Blog

Introducing “Understanding Digital Tokens: Market Overviews and Proposed Guidelines for Policymakers and Practitioners”

Introducing: “Understanding Digital Tokens: Market Overviews & Guidelines for Policymakers & Practitioners.”
An Initial Step Toward Self-Regulation

By Perianne Boring and Amy Davine Kim

One of the most striking developments in the blockchain ecosystem is the emergence of token technology platforms, their transformative potential, and the multi-billion dollars in capital they generate.  This is just one unique facet among the many transformative and positive possibilities that blockchain technology represents for government, businesses, and consumers.  Blockchain technology will improve many aspects of our lives, much of which will be fueled through the distribution and use of digital tokens.

Yet, the versatility of tokens has proved a challenge for U.S. regulators. The sheer number of unique characteristics that tokens may represent means that much work remains to be done to understand their potential and functionality. A digital token can be a security, a currency, a commodity, property, or even a hybrid of these characteristics. Some have even suggested that a token may initially represent one functionality, such as a security, and then shift and represent another, such as a commodity. When it comes to the regulatory treatment of a token, this very versatility can be baffling at best.  The fact that other countries are recognizing the potential of this technology, and developing regulatory systems to welcome it, renders the problem more urgent.

Today, we’re pleased to announce that the Chamber of Digital Commerce’s Token Alliance is releasing the first installment of a comprehensive set of token and ICO guidelines in its report “Understanding Digital Tokens: Market Overviews & Guidelines for Policymakers & Practitioners.” Under the leadership of former SEC commissioner Paul Atkins and former CFTC Commissioner and Chair James Newsome, the project brings together 350+ industry technologists, economists, executives, lawyers and others worldwide within the Token Alliance. The project addresses some of the ideas that are quickly coming into focus for the blockchain industry — including the notion of self-governance for token sponsors and token trading platforms.

This report now equips our industry with the first set of proper tools to have meaningful, informed, and actionable dialogue to support a well-informed approach for this transformative industry.

Specifically, this installment of the project:

  • Provides guidelines for Token Sponsors and Token Trading Platforms for the generation and distribution of digital tokens to enable responsible governance and help to minimize fraud in the industry.
  • Contains overviews of the laws impacting digital tokens from five countries (with more to be added in later editions).
  • Provides a comprehensive market overview and trends analysis of the token economy.

We’re pleased to share with you today the most widely subscribed token governance project ever developed in the industry, designed to be the first in a series and a resource both for industry and governments.

Comments or Suggestions? 

Built on an open-source foundation, the Token Alliance guidelines are based on the current regulatory state of affairs and will likely evolve over time. This is just a first step – we anticipate additions to these guidelines to address other important aspects of the token economy.  All those dedicated to supporting and growing this thriving community, are invited to join the conversation and provide feedback to this white paper on GitHub.