An outspoken (though slightly more lenient) lawyer on the subject of token sales is Stephen D. Palley, counsel in the Washington D.C. office of Anderson Kill.
Palley said of the DAO ruling: "It will be interesting to see how the SEC deals with recent large token sales directed to US residents by US residents. The analysis could certainly be coloured by the amount of personal gain its promoters receive.
"The SEC also reminds the industry that exchanges and their participants are subject to securities laws. There is no 'but it's blockchain' or 'it's a crypto-exchange' exemption in US Securities law."
There's probably a clear division between those who think ICOs should count as securities and those who don't. Palley wanted to be clear that he does not think all tokens are securities.
"It's not only possible - it's a fact that there are software tokens in existence that are not securities." He also pointed out that the definition of ICO tokens as securities could vary from one jurisdiction to the next – a point which seems to often be ignored.
"For somebody to flat out say that all tokens are securities, my question then would be, first of all, describe the token; second of all would be, where? Because I can't tell you what the laws in Lichtenstein or Laos or Liberia would say - I don't know. One of the challenges with tokens is they can be sold everywhere in the world all at once."
Another common approach is the distinction made between a utility token and what may be a pure investment token. "I don't think that's a bad sort of general rubric if you are talking about US securities laws," said Palley.
"The fact that it's called a token or the fact that you are doing a token sale, I'm not sure that in and of itself means that it's a securities offering.
"The problem is you have people who are taking ideas, creating a website in a day, maybe writing a white paper - maybe swiping a white paper from somebody - and baldly saying if you give us your money we will build something that you can later use.
"Without going into detailed analysis of securities laws, that basic proposition: give me your capital, over which you will have no control and I will build something that you may be able to later use, and I will give you something that you can trade on secondary markets ... in a lot of places that is probably going to be a security. Period."
Whole article here. This is an interesting read on the question of ICO relative to the recent announcement of SEC on its position on the continuing proliferation of Initial Coin Offerings (ICO) in the market. One of the things Mr. Palley mentioned is that there can be different laws treating ICOs from one country to another and that definitions of ICOs may not be the same. These things have to be clarified before and so the story-line for ICO issuance will continue to be littered with questions more than answers.
