In late 2017, we hosted a webinar for financial legislation experts to answer questions about ICOs and their legal status in various jurisdictions. These slides are a preview of 18 insights and answers to the key questions every company considering an ICO needs to ask.

1. 1
19 Must-Know
Regulatory
Insights for
ICOs

2. 2
Agenda
United States
Regulatory
Analysis
China
Regulatory
Analysis
Canada
Regulatory
Analysis
Other Jurisdictions:
What are Regulators
around the World
doing about ICOs?

3. 3
Speakers
Angela Chartrand
Founder
Sara Hody
Associate
Marco Santori
Partner
Neal Reiter
Director of Product

4. 4
Introduction
In late 2017, we hosted a webinar for financial legislation experts to answer
questions about ICOs and their legal status in various jurisdictions.
These slides are a preview of 18 insights and
answers to the key questions every company
considering an ICO needs to ask.
Click Here to Download All 18 Insights

5. 5
United States Regulatory Analysis
United States
Regulatory Analysis

6. 6
What is a Security?
The Howey Test was created by The Supreme Court for determining whether certain transactions qualify as investment contracts – and thus
subject to security requirements.
Securities include notes, stocks, bonds, debentures, and any other instrument that can be characterized as an investment contract.
Under the Howey Test, a transaction is an investment if:
q It is an investment of money
q There is an expectation of profits from the investment
q The investment of money is in a common enterprise
q Any profits comes from the efforts of a promoter of third party
If an investors own actions largely dictate whether an investment will be profitable,
then that investment is probably not a security
Investment
SUBSTANCE
Investment
FORM
Courts will look at the economic
realities (substance) of an
investment scheme
Getting Familiar with The Howey Test

7. 7
Requirements If You Are A Security
In general, all securities offered in the U.S. must be
registered with the SEC (there are some exceptions).
The registration process involves the disclosure of certain
information, including:
• Description of the company’s properties and business purpose
• A description of the security being offered
• Information about the company’s management
• Financial statements about the company, certified by
independent accountants

8. 8
Regulatory Analysis
1. Is it worth launching a ICO if you’re a security? Or should you consider other funding
mechanisms?
2. If you are possibly a security, do you block the U.S.?
3. If you are security and you don't block the US: What could happen? For example,
you're in Switzerland and you're a security accepting U.S. customers.
4. If you’re not a security, which U.S Government Agencies have jurisdiction? Who
should you be most concerned about?
5. If you're not a security, what kind of compliance do you have to do?
6. Who's scarier: the SEC or Class Action Lawyers?

9. 9
Regulatory Analysis
1. Is it worth launching a ICO if you’re a security? Or should you
consider other funding mechanisms?
• Some business models may not be a good fit for tokens, so
consider the function of the token itself (security or utility) to
answer this question
• Reg D or Reg A+, which allow smaller companies to raise
capital without registering with the SEC, are also options
• Speak to an experienced lawyer as early as possible, as they
can advise on the market demand for the token in the given
regulatory constraints

10. 10
Regulatory Analysis
Whether the ICO is targeted at the U.S.
or not, it is almost certain that the
resulting activity will enter U.S.
jurisdiction. Blocking the U.S. is
unlikely to exempt most ICOs from
regulatory obligations.
The US is also a very large market, so blocking the U.S. may make it
challenging for any given ICO to gain enough contributors.
2.If you are possibly a security, do you block the U.S.?
Marco Santori
Partner
Cooley

11. 11
Regulatory Analysis
3. If you are security and you don't block the US: What could
happen?
For example, you're in Switzerland and you're a security accepting U.S. customers.
The possible consequences of violating U.S.
law are:
• Losing the value of the investment
• Being financially liable as an individual
• A jail sentence
These are all possibilities, but significant
monetary penalties are more probable.
Marco Santori
Partner
Cooley

12. 12
f
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To download the rest of the insights on
ICO legislation in China, Canada, the
UK, and across the world!