Token Sales and The US’ Impressionistic Securities Laws

Jared Marx is an attorney at Washington, DC law firm Harris, Wiltshire Grannis. He advises companies about bitcoin-related regulatory law and represents companies and individuals in civil and criminal proceedings. Here, he discusses why securities law is problematic for bitcoin 2.0 companies operating in the US.


It is now almost commonplace to see a crypto 2.0 company raise development capital by pre-selling tokens to be used in their proposed project. 

Ethereum’s multi-million dollar sale of ‘ether’ – the ‘fuel’ for running its proposed blockchain system – stands out as the most successful to date, but Ethereum is in no way alone.

The development of this business practice has spawned yet another area of regulatory uncertainty in an industry where legal ambiguity is the norm: American federal securities regulation. 

Are tokens securities?

In short, if those tokens are securities under US federal law, their sale in the United States must either be registered with the SEC (costly and onerous), or there must be an applicable exception to registration (generally meaning that they can only be sold to wealthy people). And somewhat contrary to common sense,

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