Your reply:
Afaics, the Howey test only requires that investors had a reasonable cause to expect their gains would come from the efforts of some group or community. So if you are pitching your coin to investors, I think you will be culpable. Just being decentralized in terms of distribution of the coins (and not selling it directly) doesn't appear to be sufficient. The Supreme Court said it will look past any obfuscations and always at the underlying economic reality, meaning whether the investors were reasonably relying on the lead developer for their future returns.
says that you're either antsier or more prudent than I. You seem reluctant to accept that Howey requires that all four criteria be met, and even more reluctant to recognize the efficacy of a "best-efforts" defense. Did you read the link I supplied, or the Wikipedia article on
Howey?
W.J. Howey went out of his way to discourage independent action. By my lights, that's the complete opposite of the peer-to-peer foundations of cryptocurrency. As I noted, I'm no lawyer myself...but I fail to see why a best-efforts defense backed up by repeatedly and publicly
encouraging independent entrepreneurial action won't hold up.
A capable lawyer could really drag out the case by slowly and emphatically introducing every individual exhortation by the dev (team) to build an independent service for the cryptocurrency - as Defense Exhibit A, B, C, and so on in a performance that would be a lot like a filibuster - and not stop introducing them until he runs out, or is shouted down by the judge (which would give him good grounds to "except" [i.e., indirectly object and give notice of a future appeal.]) or until the prosecutor agreed to stipulate that there's a pattern of exhortation that's the
opposite of the pattern of W.J. Howey's exhortations. To mount a defense of this kind, all you need to do is be somewhat of a nag.
I can probably safely assume you didn't read the entire thread of prior discussion and analysis at the link I provided to you. I don't have time to go redigest that thread again, so I will just attempt to broadly resummarize from memory. You should refer to the thread to dig deeper.
I had read the actual Supreme Court text and not just summary of interpretation. The judgement revolves around the interpretation of the meaning of "investment contract" and it specifically says that there are no specific cases that will preclude the interpretation of the economic reality:
The term 'investment contract' is undefined [...]it had been broadly construed by state courts so as to afford the investing public a full measure of protection. Form was disregarded for substance and emphasis was placed upon economic reality. An investment contract thus came to mean a contract or scheme for 'the placing of capital or laying out of money in a way intended to secure income or profit
So there are no specific rules. The court will look at the economic reality of whether participants were placing of capital or laying out money in expectation of profit. Note that 'capital' might not even mean money. It can include applying their effort, which is a form of human capital. I confirmed this by reading in depth other expert interpretations and subsequent case law.
It appears to me that the court will look at the reasonable expectations of the participants. And always side with protecting the public. Thus my interpretation is if the participants are not investing but just using your tokens, then they don't need to be protected by securities registration. However if your tokens are being invested in by investors expecting a profit, then you need to register then with the SEC. This is why I advised making sure the ecosystem is well diversified asap, so that by the time investors start accumulating the tokens, then it can't be alleged that the investors were basing their investment on the ongoing effort of the original developers of the coin. It is with this interpretation that I have concluded that even coins (such as Aeon and Monero) which distributed their coins via PoW are still culpable under this law. And I don't understand why smooth is risking his already lucrative employment as a software developer to work on a coin that could end up getting him in big trouble. He doesn't need that! And for what gain?
IMO Monero and Aeon are not solving any major paradigmatic issues for crypto. OTOH, since they are very small fish, they are likely to never amount to any legal case, but again why waste effort?
But again I am not a lawyer, so you can't cite my posts as legal advice!!
