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To analyze and draw conclusions from the “Framework for ‘Investment Contract’ Analysis of Digital Assets” (the “Framework”), released by the US Securities and Exchange Commission (the “SEC”) on April 3, 2019, and the SEC’s corresponding no-action letter to TurnKey Jet, Inc. (“TKJ”), which is the SEC’s first no-action letter publicly agreeing with the view that the digital asset described therein is not a security.

Explains how the Framework assists market participants in analyzing whether a digital asset is a security, by applying the Howey factors for identifying an investment contract. Discusses the SEC’s TKJ Letter, highlighting the factors the SEC emphasized in its analysis of the Framework.

While largely reiterating prior guidance, the Framework provides a helpful overview of the SEC’s views on when a digital asset is a security and how to properly analyze the prongs of Howey with respect to digital assets. The Framework also leaves certain important questions unanswered, including, for example, whether digital assets distributed by means of a so-called “Airdrop” are securities under the Framework, and the extent to which the Framework is meant to interact with digital assets that were issued or otherwise operate on platforms that are primarily overseas.

Expert guidance from lawyers with broad experience in financial services, securities, investment funds, derivatives, and digital assets regulation and compliance.

This chapter synthesizes the economics, law, and technology of security tokens and security token offerings (STOs). Security tokens are an increasingly important instrument in decentralized finance (DeFi) markets. They are blockchain-based investment contracts that are subject to securities law. Interoperability, fractional ownership, market liquidity, and rapid settlement are the main reasons security tokens are a primary catalyst for digitizing finance. The chapter empirically compares STOs with initial exchange offerings (IEOs) and initial coin offerings (ICOs). STOs take longer and raise more funding. However, controlling for other factors, the amount raised in STOs and IEOs is lower than in utility-token ICOs. These findings suggest an avenue for future research. Moreover, both the law and the technology of security tokens need to address critical challenges related to the competent jurisdiction in multinational activities and blockchain interoperability, scalability, and natural resource degradation.

This chapter examines the insider–outsider dynamics shaping Web3 technologies as they navigate entrepreneurial ecosystems and the technology diffusion process. It establishes insiders as the developers, founders, and investor communities driving Web3 innovation, often operating in regulatory grey zones with a techno-solutionist mindset. In contrast, outsiders include institutions, policymakers, and the broader public reacting to Web3’s experimental nature and socio-technical novelty. The chapter situates Web3 within frameworks of technology adoption, socio-technical imaginaries, and models of diffusion. It highlights the tendency of insiders to overlook social nuances while pursuing rapid commercialisation and adoption. The chapter presents two case studies: the first examines the regulatory friction encountered by Ripple Labs and its digital asset, XRP; the second chronicles the rise and fall of Art NFTs, from their promise of empowering artists to their eventual decline due to legal uncertainties, environmental concerns, scams, and clashing community values. This decline mapped onto public disillusionment with the technology despite, and perhaps because of, its utopian techno-libertarian premise. The chapter argues that Web3 must navigate complex insider–outsider tensions while introducing disruptive innovations within existing socioeconomic structures. It concludes with policy recommendations spanning regulatory frameworks, consumer protection, responsible innovation, and public education to foster a more balanced and sustainable Web3 ecosystem.

In this chapter, the authors study how cryptotoken issuance, also referred to as initial coin offerings and security token offerings, may disrupt funding markets such as venture capital, crowdfunding, and private equity. The authors discuss the necessary infrastructure to support this new asset class. The authors analyze the market evolution in terms of volatility, global reach, news events, and types of industries that are issuing or considering to issue tokens. The authors discuss some specific token offerings to highlight lessons learned. the authors summarize the regulatory landscape and challenges going forward. This market crashed in terms of market capitalization at the end of 2018. However, this new asset class along with the underlying technology holds great promise to disrupt various types of intermediaries if adequate financial and regulatory infrastructures are developed.

The purpose of this paper is to review the first two years of the US Securities and Exchange Commission (SEC) efforts to regulate cryptosecurities to assess the trends of that regulation.

The authors review the SEC’s official pronouncements and informal statements about, and its enforcement actions against participants in, various early experiments in cryptosecurities.

The SEC has been evolving how to apply the US securities laws to cryptosecurities since its report on The DAO two years ago. When “coins” on a blockchain meet the traditional Howey Test, it is easy to categorize them as “securities.” However, the bedrock regulatory principle that some person must account for violations is frustrated by automated blockchain transactions, where no human is in control. This tension risks a “moral crumple zone” arising around cryptosecurities, in which persons might become liable for violations that they cannot fairly be said to have caused.

This paper provides valuable information and insights about the beginnings of US regulation of cryptosecurities and how the evolution of that regulation is trending after two years.

Cryptocurrencies are notoriously difficult to value from a fundamental perspective. This valuation challenge is rooted in various debated issues in academia and the investments industry. For example, do cryptocurrencies and other cryptoassets have intrinsic value in the conventional sense? Can one appropriately regard cryptocurrencies as digital fiat currencies? What distinguishes cryptocurrencies such as bitcoin and ether from precious metals like gold from a financial perspective? How do cryptocurrencies compare to other cryptoassets in terms of pricing and valuation? This chapter aims to provide responses to these questions, discuss approaches to cryptoasset valuation, and identify areas for future research.

This paper aims to examine the impact of enforcement actions by the US Securities and Exchange Commission (SEC) on the valuation of major crypto assets.

Given the recent increase in regulatory efforts to combat fraudulent activity within the market, the paper concentrates on the period from 2019 to 2023 and uses the event study approach.

The analysis reveals a negative and economically significant effect of SEC actions on crypto valuations, ranging from −0.7% to −1.4% over a three-day window surrounding the announcement of enforcement actions for the entire sample. Particularly, a pronounced negative reaction is observed from crypto investors to SEC enforcement actions in 2022 and those where individuals are charged.

The findings align with existing literature, even though the study uses more conservative methodological approaches and data selection criteria. Specifically, the author uses a market event study model, account for potential confounding events, and use initial news reports about investigations rather than official SEC communications as event dates.