By Grant Ferowich
Nick Spanos penned an editorial for The Hill Tuesday providing a handy rundown of questions to help people make more informed ICO decisions.
1. Does the project’s white paper have a reasonable roadmap for where it’s heading?
2. Does the project’s team have the human and technical capital to suggest the firm is likely to execute its roadmap?
3. “Why does the project need a token, and what will the utility of the token be?”
4. How much money is the company trying to raise, why do they need the money, and where will it be spent?
5. Are there other comparable ventures that are already out there? If so, what makes the project unique from its competitors?
Spanos, founder and CEO of Blockchain Technologies Corp., helps clarify the state of debate regarding whether tokens are securities. “Although ICOs in general are not securities, there are some that can receive that classification, much like a square is a rectangle but a rectangle is not necessarily a square. This is not because of the release of tokens in exchange for Ethereum, but because of the utility of the tokens, or lack thereof, and what the tokens give you in exchange. In some instances, the tokens give you voting rights in the company, hence it is a security,” the expert wrote.
If if a token shares the same characteristics as a security, like speculative valued, then the token is a security, Spanos writes. When tokens gain the security designation they become subject to U.S. securities laws.
The CEO also shot down allegations that cryptocurrencies are at their core a vehicle for criminals. “Cryptocurrency is far more susceptible to government tracking than cash, since every transaction is recorded in an open ledger. Cash is much more difficult to trace, but the blockchain is, by definition, a history of every single transfer of bitcoin.”