How do I make my token NOT a “security”?

When designing the ecosystem and tokenomics of a platform, it is essential to not be classified as a “security token”.

What exactly does make my token a security and how do I **not** become one. I read a comment like this, but i’m sure there is more to it.

*”The reason why Maker (and Uni, and others) don’t revenue share is because that directly makes them a security. They are shielding DeFi from the eyes of SEC and preventing an outright Security label to ban them.”*

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5 thoughts on “How do I make my token NOT a “security”?”

  1. Learn how to apply the Howey Test – it’s what government bodies use to determine whether an asset should be classified as a security.

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  2. Another widely used method is to create a DAO behind the token, so the token looks to be just a way to express governance in the protocol and not a way to speculate from the potential success of the protocol

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  3. If you structure things so that token buyers buy because they expect the value of the token to rise, it’s probably a security and needs to be registered as such (or you file for an exemption, or you sell in another jurisdiction where it’s allowed).

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  4. The best way is to have created it before 2016 so that it can be “grandfathered in” to a commodity classification. At least that’s what some of Congress’ bills are currently saying.

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