On September 4th, Alan Cohn hosted the 229th episode of The Cyberlaw Podcast.  We took a deep dive into all things blockchain and cryptocurrency discussing recent regulatory developments and best practices for users of exchanges.  Our episode begins with Charles Mills discussing the landmark decision coming out of the New York Eastern District Court in

Alan Cohn was recently featured on the Future Tech Podcast. In an interview with Richard Jacobs, Editor of Crypto News Insider and Organizer & Host of the Bitcoin, Ethereum, and Blockchain Super Conference 2018, Alan discusses the recent regulatory changes and guidance related to cryptocurrency such as the recent Securities and Exchange Commission (SEC)

On July 25, 2017, the Securities and Exchange Commission (SEC) issued its first guidance on how it will interpret token issuances or “Initial Coin Offerings” (ICOs) under relevant securities laws.

The headlines—“SEC Finds DAO Tokens are Securities”—come from Release No. 81207, “Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO” (July 25, 2017), in which the SEC determined that the tokens issued in association with the Distributed Autonomous Organization (DAO tokens) in April-May 2016 were securities and explored the various implications of that determination.  (See Steptoe’s analysis of this report here.)

However, the real news may be the other document released on July 25, a notice to investors titled “Investor Bulletin: Initial Coin Offerings” (July 25, 2017).  In that document, the SEC sets out several areas of concern regarding ICOs—framed as advice to investors—from which the reader can discern the SEC’s initial expectations with respect to ICOs.  Much of the guidance is not surprising, but the SEC’s statement paves the way for more certainty for companies considering ICOs.
Continue Reading SEC Begins Offering Guidance on Initial Coin Offerings

The SEC announced yesterday that “offers and sales of digital assets by ‘virtual’ organizations are subject to the requirements of the federal securities laws.”  Although not coming as a surprise, the SEC’s announcement affirms that companies seeking to involve US investors in an initial coin offering (ICO) must register offers and sales with the SEC or else qualify for an exemption.

The SEC chose the token offering by the Distributed Autonomous Organization (DAO) in April-May 2016 as the focus of the study.  The DAO was built on top of the Ethereum  blockchain by the German unincorporated organization Slock.it, and the success of its token offering ushered in the current wave of ICO activity.  Although questions surrounded the DAO offering in terms of its prospective treatment under US securities laws, the DAO made headlines when it suffered an exploitation that led to the loss of $50 million in Ether.  Although the SEC found that DAO “may have violated federal securities laws,” it decided against pursuing an enforcement action, choosing instead to use DAO as a demonstrative for future ICOs (“to advise those who would use a Decentralized Autonomous Organization … or other distributed ledger or blockchain-enabled means for capital raising, to take appropriate steps to ensure compliance with the US federal securities laws”).
Continue Reading SEC Weighs in on the Distributed Autonomous Organization’s Tokens