The Institute of Financial Science and Technology of Tsinghua University, in conjunction with Ripple, a US cross-border payment service company, has launched the Block Science and Technology Research Awards Program (BRSP) for graduate students across the country. We will be launching a series of articles on US blockchain regulation brought to you by project team members.
This article is a compilation article of Zhan, a member of the block technology research and reward program project team. This article will be followed by a series of articles, so stay tuned!
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William Hinman, head of the US SEC's financing department, presented his views on digital currency regulation at the House Financial Services Committee hearing on April 26, 2018. He believes that not all cryptocurrencies must be regulated as securities, assuming that there is a cryptocurrency that the holder buys for its utility rather than for investment, it can be considered as a utility token. ) is not a security.
Industry insiders expressed their opinions: Aaron Wright, a legal researcher in the blockchain industry, and Peter Van Valkenburgh, research director at the Coin Center, both expressed their support for William Hinman's point of view, Peter Van Valkenburgh exemplified "Even if Ethereum was able to pass all securities tests initially, a decentralized digital currency like Ethereum could never be a security."
California Democrat Brad Sherman believes that Bitcoin should be considered a security because of its investment attributes. For Brad Sherman's point of view, the blockchain community red man Emmer said that the initial issue of cryptocurrency and blockchain technology is a new and unknown area, and the regulatory authorities should be aware of the particularities of the field.
The cryptocurrency was treated as a survey of securities that began in 2017. On July 25, 2017, the US Securities and Exchange Commission issued a survey report on a digital currency project called “The DAO”, which included the distribution model of The DAO and the use of the blockchain claimed by the publisher. A detailed explanation is given that the DAO should be recognized as a security under the US Securities Act of 1933 and the Securities Exchange Act of 1934. The reason for the investigation was that The DAO was hacked in June 2016, losing about 1/3 of the ETHs it had collected, and the loss was about $60 million at the time.
The SEC's investigation report states that the legal basis for identifying The DAO as securities is Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act, even if it is not in cash. Participating in investment, an "investment contract" is also a form of securities. The purchaser's purchase of The DAO is based on a reasonable expectation of the company's future profits, so this is essentially an investment behavior.
After this investigation report, all cryptocurrency related institutions have pressure to register with the SEC.
“Utility token” is a new direction for the cryptocurrency regulation in 2018 by William Hinman, director of the Corporate Finance Department of the Securities and Futures Commission. The Utility token is translated into a utility-type pass in the country, usually referring to the circulation of the project within the blockchain ecology as a payment medium, which can consume the service or the product. Utility-type pass is not an “investment contract”, it is a payment medium corresponding to the blockchain ecology, similar to Q coins, so the buyer’s holding of such cryptocurrency is not based on the expectation of profit, and does not have investment. Attributes. However, due to the particularity of blockchain technology and ICO projects, the classification of cryptocurrencies into utility and non-utility at the regulatory level may have the following problems:
- The utility token needs to be clearly defined. This involves a lot of technical difficulties and legal definitions.
- Non-securitised digital currency will face great sales pressure when it is first issued. Excessive sales pressure may lead to the development of the corresponding blockchain ecological application scenario.
- Some blockchain projects may falsify supervision to make digital currency pseudo-licensed. Due to the particularity of blockchain technology, this may impose high requirements on regulatory capabilities.
On the one hand, according to the characteristics of the use of cryptocurrency and other characteristics, different types of cryptocurrencies using different regulatory methods will lead to greater regulatory costs, but also pose a great challenge to the regulatory capacity of the regulatory authorities.
On the other hand, if all digital currencies are defined as securities, “one-size-fits-all” regulation may also have a negative impact on the development of blockchain technology, and the vitality of blockchain technology cannot be released. However, in the long run, clarifying definitions and classifying supervision is more conducive to creating healthy blockchain technology and digital currency development environment.
Source: Block Technology Research and Supervision (Public Number of Tsinghua University Institute of Financial Technology)