I've been doing a lot of research mysel recently. I agree with most points made in your article.
The most damning of all for the SEC is that I do not believe they could consider bitcoin a currency, for any jurisdiction to consider it a currency (legal tender) would surely have to accept it as payment against tax debt, etc.
However, that may not improve things:
They could consider it a commodity. Something does not have to be a real, tangible item to be a commodity. In the USA energy is a commonly traded commodity. Thus I suspect asset issuers in the USA would be subject to regulatory controls by the Commodity Futures Trading Commission (CFTC) on the bitcoin side, AND the SEC for the regulations around how they have to deal with their shareholders. Simply trading a security using a commodity does not release that security from regulatory requirements. If you want to be legit, there's likely no getting around the fact that we're dealing with securities. Their definition of a security is pretty complete:
(1) The term "security" means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or
privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or
purchase, any of the foregoing.
The good (GREAT) news is that the new JOBS act in the USA makes crowdfunding a whole lot easier and as far as I can tell, having read through several summaries of the stipulations, the securities issued (using commodities) will fit just fine into the new exchange I'm working on.
The JOBS Act creates a new exemption from registration for securities sold via crowdfunding offerings, so long as certain criteria are met, namely:
(A) no more than $1,000,000 is raised via crowdfunding in any 12 month period; and
(B) no single investor invests more than a specified amount in the offering, namely:
i. the greater of $2,000 or 5% of the annual income or net worth of the investor, as applicable, if the investor has annual income or net worth of less than $100,000; or
ii. 10% of the annual income or net worth of the investor, as applicable, if either the annual income or net worth of the investor is equal to more than $100,000, capped at a max of $100,000 invested.
(C) the offering is conducted through a registered broker or “funding portal” (a new term made up by the JOBS Act); and
(D) the issuer registers with the requirements below.
(a) name, legal status, address, website, etc.
(b) names of directors, officers, and 20% stockholders
(c) “a description of the business of the issuer and the anticipated business plan of the issuer” – the devil is really in the details of this one, and it remains to be seen whether the SEC will require this “description” to be 4 pages or 40 in order to be sufficient
(d) prior year tax returns, plus financials – see below for details
(e) description of intended use of proceeds
(f) target offering amount, deadline, and regular progress updates through the life of the offering
(g) share price and methodology for determining the price
(h) a description of the ownership and capital structure of the issuer, including a lot of detail about the terms of the securities being sold, the terms of any other outstanding securities of the company, a summary of the differences between them, a host of disclosures about how the rights of shareholders can be limited, diluted or negatively impacted, “examples of methods for how such securities may be valued by the issuer in the future, including during subsequent corporate actions”, and a disclosure of various risks to investors
Much of that could be accelerated for the asset issuers via pre-prepared documents or a "registration wizard".
Short term though, I suspect my exchange is going to be a virtual stock exchange trading in virtual currency and virtual securities. It will join the ranks of 100's of other sites out there that let you play stock trading simulations to study and learn about the financial industry's terms and trading process.
edit: made it easier to read.
