Utility or Security Token?

[paulwallyall]

There's a huge debate on whether a company should go the route of a security token or utility token.

Utility tokens have been very popular, although we are seeing companies like Telegram start to issue security tokens. It seems like everyday there is new legislation passed somewhere on ICO's - some negative, some positive.

I thought this podcast, episode #130 of Joe Wallin's 'Law of Startups' podcast was an interesting debate between one lawyer who believes the SEC and other government organizations are going to crack down on utility tokens versus another lawyer who doesn't exactly see if that way.

Does anyone have experience with an ICO doing either a utility or security token? What was that like and how did you think about the legal frameworks?

http://www.thelawofstartups.com/ Episode #130 with securities lawyer Dan DeWolf

[Wheelige]

Whether a company decides to issue a utility token or a security token really depends on the business model they are looking to achieve and how they intend to tie in to regulations in the states they will be operating in.

At one point in time you could get away with an ICO that would pay out dividends (clearly a security) and there wouldnt be too much fuss because the ICO phenomenon wasnt big enough. But now with the crackdown of global regulators on securities and making sure that any company selling securities complies with local securities regulations genuine consideration should go into whether or not you business model can support a utility token.

Some organisations, Paypie for example went the route of a utility token, and are now having to actively work with their local (Canadian) regulators in order to show that it is a utility token and therefore exempt from security regulation. In order to do this they are essentially needing to complete their platform and show the use case of the token. The whole concept revolves around how their token will be engaged in the platform.

Another example would be Caviar, they have decided to release a token that will pay out dividends based on performance of the organisation. As such they dont need to focus on a use case of the token as it is only there for passive income. They do however have to put further consideration into the markets they are going to be allowed to sell their tokens to (they were pinged by a US state regulatory office for having sold a security to a US citizen). They are now having to complete a full KYC audit in order to ensure that no tokens were sold to persons in states which the sale would not be legal. Every country has a different regulatory framework for securities and the level of regulation of/interference with the market is different, therefore there can be a lot of work to protect your business from attracting unwanted attention from regulators.

[Tai Chi Chain]

There's a huge debate on whether a company should go the route of a security token or utility token.

Utility tokens have been very popular, although we are seeing companies like Telegram start to issue security tokens. It seems like everyday there is new legislation passed somewhere on ICO's - some negative, some positive.

I thought this podcast, episode #130 of Joe Wallin's 'Law of Startups' podcast was an interesting debate between one lawyer who believes the SEC and other government organizations are going to crack down on utility tokens versus another lawyer who doesn't exactly see if that way.

Does anyone have experience with an ICO doing either a utility or security token? What was that like and how did you think about the legal frameworks?

http://www.thelawofstartups.com/ Episode #130 with securities lawyer Dan DeWolf

There are plenty of different types of tokens.
Tai Chi Chain Token is not a Utility token, equity, security, or any right to Tai Chi Chain.

We are doing everything as "Donations".

We believe this is truly a new way to raise funding without being classified as an ICO, but while still allowing users to trade these tokens with any given speculative value on decentralized exchanges.

TaiChiChain.org

[avikz]

I am not sure about what utility and security token does, because all tokens running in the market, have only one goal. They just want to raise fund for their business. While 20% of them having a legal and real-world business, rest 80% are scam. So it really doesn't matter whether a token is utility or security, what matters most is the value of the token. Just to give an example,

I was attached with Trade token and Ethergreen token as a bounty participant. At the initial phase, both tokens looked professional, but at today's date, trade token is big and  selling at $0.30 per token while ethergreen ran away with investor's money. Their website is not live as well. So I believe, security or utility doesn't matter. What matters is the intention to make a great business from the funding they have received.

[paulwallyall]

There's a huge debate on whether a company should go the route of a security token or utility token.

Utility tokens have been very popular, although we are seeing companies like Telegram start to issue security tokens. It seems like everyday there is new legislation passed somewhere on ICO's - some negative, some positive.

I thought this podcast, episode #130 of Joe Wallin's 'Law of Startups' podcast was an interesting debate between one lawyer who believes the SEC and other government organizations are going to crack down on utility tokens versus another lawyer who doesn't exactly see if that way.

Does anyone have experience with an ICO doing either a utility or security token? What was that like and how did you think about the legal frameworks?

http://www.thelawofstartups.com/ Episode #130 with securities lawyer Dan DeWolf

There are plenty of different types of tokens.
Tai Chi Chain Token is not a Utility token, equity, security, or any right to Tai Chi Chain.

We are doing everything as "Donations".

We believe this is truly a new way to raise funding without being classified as an ICO, but while still allowing users to trade these tokens with any given speculative value on decentralized exchanges.

TaiChiChain.org

This sounds sketchy.

You're telling me people are donating their money and not getting the ability to use these tokens in your platform? Nor do they get the benefits of owning a part of the company?

Sketch.

[Tai Chi Chain]

There's a huge debate on whether a company should go the route of a security token or utility token.

Utility tokens have been very popular, although we are seeing companies like Telegram start to issue security tokens. It seems like everyday there is new legislation passed somewhere on ICO's - some negative, some positive.

I thought this podcast, episode #130 of Joe Wallin's 'Law of Startups' podcast was an interesting debate between one lawyer who believes the SEC and other government organizations are going to crack down on utility tokens versus another lawyer who doesn't exactly see if that way.

Does anyone have experience with an ICO doing either a utility or security token? What was that like and how did you think about the legal frameworks?

http://www.thelawofstartups.com/ Episode #130 with securities lawyer Dan DeWolf

There are plenty of different types of tokens.
Tai Chi Chain Token is not a Utility token, equity, security, or any right to Tai Chi Chain.

We are doing everything as "Donations".

We believe this is truly a new way to raise funding without being classified as an ICO, but while still allowing users to trade these tokens with any given speculative value on decentralized exchanges.

TaiChiChain.org

This sounds sketchy.

You're telling me people are donating their money and not getting the ability to use these tokens in your platform? Nor do they get the benefits of owning a part of the company?

Sketch.

The Stellar Network is an open source blockchain. People can build dApps, wallets, etc on top of their Network.
The bases of our tokens is that they will be the only ones compatible with our Dark Wallet which runs on the Stellar Network(Extremely fast/Instant).
This Dark Wallet will provide privacy features which isn't available at the time on ANY Stellar Wallet(and no one else is working on this).

Tell me, what benefits are received from holding bitcoin besides the occasional failed hard forked coins?
What about Ethereum itself? Holding these tokens doesn't mean you are entitled to dividends like regular stocks at all.

How many people are donating to other platforms and are receiving tokens with only promises? 90%+ of them.

IOST token doesn't even have a use case yet, yet it reached a market capital of over $1B+ with hundreds of millions in volume.

All I can say is we are a legitimate & long term project that is here to stay for the whole ride.
Come check us out on Twitter.com/TaiChiChain
I can guarantee there is nothing "sketch" about us & we are regular people like yourself.

Sincerely,
The Tai Chi Chain Team.

[paulwallyall]

There's a huge debate on whether a company should go the route of a security token or utility token.

Utility tokens have been very popular, although we are seeing companies like Telegram start to issue security tokens. It seems like everyday there is new legislation passed somewhere on ICO's - some negative, some positive.

I thought this podcast, episode #130 of Joe Wallin's 'Law of Startups' podcast was an interesting debate between one lawyer who believes the SEC and other government organizations are going to crack down on utility tokens versus another lawyer who doesn't exactly see if that way.

Does anyone have experience with an ICO doing either a utility or security token? What was that like and how did you think about the legal frameworks?

http://www.thelawofstartups.com/ Episode #130 with securities lawyer Dan DeWolf

There are plenty of different types of tokens.
Tai Chi Chain Token is not a Utility token, equity, security, or any right to Tai Chi Chain.

We are doing everything as "Donations".

We believe this is truly a new way to raise funding without being classified as an ICO, but while still allowing users to trade these tokens with any given speculative value on decentralized exchanges.

TaiChiChain.org

This sounds sketchy.

You're telling me people are donating their money and not getting the ability to use these tokens in your platform? Nor do they get the benefits of owning a part of the company?

Sketch.

The Stellar Network is an open source blockchain. People can build dApps, wallets, etc on top of their Network.
The bases of our tokens is that they will be the only ones compatible with our Dark Wallet which runs on the Stellar Network(Extremely fast/Instant).
This Dark Wallet will provide privacy features which isn't available at the time on ANY Stellar Wallet(and no one else is working on this).

Tell me, what benefits are received from holding bitcoin besides the occasional failed hard forked coins?
What about Ethereum itself? Holding these tokens doesn't mean you are entitled to dividends like regular stocks at all.

How many people are donating to other platforms and are receiving tokens with only promises? 90%+ of them.

IOST token doesn't even have a use case yet, yet it reached a market capital of over $1B+ with hundreds of millions in volume.

All I can say is we are a legitimate & long term project that is here to stay for the whole ride.
Come check us out on Twitter.com/TaiChiChain
I can guarantee there is nothing "sketch" about us & we are regular people like yourself.

Sincerely,
The Tai Chi Chain Team.

I'm not saying there is anything sketch about you personally. Just the project.

Yes, there are a lot of coins that are blowing up because of the speculative nature of crypto without many real life use cases. That doesn't change that people do believe there are strong potential use cases for most of these coins. Whether they fulfill their "promises" or not is irrelevant. It does not seem like there is any reason to donate to your project as there is a guarantee that you get no return whatsoever.

[goldblum-FinTech]

That is an interesting topic for many jurisdictions. I am a lawyer in a Swiss law firm located in Zug and Zurich. Recently we received a new Guideline from Financial authority dedicated to the topic how the ICOs and Tokens should be treated in Switzerland. You can check the info http://goldblum.eu/en/legal-news/the-swiss-financial-market-supervisory-authority-issues-guidelines-on-icos/ 

I would emphasize two points: First, the type of token (utility, security or currency) does not necessarily imply the financial regulation, which more or less depends on the ICO structure; and second - the utility tokens have very specific and narrow meaning - the token is utility only if it can be used at the platform/for your service/etc. already at the moment of its issue. Also, the definition and regulation of the "security" in different jurisdiction vary. If you are interested in Swiss regulation, our lawyers can advise you on this subject as well as assist in implementation. Best regards

[CryptoBry]

In my own humble view, this debate should have been clearer if there is a single agency in the government that will have the final say whether one is issuing a security of just a token BEFORE making any moves asking for funding or doing an ICO. It would save a lot of headaches and wasted time and effort rather than do emergency effort later. This debate will continue for a long time until there will be a clear guideline what constitute a security and utility token.

[moseich]

What does the check in SEK, form D?
If the utility tokens.

[CoinstarF]

What does the check in SEK, form D?
If the utility tokens.

They are both important because utility token could be eventually become a milti trillion dollar industry to be raise,  while security token it is the key to gain something we want to be raised and placed it in a restricted electronic access. If they combined it will be good enough.

[Ajeng07]

Utility Token, do not serve as investment, if properly structured this feature will exclude their token utilities from federal laws governing securities. This token represents the account unit for the network. the larger the growing network, the more it is also in the token.

[Wheelige]

Anyone that thinks that the genuine classification of whether a token is a currency, security or utility isnt important is living in the past. Regulators over the world have started to take a serious interest in the ICO market and are looking to impose their will where applicable and even in some situations that are a bit of a jurisdictional reach.
Veritaseum and Paypie are having to prove to their relevant regulators (US and Canada respectively) before being able to fully engage their operations, if this wasnt required then they would be able to blast ahead, list on any big exchange and because massive speculative vehicles like many other cryptos.

Caviar released a token that drew the attention of state regulators in the US and it put a massive spanner in their works and caused huge delays in their operations and required them to jump through multiple hoops in order to not face prosecution and to allow them to continue their planned operations long term.

As a organisation thinking about doing an ICO this kind of concern should be at the forefront of your planning.
As an investor looking to throw money at a token, this should be a major consideration as a team that cares about this is probably going to have expertise and dedication to get their product online, without it there are signs on disinterest, ignorance or lack of experience.

Be careful out there and follow those that are careful.

[marielbeckham]

Without any doubt, this podcast is worth attention.

[moseich]

Yes, when you see on the site of the ICO test Howey.
Or the team describes the registration in the SEC.
  There is more trust. You can check the words of the team.
It remains a mystery how are scammers getting investment?
SEC website and check the information.
And do not believe bright pictures and empty promises?

[Harlot]

I think the main issue about this ICOs is how they are classifying their tokens. I know for one that some domestic corporations to countries with no strict regulations laws on cryptocurrencies are creating security tokens instead of IPOs as some of them do not pass the screening process provided by their SEC. This security tokens if they are no good for their own Secuirty and Exchange Commission should also not be good to conduct their ow ICOs as they are literally evading what their SEC has judged to them. And of course unlike stocks they have more control to their token as for one it is not available in the main market and the dividends issued will be their's to decide.