A Conceptual Framework for Digital-Asset Securities: Tokens and Coins as Debt and Equity

Yuliya Guseva

Blockchain technology, fintech, and cryptoassets (also called “digital assets”) have become universal economic phenomena. Capital markets have witnessed sales of digital assets in the form of digital securities, tokens, and coins distributed by private entities and even by the World Bank. The importance of cryptoassets and blockchain technology is hard to overestimate. These innovations have been closely watched by foreign and U.S. regulators. 2019 and the first three quarters of 2020 produced as many as five bills in Congress and one major proposal—Rule 195—by an SEC Commissioner who is a leading expert on technology and digital assets. In turn, legal scholarship has examined how to fit blockchain-based entities and digital assets within the corporate and securities law frameworks.

This Article contributes to the growing literature on crypto and fintech and discusses two distinct stages in cryptoasset capital raising. Securities law is crucial in the first stage but essentially irrelevant in the second stage. Academic commentary has either missed or misinterpreted when this second stage begins and what the rights and obligations of the affected parties are. Most importantly, two recent judicial decisions—Telegram and Kik— suggest that federal district courts struggle with distinguishing and conceptualizing the discrete stages in the development of crypto projects.