the FinTech-Department FinHub the US stock exchange Supervisory authority SEC at the 3. April a framework for the regulation of crypto-currencies and other digital Assets submitted. It is, among other things, to the question of when a Coin or Token as the value of paper is considered to be.
By Christopher clover
5. April 2019 BTC$4.913,70 -1.52 Phonak% part Facebook Twitter LinkedIn xing mail
the struggle to find a coherent crypto-regulation in Overseas now finally come to an end? A recent FinTech division of the U.S. Securities and Exchange Commission (SEC) published a framework to provide more clarity in the question of whether there is a Token a security. The guidelines give instructions for the valuation of a Token according to the criteria of the Howey test. According to the Howey Standard is an Asset, a Security, when a Person invests money in a common enterprise and profit expectations, solely on the efforts of the promoter or a third party are based. In the FinHub publication, it is stated:
Usually, the main question in the analysis of a digital asset in the context of the Howey test, whether a buyer has a reasonable expectation of profits (or other financial items) that are derived from the efforts of others. A buyer can expect to achieve a return on your investment through participation in distributions or by other methods the increase in the value of the asset, such as the sale to a profit on a secondary market.
The Howey Test as a measure
of The Howey Test applies in the USA as a standard tool for the valuation of Assets. Given his requirements it takes little wonder, then, that the SEC has been punished in your ICO-Hatz mercilessly pretty much every Initial Coin Offering, you ran in front of the shotgun. The authority has classified the vast majority of the ICOs resulting Token as not registered and, therefore, illegitimate securities. The framework encourages the publishers of the Token, and this under the aspects of the Howey test to (re-)evaluate. It is primarily the aspect of “reasonable expectation of profits arising from the effort of third parties.”
Accordingly, it can be a “reasonable expectation of profit”, for example, if:
a Token that gives the holder the right to participate in the income or profits of the company, or to realize gains from the increase in the value of the digital asset is transferable, or through a secondary market
or for the future is traded there is apparently little correlation between the purchase and the offer price of the Token and the market price of the individual Goods and services, can be purchased with the Token, was able to collect the publisher of the Asset/Token significantly more capital than for the establishment of a functioning network is needed, the Token would be marketed, directly or indirectly, so that the “Expertise” of the publisher is to ensure a growth of the asset or of the network, the Portability of the Token is one of the most prominent reasons is Howey, the Second
includes The above list are just some of the points from the list that the framework of the FinHub-supplies employees.
the Same is true for the aspect of “dependence on the work (/cost/effort) of others”. For this purpose, the following indicators:
The Asset editor, and not a decentralized network of users assumes significant duties and responsibilities. The publisher creates a market for his Asset, determined by the number of the created Token, specifies the rate or the… …under actions (such as Token Burns), to promote the rate increases, by reducing the total number of tokens. The editor plays a leading or Central role in the decision-making on Governance issues, Code Updates, or the involvement of third parties in the validation of transactions taking place in relation to the Digital Asset. The Issuer owns or controls the ownership of the intellectual property rights of the network or digital Asset – directly or indirectly.
based on these criteria is easy to understand why the SEC is understood to be the most of that Token as securities, the market explicitly as a Utility Token. The latter has the advantage that even small investors can invest in a ICO.
Enggeschnürtes corset for Utility Token
But when is the Token, the speech of a Utility? The FinHub staff have also tried here to provide more clarity. A Utility Token is not allowed to pass the Howey Test to be consistent. This is more likely the case, the more points the following list to apply to the Token:
The distributed Ledger network and digital Assets are fully developed and ready for use. Holders of the Token are immediately able to use it for the intended functionality. The creation and structure of the digital asset is designed and implemented to meet the needs of users, rather than speculation about their value or the development of your network. The prospects for an increase in the value of the Token is limited. The Marketing emphasizes the functionality of the Token, and not the potential for the increase of its market value. Restrictions on the Transferability of the Token are in accordance with its use and encourage any speculative market. If the AP allows for the creation of a secondary market, may Transfers of digital Assets will only be made from and between users of the platform.
this is an excerpt from the FinHub staff proposed evaluation guidelines.
The FinHub experts Bill Hinman, Director for Corporation Finance, and Valerie Szczepanik, Senior Advisor for Digital Assets, and Innovation, emphasize that the framework are mainly used for orientation and not as a legally binding misunderstood to be:
This framework reflects the views of the [FinHub-]employee and is not a rule, regulation or statement of the Commission. The Commission has approved its contents, nor rejected. This framework is, like other guidelines for the staff, for the departments and the Commission are not binding.
turning to STO
The thrust of the FinHub-employees should not, however, help other departments of the authority in the regulation of crypto-Assets; The framework should at the same time (give potential) publishers of the Token as a guide to the correct classification of your Assets. Moreover, the rigorous attitude of the SEC to understand, what is the classification of Token.
it has Since been proven, as the SEC often, it can be a mislabeled ICO tax for investors as it is for initiators. Also for this reason, the Security Token Offerings (STO) are growing in popularity.
In their own right: The topic of STO, we have been dedicated in the March issue of a private crypto-compass-special – check it out!
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