Sales of digital tokens used and issued on blockchain-based online platforms (sometimes also referred to as initial coin offerings or “ICOs”) have increased dramatically over the last year. While precise figures are hard to come by, observers have estimated that the market went from about 50 separate token sales in 2016 raising around $100m equivalent in Bitcoin, ether and other cryptocurrencies (measured at the time of sale), to what some think may top $4bn equivalent across at least several hundred separate token launches by the time 2017 comes to an end.

This type of growth raises the question as to why so many are participating in token sales, even when it is widely understood that many of the platforms being developed may be unsuccessful.

However, whether you conclude that token sales are an exciting new way of raising capital or just another tulip mania, one thing that's for sure is that the regulatory environment applicable to them is far from certain.

On November 21, Aaron Wright of Yeshiva University’s Cardozo Law School, a leading New York area institution, hosted a panel-based symposium on structuring legally compliant token sales.

The panel comprised legal experts from major US law firms who work on the front line on token sales, with New York capital markets partner Lewis Cohen representing Hogan Lovells.

During the discussion, the panel examined some of the major legal issues around token sales.


One critical question is whether token sales constitute offerings of “securities”.

This is important because, where a digital token is properly categorized as a security, it has to be registered with the US Securities and Exchange Commission and satisfy various disclosure requirements.

The panel focused in particular on a controversial approach to token sales known as the “simple agreement for future tokens” (or the “SAFT”), with different participants expressing a variety of views on the topic, leading to some very engaging discussion.

Other regulatory issues around the extent to which commodities regulations apply to the SAFT were discussed, as well as anti-money laundering, 'know-your-customer' requirements, and tax concerns and the possibility of price manipulation and fraudulent practices.

You can watch the entire symposium here.

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