Coin Center Updates Its Securities Framework for Cryptocurrencies
The block chain advocacy group Coin Center believes that some Crypto calls must be regulated because they look like securities by law.
The organization's research director Peter Van Valkenburgh announced on Friday a new report claiming to follow the Howey Test, citing specific cryptocurrencies and acting as investment contracts. He therefore wrote that he should be treated for securities.
This report updates the 2016 version. This presents a possible framework for regulatory authorities when deciding which cryptocurrency should be secured according to the Howey Test.
This framework examines three variables that Van Valkenburgh believes are important in determining whether cryptocurrency is secure: "distribution, distribution, and functionality." In particular, he talks about how tokens are first distributed, how the primary network is distributed, and how rights and permissions token owners are secure.
"For example, distributed and larger computing platforms such as ethereum, as well as larger, distributed CryptoCurrencies, such as bit-coin-encrypted cryptocurrencies, do not fit easily into security definitions and do not present consumer types But we have seen the greatest risk with the Securities and Exchange Act, but we have found that a large or small, suspiciously-sold or designed call-to-talk currency can actually meet that definition. "
The new version scrutinizes the Initial Coin Delivery (ICO) rather than the original coin. Perhaps it reflected the surge in fundraising methods last year. ICO raised $ 46 million in 2016, less than a tenth of the $ 5 billion raised in 2017. It also provides an in-depth explanation of ALT coins and how they can be applied to the framework.
Van Valkenburgh also notes the increase in Airdrops and ERC-20 tokens, saying, "The most important network is that many networks are designed to create customized tokens on their parent networks." New tokens and their usage are monitored and described by the underlying network consensus mechanism and block chaining. "
Van Valkenburgh, like its predecessor, explains the risks to investors and offers suggestions on how to protect it without compromising innovation.
House framework image through Shutterstock
CoinDesk, a leader in block-chain news, is a media outlet that pursues the highest standards of journalism and adheres to strict editorial policies. CoinDesk is an independent operating subsidiary of the Digital Currency Group, which invests in cryptocurrencies and block-chain startups.
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