A Light Regulatory Touch On Initial Coin Offerings

By Nicolas Morgan, David Hernand and Vivian Tsai (August 1, 2017, 4:55 PM EDT) -- Earthworm farms have qualified. So have chinchilla breeding programs. And decades ago, the U.S. Supreme Court in Howey found that certain real estate contracts for tracts of land with citrus groves constituted "securities" under the federal securities laws because, among other things, they involved an investment with the expectation of profits from the efforts of others.

In light of such a broad definition of securities, both proponents and critics of a newish method for raising capital, called initial coin offerings (ICOs), could be forgiven for being underwhelmed with the equivocal nature of a U.S. Securities and Exchange Commission pronouncement on the...

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