SAFT Achilles heel with the SEC #7
Description
The SAFT model is an ambitious, creative and convoluted attempt to get ICOs in line with SEC regulations.
IMO the weak link is that assumption that newly issued tokens can pass the Howey test. Investors will continue to have a) expectation of profits b) from efforts of others.
Some thoughts from my recent twitter thread at https://twitter.com/VinceKuraitis/status/914996753279066112
1/ Problem w/ SAFT model is assuming that value creation occurs by creating technology. In fact, value creation occurs with network adoption
2/ Does creation/existence of unadopted software give investors any better insight into future network adoption? Doubtful.
3/ Further re: SAFT, greatest ICO value creation will occur ONLY AFTER network adoption reaches critical mass & NETWORK EFFECT kicks in.
4/ Even after tokens are widely available to public, investors will have a) expectations of profits b) from efforts of others (Howey #fail)
5) Likely implication: SEC will continue to view #ICO tokens issued under SAFT model as "securities"
6/ Think about it. The term growth "hacking" describes level of experimentation & effort required to grow a network. Doesn't just happen.
7/ More on this line of thinking re: SAFT at https://www.linkedin.com/pulse/why-utility-tokens-can-still-securities-even-issued-only-newman-nahas/