8 Important Things To Know About Security Tokens / Token Regulation
2017 has truly been the year of Initial Coin Offerings with the investment volume of ICOs even surpassing venture capital funding. This happened even with these crowdfunding initiatives occuring in unregulated (or at least poorly regulated) territory. It is important for both investors and companies to be aware of the regulatory and legal landscape so that they can avoid future civil and criminal liabilities. That is why I put together the most critical things you need to know about token regulations.
1) What is a token?
Tokens can come in various different forms and functions and are therefore hard to define. Some represent a user’s reputation within a system (augur), a deposit in US dollars (tether), the quantity of files that are saved in it (filecoin) or the balance in some internal currency system (bitcoin)
Thus, a token can fulfil either one, or several of the following functions:
- A currency, used as a payment system between participants
- A digital asset (a digital right like land ownership)
- A means for accounting (number of API-calls, volume of torrent uploads)
- A share (stake) in a company
- A reward for contributors (i.e. Steemit)
- Payment for using a system/product/service
