Industry experts and lawyers discussed whether companies should issue security tokens in a panel debate at real estate-focused event BitcoinCRE on June 14.
Part of London Tech Week, the event looked at regulations across the world and happened hours before Ether was declared ‘not a security‘ by the SEC.
‘A Security Token Would Kill Our Business’
In favour of issuing a security token, Lior Abehassera, co-founder of Leaseum Partners, a real estate agent token backed paying out dividends, said that it isn’t the easiest option, but that if done with good partners, ‘will help you from ending up in jail.’ He advised to be wary of market restrictions and to commit to performing know-your-customer (KYC) and anti-money laundering (AML) checks on investors.
Abehassera said: “The challenge is what happens on the secondary market where there can be money laundering. If you’re selling a security token, you don’t want that. How to deal with compliance on the secondary market? You embed into your token a whitelist. When anyone has your token they have to go through whitelisting.”
In contrast, the founder of CPROP, Sandy Selman, highlighted the risks of tokens being classified as securities and blamed the lack of global regulation on the lack of consensus between regulators.
Selman said: “We decided to use a tradeable entity. If it became a security it would kill our business. We decided not to take any U.S. money to not deal with the problem.”
ICO’s, Global legal uncertainties, Utility or Security token?…so many questions, so few answers. On June 14 join our legal framework session at #BitcoinCRE during @ldntechweek…Tickets @ https://t.co/rMLzb9Otqo #blockchain #bitcoin #crypto #LTW #londonevents #proptech pic.twitter.com/KoXqxtGYQL
— AnySizeDeals (@Anysizedeals) June 11, 2018
Considering both sides of the argument, blockchain expert and partner at Orrick Law Firm, Jacqui Hatfield said that companies need to consider what the token is for on a ‘case-by-case basis.’ She also pointed out that consideration needs to be made to the countries that the token is aimed at, saying