“If Oranges Aren’t Securities, Why Are Tokens?” might sound like a silly question at first, but in the context of SEC v. Howey, the U.S. Supreme Court case that gave us the “Howey Test,” the more you think about it, the more it makes sense.
That’s because an “investment contract” (which is a security per the Securities Act of 1933) and the object of that investment contract can be quite different, especially when the object of the investment contract appears more like a commodity, e.g., oranges, whisky, even blockchain tokens.
Why is this important? Because this framework has the potential to reinvigorate the discussion surrounding what some people refer to as “utility tokens” or “consumer tokens.”
And why do I mention any of this? Because it’s the subject of an upcoming paper authored by Lewis Cohen, who kindly provided a sneak preview to us on the latest episode of The CryptoLaw Podcast. If you’re a fan of ICOs, and have been waiting for that next big hit of “hopium,” this podcast is sure to make you smile. 👇
Also on the podcast is none other than Gabriel Shapiro, who talks about “blockchainizing” corporate stock and who also provides my favorite quote ever regarding digital securities:
The marketing for [tokenized securities] has not been very good. What I typically see in almost every news story … is the word “compliant.” No one ever in history has said the premiere feature of any product is that it doesn’t break the law.Gabriel Shapiro