SEC Report Asks Issuers Of Crypto-Assets "Howey Doing?"

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The U.S. Securities and Exchange Commission ("SEC") recently published an investigative report (the "Report") that places issuers or sponsors of digital assets or "crypto-assets" on notice that the exchange of assets such as tokens issued upon an initial coin offering ("ICO") for value using distributed ledger technology ("DLT") may comprise a distribution of securities, and therefore be subject to United States federal securities laws, including prospectus and registration requirements.

Despite the perception that issuances of tokens are unregulated, in the Report, the SEC concluded that DAO tokens (tokens offered and sold by the virtual organization "The DAO") were securities under federal securities laws. The DAO was a for-profit, decentralized autonomous organization that was roughly analogous to a venture capital fund except that DAO token-holders were entitled to vote directly on investment projects. DAO