There is now wide legal consensus that organizations that seek to sell tokens for capital-raising purposes in the United States should register their tokens with the U.S. Securities and Exchange Commission or rely on available registration exemptions. However, many token investors and other recipients of tokens do not realize that, to the extent a token is a security, any sale that the holder makes of the token (i.e., any “secondary sale”) must also be in compliance with similar securities laws and regulations, just as the initial, or “primary,” sale of the token to the holder must have been. In their article “Structuring Secondary Token Sales: How to Monetize Digital Tokens under U.S. Securities Laws,” Alfredo Silva and Dario de Martino of Morrison & Foerster LLP present key hurdles to consider when structuring secondary token sales in order to avoid legal repercussions.
Read our article at Bloomberg Law.