1/ We need a third way. Post project fundraise, the core problem is information asymmetry. Relying directly on a project to provide all “material” info to the public is hopeless.
2/ Project disclosure can and should be crowdsourced to a single location (think: Wikipedia).

Social and legal consequences would be meted out to those found to knowingly have provided misleading information (whoever they may be).
3/ Digital asset exchanges can be arbiters of the quality of the project information and be responsible for making reasonable determinations about its accuracy and completeness.

No project has a *right* to be listed.
4/ Those who care about a project (for whatever reason) should coordinate to provide the best available information, with the incentive being better liquidity for the project token.
5/ But what about DEXes, you ask?

There is a way forward there too.

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More from @NYcryptolawyer

9 Mar 20
Another great discussion initiated by @lex_node based on a valuable piece on @coindesk written by @Frances_Coppola. As with many threads on Twitter, the tone quickly gets ... acerbic but it is a useful starting point to make a couple of important observations in both directions.
2/ As comments in the thread make clear, Coppola is focusing on “tokenizing” fungible and tangible assets. Her (spot on) point is that it is absurd to think that “blockchain“ can fix the trust issue when it comes to tangible IRL assets. However, I want to get to a deeper point.
3/ I spend quite a lot of time debating what is, and what is not a “security“. However, one thing is clear: in almost all cases, when you create a financial instrument backed by a pool of physical assets, under US law you have created a security.
Read 17 tweets
25 Dec 19
1/ Merry Christmas to all celebrating today! I would like to pick up on a point made in the thread below by @BoulevardLP. H/t to @insideNiMA to getting the ball rolling and @r_ross_campbell for the shout out. Will be curious as to thoughts from @lex_node, @propelforward +others.
2/ First, although the Turnkey Jet no-action letter is helpful (as is the @DLxLawLLP letter for @BuyQuarters), undoubtedly the most developed and relevant statement on this topic from the SEC is their April 2019 Token Framework - sec.gov/corpfin/framew….
3/ In addition, although the term “utility token” is commonly used, I would argue it is very unfortunate and confusing. There is no formal category of “utility token” anywhere in US law. A token (or any other asset) either is or is not a “security”.
Read 8 tweets
20 Aug 19
1/ Having so much fun with this thread - let’s add a hypothetical. Inspiration from our friends @coincenter. A developer team raises money by pre-selling a token that does not yet exist. H/t @jasonsomensatto @lex_node @propelforward @AndoniOlta @jchervinsky @LawxTechxArt
2/ During the pre-sale (which is open to the general public and not otherwise registered with the SEC), the developer team affirmatively reference the anticipated success of the platform they are building and the attendant economic benefits of owning the yet-to-be-developed token
3/ Purchasers send crypto to the developer team and, in exchange, designate a wallet address to which the tokens, once created, will be sent.
Read 10 tweets
26 Jun 19
@lex_node @JoshuaZeidner @jerrybrito 1/ Thanks, @lex_node. There’s actually a fair amount to unpack here. First, it’s important to bear in mind that the definition of “security” in Securities Act sec.2(a)(1) is much broader than just “investment contract”.
@lex_node @JoshuaZeidner @jerrybrito 2/ Also included in the “security” definition are “collateral-trust certificate” and “any certificate of interest or participation in ... any of the foregoing”. Moreover, if tokens were not involved, we would say many “stablecoins” look a lot like asset-backed securities ...
@lex_node @JoshuaZeidner @jerrybrito 3/ ... because they would represent an instrument backed by a managed pool of financial assets. AFAIK, the absence of interest payments does not ipso facto make an instrument not a security.
Read 8 tweets
18 Jun 19
1/ There is quite a lot to digest around #LibraCoin. Much of the discussion so far has focused on the technology elements and the legal and regulatory and framework. I am more intrigued by the underlying economics.
2/ Because the Libra token will both be non-interest-bearing and broadly “stable” in value, there will be a strong economic disincentive to hold it for any period of time. In this respect, it will be similar to the many other “stable coins” already on the market.
3/ However, the stated mission of the Libra project is quite different from that of most other stable coins. From their whitepaper: “The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people.”
Read 20 tweets
26 May 19
1/ Some Sunday morning thoughts on “security tokens” following the observation of @boironattorney below.
2/ First, I very much agree that you cannot say that security tokens have “flopped” at this early stage of the game. At the same time, we also cannot deny that that the take-up for security tokens from traditional cap mkts players has not lived up to the hype, as of yet.
3/ Here is how I look at it: security tokens are not a new “asset class”. They are simply a more streamlined, efficient and improved way of doing something we have done for a very long time - issuing and selling securities in the capital markets.
Read 20 tweets

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