When ICOs burst onto the scene, no one could have predicted how large the legal ramifications would be. For those that did, they either tried to ignore it and fly under the radar or got in fast in order to minimize retrospective effects. The challenge is that while every ICO claims utility, many business models are designed to increase utility in order to drive up demand and thus the value or price of the token. With this increase in value, many have the expectation of profits.
In this chapter, we learned what a security is in the eyes of the SEC and looked at the Howey landmark case when determining if something is an investment contract or not from a US perspective. The global regulatory stance of various countries was discussed, where, in general, other than the outright ban from China and South Korea, regulators are open to working with businesses within a framework in an attempt to not stifle innovation.
The SEC started sending signals in the latter half of 2017 and its reports...
