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Bright Lines Don't Work for Blockchain Tokens
17 October 2017
View Client Update
Some blockchain industry participants have taken the view that all sales of pre-functional blockchain tokens are “investment contracts” subject to the federal securities laws.
A bright-line test is not appropriate under governing law and guidance issued by the SEC. Rather, a facts and circumstances analysis should be applied to all token sales.
Shortcomings of the bright-line test include its failure to distinguish between types of blockchain tokens, its inconsistency with principles underlying Regulation Crowdfunding and its oversimplification of blockchain technology development.
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