Over the past week, regulators in both the United Kingdom and Hong Kong have voiced words of caution regarding varying virtual assets.  Both regulators were concerned in particular about the integrity of the cash markets for virtual assets and products giving retail investors both direct and indirect exposure to virtual assets.

With the flurry of subpoenas and investigations into companies in the blockchain space that has erupted in the first eight months of this year, 2018 is on track to be "the year of the crypto investigation."

Murphy & McGonigle’s leading FinTech & Blockchain Practice is pleased to publish the second edition of “Who’s On the Block,” a roundup of blockchain conferences, trends and upcoming events.

Murphy & McGonigle lawyers will be attending and speaking at Blockchain conferences around the country and internationally in the coming weeks. Who’s On the Block features a summary of the conferences, trends, thought leadership and sponsorships in which our leading FinTech & Blockchain Practice is involved.

Whether digital assets are securities under Federal securities law or something other than a security, and therefore outside those provisions, is a pressing question.  On June 14, 2018, William Hinman, the Director of the Division of Corporation Finance at the Securities and Exchange Commission, provided valuable insights about current staff thinking and offered future guidance for market participants.  However, parsing the analysis in respect of a particular digital asset remains a daunting task.

This article addresses the problem of how to separate capital-raising securities from utility tokens.  The proposed solution is to use the basic SAFT model, but add a mechanism that extinguishes the capital-raising securities and results in the distribution only of utility tokens.