Crypto Equity Crowdfunding : magic Internet equity, app-coins, or both?

The last week of October saw the crypto-currency community seized by the dread of government crackdown as rumours spread that the US Securities and Exchange Commission (“SEC”) had turned their attention to the crypto 2.0 world. The panic was, unsurprisingly, premature. The purported SEC letters received by various crypto-currency and crypto-equity businesses merely sought further information about the business operations, fundraising activities and finances of the recipient companies. It was alleged but not confirmed and in fact later denied, that certain bitcoin based companies have been targeted by the SEC for the offering of unregistered securities. This surely won’t be the last time crypto 2.0, digital assets, and securities law appear together on the news-cycle. Questions related to new types of digital finance and securities law will surely only grow with the success and expansion of second generation services which have origins in digital currency, such as Bitcoin. Though difficult to qualify, “crypto 2.0” generally means second generation cryptography based services that build software layers on top of existing financial systems including bitcoin and traditional fiat currency. Crypto 2.0 services include the creation of and trade in complex financial products that enable a range of different types of investment. Some crypto 2.0 services, such as Ripple, offer real time asset exchanges. Others, such as Mastercoin, allow users to trade just about anything of value online peer to peer. Another crypto 2.0 player generating a lot of buzz is Bitshares X, a distributed database and ledger that also provides for the trading of different digital math-based assets. Most of these new financial services are built on top of ‘DAC’s. DAC...