Security Tokens - Sustany Capital with Christian Kameir and Dean Kirkland - Crypto the WonderDog

A security is a tradable financial asset.

legal definition varies by jurisdiction

-In some jurisdictions the term specifically excludes financial instruments:

--They can be cash (currency), evidence of an ownership interest in an entity (share), or a contractual right to receive or deliver cash (bond).

- debenture is a medium to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.

- CoinMarketCap: 1,736 Listings $266b (less than 3%)

- “The Polymath network connects token investors, KYC providers, smart contract developers and legal experts who help form the basis of your securities token.”

- Raised  ~69,000 ETH (was worth $96MM -> now: $32MM)

http://fortune.com/2018/05/18/security-token-harbor-ceo/

Harbor, Josh Stein

The compliance is centralized at Harbor, and that’s a little different than some of the other companies doing this. Some folks are a complete walled garden — they have to issue the tokens, they only trade on their exchange, and you can’t use other players.

We have the ability to freeze trading on behalf of the issuers. Let’s say you want to move back to paper — we’d freeze trading and re-issue paper. http://fortune.com/2018/05/18/security-token-harbor-ceo/

Harbor, Josh Stein

The compliance is centralized at Harbor, and that’s a little different than some of the other companies doing this. Some folks are a complete walled garden — they have to issue the tokens, they only trade on their exchange, and you can’t use other players.

“R-Token” – David Sacks

 Carlos Domingo, CEO and Chairman, Managing partner at Spice VC, Former CEO at Telefonica R&D

he platform has secured commitments from companies running ICOs in aggregate of $500 million, including offerings from CryptoOracle, Kairos.com, Lottery.com and 22X Fund.

GSR Capital for a purchase of $160 million in tZEROSecurity Tokens at a price of $10.00 per token, pursuant to the Simple Agreement for Future Equity (SAFE).

Wyoming's state legislature passed legislation defining utility tokens as a new asset class and exempting them from securities regulations

Utility Token Bill" was signed into law. The Bill exempts "Utility Tokens" from the state’s securities laws provided the issued token and its issuer meet the following requirements:

(i) The developer or seller of the token, or the registered agent of the developer or seller, files a notice of intent with the secretary of state[;]

(ii) The purpose of the token is for a consumptive purpose, which shall only be exchangeable for, or provided for the receipt of, goods, services or content, including rights of access to goods, services or content; and

(iii) The developer or seller of the token did not sell the token to the initial buyer as a financial investment.

Under the statute, the part (iii) requirement is only met if:

(A) The developer or seller did not market the token as a financial investment; and

(B) At least one (1) of the following is true:

(I) The developer or seller of the token reasonably believed that it sold the token to the initial buyer for a consumptive purpose;

(II) The token has a consumptive purpose that is available at the time of sale and can be used at or near the time of sale for use for a consumptive purpose;

III) If the token does not have a consumptive purpose available at the time of sale, the initial buyer of the token is prevented from reselling the token until the token is available for use for a consumptive purpose; or

(IV) The developer or seller takes other reasonable precautions to prevent buyers from purchasing the token as a financial investment.

Utility ICOs: These tokens do not qualify as securities only if their sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue. If a utility token functions solely or partially as an investment in economic terms, FINMA will treat such tokens as securities (i.e. in the same way as asset tokens).

Asset tokens represent assets such as participations in real physical underlyings, companies, or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds or derivatives.

More than 200 centralized exchanges already

Exchange Act Registration

Even if your company does not have an effective registration statement for a public offering, it could still be required to file a registration statement and become a reporting company under Section 12 of the Exchange Act if:

it has more than $10 million in total assets and a class of equity securities, like common stock, that is held of record by either (1) 2,000 or more persons or (2) 500 or more persons who are not accredited investors or

it lists the securities on a U.S. exchange

More than 200 centralized exchanges already

https://www.wired.com/story/the-stock-market-loophole-that-screws-the-little-guy/

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