Why ICOs Should Want to Be Securities

12:17 AM
Lindsay Lin is a counsel and program manager at Lightyear.io, a company that leverages the open-source Stellar protocol to build digital payments infrastructure and services.
In this opinion piece, Lin argues that issuers of ICOs should not only accept but embrace regulators’ classification of their tokens as securities.
In the past year, most organizations conducting initial coin offerings (ICO) have desperately sought to avoid having their tokens categorized as securities.
These organizations tend to emphasize that their tokens are “utility tokens[1],” more akin to a tradable gift card or software license than a security. Others frame their ICOs as donation initiatives[2], whereby those who contribute bitcoin or ether in exchange for tokens are deemed to have charitably contributed to a foundation or non-profit entity.
However, the SEC’s philosophy is “substance over form.” It is still unclear[3] what token characteristics will suffice to avoid categorization as a security, and the analysis may differ by state.
Contrary to popular sentiment, there are multiple reasons why organizations planning ICOs may actually want to consider issuing security tokens rather than try to avoid the label. When sold in a compliant manner, security tokens have the potential to provide legal certainty (ergo lower risk), strengthenRead more ... source: CoinDesk.com [4]Advertise on the Bitcoin News[5]
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References^ utility tokens (www.coindesk.com)^ donation initiatives (techcrunch.com)^ still unclear (www.stellar.org)^ Read more ... source: CoinDesk.com (www.coindesk.com)^ Advertise on the Bitcoin News (thebitcoinnews.com)

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