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.

  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

  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).

  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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