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Comment by ringaroundthetx | Hacker News Reader

This is a fluid development, but basically until Stox proves that it isn't a security, then securities regulations apply. In this case it means lots of disclosures for safe harbor from litigation when it goes bust. (PSLRA)

How is it different than bitcoin or unikrn? Loaded question, but the main thing is that not all tokens are the same. As in, just because something is tokenized doesn't mean the same things apply. Even the SEC understands that, and proved so with their no action report from a few days ago, even though nobody read it and just used the headline to confirm their worldview.

Regulations apply to securities. Bitcoin isn't considered a security. Unikrn might be. Stox might be. This is a factor of how they are offered, issued, and used.

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>but basically until Stox proves that it isn't a security, then securities regulations apply

That's not how it works.

It's not exactly how it works but there is lots of precedent that allows the SEC broad discretion in this regard & upholds their very broad view of what is a security.

So while it's not true it's a fairly good starting point for a group to take when they float securities looking item.

Right, but that doesn't mean digital token sales are securities offerings until proven otherwise. The recent SEC communication did not assert that, and only concluded that DAO tokens, which are among the most security-like tokens to be created, were securities.

The investigative report they released [1] is quite informative, and suggests to me that the vast majority of tokens being traded and sold do not meet the SEC's definition of a security. Mind you, I'm not a lawyer, so take what I say with a grain of salt.

[1] http://www.sec.gov/litigation/investreport/34-81207.pdf

I agree with you, but you simply can't do any business with that logic because all of your affiliates have to treat your tokens different if they are or are not securities.

Exchanges have to have assurances that they are not securities, otherwise they may retroactively be sanctioned as unregistered broker-dealers. For the traders themselves, securities are subject to insider trading logic which doesn't apply to non-securities. It is a tough landscape, and creating a legal basis for not being a security is a prerequisite, for now.

When actual broker-dealers (like TD Ameritrade, ETrade etc) start trading tokenized securities offerings, it will be extremely advantageous because they have much more robust infrastructure and trillions of dollars of assets under management already. So people that register their tokenized offerings as securities now may have the first mover advantage in the future for attracting liquidity, but a big disadvantage now.

>When actual broker-dealers (like TD Ameritrade, ETrade etc) start trading tokenized securities offerings, it will be extremely advantageous because they have much more robust infrastructure and trillions of dollars of assets under management already.

Maybe. But maybe in the long run, the regulated industry, as encumbered by regulatory friction as it is (e.g. $10 per trade), is a dinosaur, and will be thoroughly eclipsed by this new unregistered blockchain token market with its nearly frictionless transactions.

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