What the third party promoters know about, but investors don’t know about, if this is highly decentralized, that information asymmetry recedes. When does the network become decentralized or functional? I believe in those cases answer is a qualified yes.” Just how exactly this would work in practice, however, is unclear. Just when does it stop being a security, for example. How does anyone know or determine?
The token, the coin, all by itself is not a security, U.S. Securities and Exchange Commission (SEC) Director of Corporate Finance William Hinman said in a surprise announcement today.
“If the network on which the token or coin is to function is sufficiently decentralized, and the purchasers no longer have a reasonable expectation that a person or group is going to carry out a central managerial or entrepreneurial efforts, those assets might not represent an investment contract,” Hinman said before adding:
“Moreover, when the efforts of a third party are no longer key in determining the enterprise’s success, material information asymmetry recedes.
What the third party promoters know about, but investors don’t know about, if this is highly decentralized, that information asymmetry recedes.
As the network becomes more truly decentralized, the...
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