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Chamber Publishes Series of Reports As Resource For The Token Ecosystem

August 8, 2019

The Chamber’s Token Alliance Introduces Second Edition of “Understanding Digital Tokens”

We are pleased to introduce a series of reports focused on the rapidly evolving token landscape, its complexities, the laws and regulations that apply, and the trends, facts and figures behind them. As demonstrated in our initial report released last year, the way in which digital tokens operate is complex and can maintain multiple characteristics – from an investment contract, to something necessary for utilizing a digital platform, to a form of payment or exchange. Today we are introducing the second edition of “Understanding Digital Tokens,” as a follow-on installment to that initial report. The second edition will be released as a series of reports, providing the industry and policymakers with an even deeper dive into the overall regulatory and market landscape of the token ecosystem.

“We are in a moment when technological advancement is pushing the boundaries of decades-long established law. These laws were made at a time when tokenized assets and instantaneous digital transfers of value were not contemplated. It is exciting to be a part of it, but it also entails risks,” said Amy Davine Kim, chief policy officer, Chamber of Digital Commerce. “We view this as an important resource to provide policymakers, regulators, and practitioners with the tools to make informed decisions when engaging in the token economy.”

To facilitate the development of token businesses as well as minimize incidents of fraud and compliance challenges, the next edition of the series will tackle a number of issues impacting this ecosystem.

The “Understanding Digital Tokens” reports will be rolled out as part of an ongoing series starting with the following segments:

      • Considerations and Guidelines for Securities and Non-Securities Tokens – describes securities tokens with corresponding guidelines related to the legal and regulatory frameworks that apply to them. It also details the application of the securities laws, regulations, and rules of the United States for the issuance and trading of tokenized securities. This publication also republishes considerations and guidelines for non-securities tokens as published in July 2018.
      • Market Overviews and Trends in Token Project Fundraising Events – presents economic and market trends, facts, and figures from 2013 to the present to better understand the scope of the growing token evolution.

We also intend to publish the following additional sections of the series in the coming days and weeks:

        • Considerations and Guidelines for Anti-Money Laundering (AML) Compliance and Combatting the Financing of Terrorism (CFT) – provides an overview of laws in the United States aimed at the prevention of money laundering and combatting the financing of terrorists, as well as the rules and regulations certain categories of businesses must follow to establish formal AML policies and practices. This section includes guidelines for token sponsors and token trading platforms to consider when crafting AML and CFT compliance programs.
        • Considerations and Guidelines for Consumer Protection – evaluates how consumer protection laws may apply to digital tokens, the potential scope of federal and state consumer protection authority, and guidelines to help token sponsors and token trading platforms avoid running afoul of consumer protection laws.
        • Considerations and Guidelines for Advancing Cyber Security in the Token Economy – considers the substantial rise in the frequency and impact of cybersecurity breaches across industries and how these events have extended into the token economy. This section discusses cyber security considerations for permissionless blockchains, policy and regulatory considerations, and guidelines for advancing cyber security in a tokenized economy.
        • Global Legal Landscapes Governing Digital Tokens – an analysis of legal landscapes governing two additional countries, Japan and United Arab Emirates, along with an update from the United Kingdom related to tax. We will be supplementing our existing legal landscape overviews for digital tokens on a rolling basis with the introduction of additional countries.

We are excited to introduce these guidelines for securities tokens to complement our work involving utility tokens. We invite you to visit the “Token Policy Guidelines & Resources” page on our website and follow us on Twitter @digitalchamber and LinkedIn where we will announce the publication of future segments.

We hope you enjoy these publications and they serve to help guide your analysis and views of the evolving digital token ecosystem.