I briefed global regulators today on crypto assets at the Third Annual Consumer Payments and Finance Academy.  My lesson: in the U.S., even “unregulated” (i.e. non-securities) tokens are invariably subject to some form of regulation (however unevenly enforced).   This also goes, I noted for “utility” tokens.

Along those lines, I brought to their attention the fact that as a matter of U.S. securities law, the concept of utility is rather unimportant.  What is instead critical is Section 2 of the 33 Act (enumerating the financial products deemed to be securities) and the contours of the Howey test, which provides a framework for unconventional items that can still be deemed a security.  But even for products that fail to meet the definition of an investment contract, a number of other laws can still apply–from the Commodity Exchange Act (for antifraud and anti-manipulation prohibitions, and potentially even more) to the Bank Secrecy Act and more.

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