Coloring coins: how do we move forward?

[Peter R]

Small fractions of bitcoins can be "colored" to represent various assets such as shares in a company, gold held in a vault, or futures contracts regarding the price of bitcoin.  The concept of colored coins has been a topic of discussion lately since the recent launch of the Coinprism wallet.  

The purpose of this thread is to discuss what else is required before we can begin to create a real decentralized marketplace for various digital-representations of assets.  As a hypothetical example, let's imagine that Company X wants to sell colored coins that represent gold stored in its vault.  Company X drafts a thorough contract specifying the precise details of the agreement (e.g., details around 3rd party audits, redemptions, time limits, etc.) and signs it with the same keys used to issue the colored coins.  Company X hopes that these tokens can be traded against bitcoin on an exchange like Kraken, in addition to p2p (which is always possible with colored coins).  Assume Company X is reputable, its executives are publicly known, and it wants to abide by the letter and spirit of the law.

Regulatory questions

Would Company X require SEC approval to sell these digitized tokens to members of the bitcoin community from the US?

Independent of the answer to the above question, once these tokens were circulating, would an exchange like Kraken legally be able to list them for trading?  Would customers trading these colored coins require any further identity verifications than they do to trade cryptocurrency?

What other regulatory issues might be encountered?

Technological questions

Can colored coins be issued using a multisig process (e.g., 2 or 3 directors of Company X must sign any new issuances)?

Is a reliable colored-coin block explorer available?

If an exchange such as Kraken listed these colored coins, is there a reasonable and turn-key method they could use to accept colored-coin deposits and facilitate colored-coin withdrawals?

[bluemeanie1]

why are you posting this thread again?

so no one sees the responses from the other one?

-bm

[Peter R]

why are you posting this thread again?

so no one sees the responses from the other one?

I just wrote this post now after discussing an idea for a series of digital assets with a colleague.    

I think you might be confused with this thread regarding the Coinprism wallet started by user "iraszl."

[Beliathon]

I suspect we can move forward by moving backward in reverse.

[Peter R]

I suspect we can move forward by moving backward in reverse.

A comment from the peanut gallery I see.  I suppose that means this thread needs more controversy.  How's this:

"Non-mined digital assets are classified as securities by the SEC.  It is unlawful for a company or individual to solicit the public to purchase most forms of such digital asset without first registering with the SEC.  This applies to assets including, but not limited to shares, bonds, options, certain types vouchers, as well as what has become known as 'crypto 2.0' if such tokens were pre-mined or insta-mined."

And this:

"It is unlawful for a US-based exchange to facilitate the trading of non-mined digital assets without SEC registration."


Of course, I have no idea if any of that is true, but maybe it will get some useful discussion started.

[PalmerLaura]

How would color coin work with ASICMiner shares ? Something like, user sends pm to friedcat to transfer his shares to a btcaddress linking to colored which set up by friedcat ? Then other users can trade them, and maybe pm to friedcat to transfer out of that address to his personal direct share address ?

[rhino34567]

I suspect we can move forward by moving backward in reverse.

A comment from the peanut gallery I see.  I suppose that means this thread needs more controversy.  How's this:

"Non-mined digital assets are classified as securities by the SEC.  It is unlawful for a company or individual to solicit the public to purchase most forms of such digital asset without first registering with the SEC.  This applies to assets including, but not limited to shares, bonds, options, certain types vouchers, as well as what has become known as 'crypto 2.0' if such tokens were pre-mined or insta-mined."

And this:

"It is unlawful for a US-based exchange to facilitate the trading of non-mined digital assets without SEC registration."


Of course, I have no idea if any of that is true, but maybe it will get some useful discussion started.

Do you have the source for that? I would like to read more into it.