Q: Have a question about cryptocurrency.
I just started working on a disruptive token to introduce in the crytpo space platforms in relation to the social & retail service settings. I'm in the U.S. and I am aware of the stringent regulations surrounding the issue of whether or not a token is considered a security. My token involves a proof of work and proof of service concept. Its value will be gained when a person performs an action, and when they do they will receive my tokens for free and then they have the right to give this token to the recipient they deem worthy of it, like giving someone a tip. Is this considered a security? Also, if I wanted further exposure and decide to just put this token on the exchange without doing an ICO or any type of outside funding sort of like the (Doge) would it be considered a security then?
A:
Refer to the Howey Test, which is the most prominently used characteristics applied to analyze whether a debt or equity security exists. If you are still unsure, I would recommend obtaining counsel who is familiar with securities law. Remember, securities law is a federal issue for the most part, so you don’t necessarily need to obtain counsel in your state to assist you with this matter. Also, note that blue sky laws apply if your coin is considered a security.
Hope this helps,
Carl G. Hawkins
Jacksonville Legal Team®
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