I. Introduction

A. The Hard Questions

Two hard questions have arisen with respect to the treatment of “utility tokes” for purposes of the securities laws:

  1. Is there a way for the creators of a blockchain network to fund the development of that network through the sale of utility tokens that can be either (i) used to obtain a service on the network or (ii) resold at a profit by the initial purchasers?
  2. At what point is a blockchain network sufficiently developed such that it is reasonable to believe that utility tokens for the network are being sold for their use value and not for their speculative or investment value, and thus such tokens are clearly not “securities” for the purposes of the U.S. securities laws?

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