"When the SEC issued an opinion on the DAO (decentralized autonomous organization) blow-up they correctly censored them because really they were selling securities. However if one is careful it can be treated as an asset token. If it is a rewards program with no passive income derived or voting shares then it is really not a security. When you increase the supply of a currency you have to offset that by creating debt because you can’t print money. With digital currencies it is not necessarily the case. If you issue tokens with specific value propositions around different sectors you don’t have to offset that with debt. There are examples of this in the sharing economy. If you look at next-generation mobility services and autonomous vehicles, it is very unlikely the vehicles will be privately owned. There will be a huge congestion problem but if you can have access and that can be guaranteed then that is better than owning your own car. There is a token called Lambo coin which allows people to buy part of a Lamborghini and have access privileges at all times. This is indicative of where things are going. It’s a membership model like timeshare but much lighter and easier to do."
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In a July ruling the Securities and Exchange Commission (SEC) found that the tokens in a prominent Initial Coin Offering (ICO) were in fact securities — meaning the transactions violated federal investment laws. What are the key differences between tokens and stock certificates?
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John Henry Clippinger
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