I am interested to read more about that token and SEC reasoning.
  - lmm 3y ago
    > You can sell your token in this case right, but you can not sell the airline miles, not in the rule/tos of the miles program, at least that is my understanding. There may notionally be a rule against it, but you certainly can - my airline will let you transfer them (for a fee in miles) and they certainly know or should know that buying and selling happens. > This does not seem the structure or details of ownership, it is flat out whether you own the miles or not. You're the beneficiary of them and have contractual rights to them, whether they're notionally held by some other party or not. If anything the idea that you don't own them makes the argument for it being a security stronger.

lmm 3y ago

> There's no investment of money (they're a rebate on a purchase) Seems pretty dubious when there are well-documented cases of the miles being worth a lot more than the purchase (from the famous pudding guy onwards). Hell, mine explicitly advertises the option to "buy miles". > there's no common enterprise, there's no expectation of profit derived from the efforts of others Miles become more or less valuable depending on how well the airline is doing, exactly like how these tokens tend to go. > Not to mention you don't own your frequent flyer miles, the airline program does. The whole point of Howey is that the details of the ownership structure don't matter, the overall economic effect is what does.

davorak 3y ago
> Miles become more or less valuable depending on how well the airline is doing, exactly like how these tokens tend to go. You can sell your token in this case right, but you can not sell the airline miles, not in the rule/tos of the miles program, at least that is my understanding. >> Not to mention you don't own your frequent flyer miles, the airline program does. >The whole point of Howey is that the details of the ownership structure don't matter, the overall economic effect is what does. This does not seem the structure or details of ownership, it is flat out whether you own the miles or not. If you have an example of token that acted more like an airline miles and there is an action against it or because of it I am interested to read more about that token and SEC reasoning.
- lmm 3y ago
  > You can sell your token in this case right, but you can not sell the airline miles, not in the rule/tos of the miles program, at least that is my understanding. There may notionally be a rule against it, but you certainly can - my airline will let you transfer them (for a fee in miles) and they certainly know or should know that buying and selling happens. > This does not seem the structure or details of ownership, it is flat out whether you own the miles or not. You're the beneficiary of them and have contractual rights to them, whether they're notionally held by some other party or not. If anything the idea that you don't own them makes the argument for it being a security stronger.