Blockchain Association Formalizes the Securities Law Working Group
Today, the Blockchain Association formally launched the Securities Law Working Group to coordinate the open blockchain industry’s efforts to seek regulatory clarity in the United States securities laws. Georgia Quinn, General Counsel at CoinList, Ian Darrow, Counsel at Protocol Labs, Craig Salm, Director, Legal at Grayscale, and Ben Melnicki, Americas Head of Regulatory Affairs at Ripple, will co-chair the working group.
Digital Tokens Must Be Defined in US Securities Laws
Since our launch in 2018, the top priority of the Blockchain Association and its members has been working with legislators and regulators to define certain digital tokens and exempt them from the U.S. securities laws. For example, we supported the introduction of the Token Taxonomy Act, which would define the term “digital token” and exempt such assets from U.S. securities laws.
The Securities Law Working Group will catalyze and coordinate these ongoing efforts across the open blockchain industry. Properly defining these assets is vital if the broader open blockchain economy is to grow to its full potential here in the United States.
To date, the Securities and Exchange Commission (SEC) staff has issued a framework to analyze whether digital assets are securities, but the framework does not exist explicitly in the securities laws or case law.
We believe that if certain tokens are sold to investors prior to the development of a system in which they can be used, the tokens could be deemed securities, and issuers of these tokens could be required to comply with securities laws in order to protect potential investors.
However, digital tokens usable on functional, public, and decentralized blockchains have their own inherent value if they can be exchanged for goods or services. At this point, a token’s value is independent of the efforts of the entity or people that created the underlying blockchain network. Under these circumstances, the tokens are not investment contracts and should not be designated as securities.
Investors, network participants, and developers deserve to know with certainty that tokens in functional, decentralized networks are not securities in order for innovation to occur where it should — the United States. With today’s formal launch of the Securities Law Working Group, we continue our mission of working with regulators and legislators to help provide clarity to the digital asset ecosystem.