Crypto token presales
The majority of initial coin offerings that are being launched today are preceded by a so-called pre-sale. In this guide, you will discover what pre-sales are, what best practices for pre-sales are, and why investors should take a close look at them. ICO pre-sales are usually targeted at larger investors such as hedge funds, venture capital firms, and accredited investors but can also include private investors depending on how the token sale is structured. The main idea behind a pre-sale is to provide a steep discount — usually ranging from 20 to 50 percent — to early backers of the project to entice investors to give the project an early funding success, which can then be leveraged during the official initial coin offering. Momentum tends to build for projects that manage to raise substantial funds early on as this shows investors that there is interest in the project, which could also mean that its digital token will perform well once the token sale is completed.
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BSC Crypto expert to develop script for auto-claiming tokens from presales like DXSALE
The digital asset sector continues to evolve at a rapid pace. Non-fungible tokens NFTs went from crypto curiosity in to mainstream in , with sales for individual NFTs and lines of collectibles smashing records each consecutive month. Besides their popularity as collectibles, NFTs have also taken hold in the blockchain-based gaming, metaverse and virtual worlds, and as collateral for borrowing and backing stablecoins.
In this chapter, we discuss the legal issues surrounding such issuances under the US federal commodities and securities laws. This chapter serves as an update to the previous edition and reflects our most current and up-to-date thinking and analysis regarding the development of consumer token sales. Howey Co. In July , the SEC applied the Howey Test to digital assets for the first time, and arrived at the conclusion that the sale of Decentralized Autonomous Organization DAO tokens, a digital asset, was an unregistered securities offering undertaken without a valid exemption from Section 5 of the Securities Act of the Securities Act.
The SEC made clear that to the extent instruments have the indicia of investment contracts, they should be offered and sold in compliance with the securities laws. In its first enforcement action relating to the sale of digital assets, on December 11, , the SEC issued an order instituting cease-and-desist proceedings to halt Munchee Inc. A key lesson of the Munchee Order was that despite the utility design features of the MUN Tokens, the manner in which the digital assets were offered to prospective investors, and the presence of investment intent on the part of participating investors, constituted material factors for the SEC in determining that the offering was a securities offering subject to the US federal securities laws.
Rather, in addition to the underlying rights associated with such assets, he reiterated that the manner of sale and the reasonable expectations of the purchasers help determine whether a particular digital asset is a security. Nevertheless, Director Hinman noted that transactions involving digital assets on a sufficiently decentralized network do not otherwise have the indicia of securities transactions and do not give rise to the public policy concern of informational asymmetries between an investor and issuer, and thus may not trigger the application of US federal securities laws.
Director Hinman reiterated these ideas in a May speech, stating that a potential pathway exists for a token that was once a security to transmute into a non-security. The Framework now serves as the principal source of guidance for analyzing whether a digital asset falls within the definition of a security. The presence of an AP means it is more likely that profits are being derived from the efforts of others.
For the SEC, such features meant the Kin offering was a securities transaction and should have complied with registration requirements as prescribed by the securities laws. Unfortunately, those hopes were not met, but the Court provided a brief hint of what might be, noting:. In the abstract, an investment of money in a cryptocurrency utilized by members of a decentralized community connected via blockchain technology, which itself is administered by this community of users rather than by a common enterprise, is not likely to be deemed a security under the familiar test laid out in [ Howey ].
The SEC, for example, does not contend that Bitcoins transferred on the Bitcoin blockchain are securities. In a February speech, Commissioner Peirce proposed a token safe harbor, which would provide network developers with a three-year grace period to achieve sufficient decentralization for their network following the issuance of unregistered tokens.
The original Safe Harbor Proposal, as well as Proposal 2. Proposal 2. As a result, purchasers of the token would no longer reasonably expect that the value of their tokens was being driven by a person or group via managerial or entrepreneurial efforts. Although the Proposals were floated by a single SEC Commissioner, they are nevertheless a positive development for such a discussion to be taking place, and would provide token holders with greater protection and transparency if adopted.
For centralized exchanges and broker-dealers acting as custodians of digital asset securities, the SEC staff issued a joint statement 21 with the Financial Industry Regulatory Authority on July 8, , highlighting the importance of compliance with Rule 15c under the Securities Exchange Act of the Customer Protection Rule. The Joint Statement emphasized how digital asset securities, as opposed to traditional securities, are particularly susceptible to being lost due to cyberfraud, cybertheft, loss of a private key, or a faulty blockchain transaction.
Digital asset securities, according to the Custody Statement, do not provide customers the protections offered by traditional securities infrastructure. The guiding principle behind the measures is to mitigate the risk of the loss or theft of digital asset securities and the impact such an event would have on broker-dealers, their customers and counterparties, and other market participants. While the CFTC does not have general regulatory jurisdiction and oversight with respect to spot crypto-asset markets, the CFTC does retain general enforcement authority to police against manipulation and fraud in the spot commodities markets including spot crypto-asset markets.
In addition to transactions in Commodity Interests, the CFTC also regulates commodity transactions with retail customers that are entered into or offered on a leveraged, margined or financed basis as if they were futures contracts the Retail Leveraged Rules. Crypto-asset markets have exhibited increasing use of leverage and margin for the trading of crypto-assets, and the application of the Retail Leveraged Rules to transactions in crypto-assets has been an area of CFTC regulatory and enforcement emphasis.
Specifically, the Advisory related to virtual currencies deposited by customers with FCMs in connection with physically delivered futures contracts or swaps. That is, the efforts of the AP remain central to the value of the instrument being sold, thus satisfying the Howey Test as an investment contract.
As a result, in an effort to separate the pre-functional sale and the underlying consumer token, financing instruments — most prominently, the Simple Agreement for Future Tokens the SAFT 30 and other similar token presale instruments — were designed.
The SAFT is a presale instrument in which the sale of the SAFT is explicitly a securities transaction that is usually sold in compliance with an exemption from registration i.
While such instruments attempted to solve the securities law issues with presales by delaying delivery of the token until after the network is functional, they raised other significant concerns. While the token presale instruments may postpone delivery until after the utility token is functional, they fail to address the status of the underlying tokens and the impact of the presale offering on the marketing of the underlying tokens.
That is, by structuring the token presale as an investment opportunity, these instruments arguably imply that the underlying token is being purchased for investment rather than consumptive purposes. As a general matter, such instruments are generally sold under an exemption from registration to accredited investors who may have to represent that they are purchasing for investment purposes.
SAFTs raise another related concern. As settlement of these instruments generally contemplates delivery of the token at network launch, 33 the delivery of tokens to SAFT holders generally occurred at the same time as broader distribution to the community via airdrop or similar method. This potentially also implicates the tokens being distributed to the community as securities because under the logic of Gary Plastic and the Munchee Order, the settlement of these instruments is not directed solely to consumers and thus could make the delivery of all tokens a securities transaction, not a consumer token launch.
Beyond the securities law concerns, the SAFT, and other similar token presale instruments, also raise commodities law concerns. Because cryptocurrencies are commodities, 38 a presale of consumer tokens through an instrument that provides the right to receive tokens in the future, or confers the right to exchange or convert such instrument into tokens that are not securities, may be a forward contract for the sale of a commodity or a commodity option, and subject to regulation by the CFTC as a swap, if an exemption is not available.
As discussed above, the many token presale agreements are and continue to be largely marketed to investors and not commercial market participants; 44 such investors would not be eligible for the Non-Financial Forward Contract Exclusion. More recent versions of token presale instruments have also included convertible features, which provide investors or the issuer, as applicable, a call or put right to deliver tokens upon the consummation of a token sale at an agreed price or discount.
Such an instrument may constitute a commodity option and would be subject to CFTC regulation as a swap, 45 unless an exemption applies.
Accordingly, token presale investors are unlikely to qualify for the Trade Option Exemption. Furthermore, since token presale instruments may constitute or contain a commodity forward contract or commodity option and may not otherwise qualify for the Trade Option Exemption or the Non-Financial Forward Contract Exclusion, we also consider whether such instruments would meet the Hybrid Instrument Exemption defined below and, as a result, be exempt from commodities law regulation.
While token presale instruments may, in theory, be capable of qualifying for the Hybrid Instrument Exemption, because they are often primarily marketed to investors who themselves are solely or in large part motivated to purchase such instruments in order to receive the underlying commodity i.
Further still, under certain structures, network participants who are also functionally retail investors may wish to receive a token. Network participants may receive such tokens through the financing of a third party or the network platform itself. The recently issued Guidance with respect to Retail Leveraged Rules has clarified uncertainty over what delivery actually means in this context and stresses meaningful possession and control and the ability to use such token in commerce.
In certain instances, neither utility nor control is practicable within a day timeline. As a result, such token presale structures may be regulated as futures contracts.
Because such presale instruments may have an embedded swap, which does not qualify for an exemption from regulation by the CFTC as discussed above , such presale instrument would be subject to the full swaps regulatory framework applicable to such instruments, or in the case of Retail Leveraged Rules, subject to regulation as a futures contract. In particular, in order to trade over-the-counter, swaps must be entered into between ECPs. As a result, the contract could be rescinded and both parties could face penalties and sanctions for such actions.
We believe these structures can be augmented to address investor demand for exposure to consumer tokens, while enabling the parties to comply with applicable securities and commodities laws. This can be achieved by providing investors with various combinations of token-related purchase, economic and voting rights. First, the conversion and exchange rights featured in currently popular token presale instruments could be replaced with appropriately limited token sale participation and economic rights that reduce the regulatory risks associated with consumer token sales discussed above.
For instance, the purchase right would not represent a conversion or exchange of the security, but would include these rights in addition to the rights granted to the holder of the securities. The exercise of such token sale participation rights could be limited to sales or distributions of the consumer tokens that would not be deemed to be securities transactions, such as when the network had achieved sufficient decentralization although the challenges in defining an objective standard for this trigger may reduce the practicality of this option.
The participation rights could also be limited to purchases for actual use, or limit the consumer tokens reserved for distribution or sale to investors, and require that any distributions or sales thereof occur in a manner that supports the broader consumer token-based network. These rights could also be supplemented with token economic rights that could be triggered in lieu of participation in the consumer token sale.
Such token economic rights would have the goal of providing the investor with a similar economic outcome of participating in the consumer token sale. As a result, the careful balancing of such token sale participation and economic rights could provide issuers the flexibility to allow for the participation of investors eager to receive token economics while protecting the development of the underlying network and consumer tokens from the application of the securities laws.
Second, because consumer tokens and the corresponding network protocol often represent a significant portion of the value proposition associated with investing in such platforms, investors can reasonably expect to receive voting rights with respect to the creation and distribution of tokens by the issuer, including the right to approve the initiation of any offerings or distributions.
Finally, these preferred stock and convertible promissory note structures may also be preferred from a commodities law perspective for several reasons.
First, conferring future participation rights on an investor to participate in a token sale, or conferring economic rights to an investor in respect of future distributions, is not clearly a swap under the CEA and subject to CFTC regulation. Currently, no regulatory certainty exists as to the treatment of preferred stock and convertible promissory note structures with token participation rights, and it is unclear whether such participation rights would constitute swaps or not subject to CFTC jurisdiction.
There is no strike price or final price differential that creates market risk that the CFTC would necessarily be incentivized to regulate in the commodity options market. Such token participation rights seek to reduce economic risk and loss attributable to other token presale agreements.
Accordingly, for the reasons set forth above, we believe such structures reduce regulatory risk of CFTC intervention, which is inherent in predecessor token presale instruments. Accordingly, it would be much harder to argue that such instrument was marketed as a swap or purchased by investors solely for the purpose of receiving the value provided by the swap component.
That is, because the predominant value of the instrument is a traditional security providing specific rights with respect to the issuer — such as traditional preferred stock rights e. Of course, while each instrument would need to be analyzed on its own merits, we believe these alternate structures have great promise for addressing commodities law issues.
At a minimum, they significantly mitigate the regulatory risks of the SAFT and other similar presale token structures; and at best may offer a clear path to avoid characterization as a swap subject to CFTC jurisdiction. Importantly, even if these preferred stock and promissory note structures are not completely exempt from regulation as a swap, certain token projects and network participants may qualify for the Trade Option Exemption, giving further relief from CFTC regulatory requirements.
These structures are also preferred from a securities law perspective for many similar reasons — because the investor is receiving a more traditional security, the various rights they are purchasing are far less ambiguous, and appropriate disclosures regarding the material aspects of the investment are more easily crafted. Please note that in collaboration with ConsenSys, we have offered up a convertible note tool that we believe addresses the concerns raised in this chapter.
Once a platform and token protocol have been developed, the question remains whether a viable consumer token sale may be accomplished. The Framework identifies a number of factors centering around two main inquiries to help distinguish when digital assets transactions may be characterized as securities transactions.
Second, the Framework emphasizes the expectations held by network participants with regard to the AP and the token. Critical in this inquiry is the nature of the marketing of the consumer token and its platform, and the nature of the purchasers.
We believe we can draw two concrete takeaways from the Framework and relevant legal decisions that bear upon this analysis. To date, Bitcoin and Ether are the only tokens that the SEC has explicitly confirmed meet this level of sufficient decentralization. Two of the most widely held and well-known digital assets — Bitcoin and Ether — provide good examples of digital assets that Director Hinman expressly posited no longer constitute securities primarily due to the decentralized nature of their use.
Key Futures and SEC v. Thus, the applicability of these cases to the analysis of Bitcoin and Ether within this prong of the Howey Test and therefore the analysis of whether either Bitcoin or Ether is a security depends on the existence of an established, decentralized market where the spot price is determined by ordinary market forces.
There are several factors underlying this inquiry and each case requires careful analysis, and, without further guidance from the SEC, it is difficult to predict the appropriate weighting of such factors.
For a token-based network to be truly decentralized, no AP should have the ability to significantly and directly influence the value of the consumer tokens exchanged on the network. This implicitly includes ongoing efforts to develop and maintain the network. Similarly, the expected use of proceeds from a related token sale can impact whether a related token-based network is sufficiently decentralized.
For example, a use of proceeds that involves further development and maintenance of the network could lead to a conclusion that the efforts of the issuer remain central to the value of the token. Issuers utilizing such instruments would be able to fund the development of their network from the investments received pursuant to such instruments and would, subsequently, be able to use the proceeds from token sales to deliver a return of capital to investors, thereby clearly distinguishing early-stage investments from token purchases and supporting the position that the tokens themselves should not be deemed to be securities.
Reliance on the efforts of others is more likely to be deemed present if an AP has a continuing managerial role in network governance, including exercising judgment concerning the network or the characteristics and rights that the digital asset represents. The sufficient decentralization argument is strengthened if the AP can avoid playing a lead role in making decisions regarding governance issues, code and protocol updates, and how third parties participate in the validation of transactions that occur with respect to the digital asset.
The value of tokens on certain token-based networks is driven by a robust token economy pitting a number of different forces with different operating incentives against each other.
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Blockchain IDOs and Presales You Should Know About
Hi, I'd like some clarity about the tax treatment of investing in cryptocurrency presales and their associated vesting periods. When new crypto projects are in development people can sometimes access presales of the token. The presale terms usually include vesting periods that gradually distribute the purchased tokens over months to years. When does the "clock" begin on long term capital gains tax treatment? Also how do I calculate my cost basis for the purchase? Is it at the moment I purchased on Jan 1st or is it the price of the token at the time I receive it each month? Most helpful reply ato certified response. Hi Steve6. You need to work out the acquisition date.
PixaPay Pre-Sale
Pre sale coins. You will automatically receive back GCC worth the funds you sent. Be … These tokens are in pre-sale phase for the moment. Kharkov, Ukraine-- Newsfile Corp. Silver and other precious metal bullion offers financial value during times of economic uncertainty.
AXL Native Token Launches Pre-Sale
May 1, Aug 1, Uncommonn Presale Uncommonn will issue crypto-tokens for use in our platform. The token holders will be Sep 15, Sep 20, Digits Presale Digits turns any existing debit or credit card into a crypto card, Sep 1, Dec 1, LaneAxis Inc. Oct 15, Dec 15, Brickken Hot Presale.
The Ultimate Guide for Investing in Presale: BSCDaily’s Checklist
Developers may also perform a pre-sale in order to create buzz ahead of the ICO, hoping for a price surge when the asset goes public. It is worth noting that pre-selling can come with risks. If a project fails, investors can find themselves owning worthless tokens, unable to make a profit from their investment. This adds to the fact that, when the actual ICO takes place, the plethora of coins now available to the public might dampen the value of the ones they initially bought. On the other hand, developers have to be wary of investors who might offload pre-sold token shortly after launch, making a decent profit. A public market in which cryptocurrencies are traded for immediate settlement.
A downside of an ICO presales is that early investors or adopters tend to dump tokens as soon as they become tradeable on exchanges. They often sell the tokens at the ICO price because they got the tokens for less than the price of the main ICO, making them big profits while negatively affecting the price for ICO participants. Ethereum is a decentralized, open-source, and distributed computing platform that enables the creation of
In this presale, we aim to sell only the proportion of tokens necessary to fund continued product development and give CATs the right kickstart in terms of liquidity, exposure and listings to third party exchanges. CryptoArena periodically redistributes platform-generated revenue back to its Users through a game-like points scoring system called the Glory System. All traders on CryptoArena earn shares of revenue distributions depending on the amount of points they accumulate each month. CATS are, fundamentally, the opposite of BNBs; rather than a discount on the fees, you get a multiplier on your profit share generated by the fees. CryptoArena also organizes a variety of competitive trading events, spending CATS gets you a discount on buy-ins.
However, you never know when exactly the developer is going to finish the presale and make the tokens "claimable". See more: free video site script auto updating video feeds , website script auto installer , script auto build , script auto cadd , java script auto portal , script auto save sametime chats , develop script , ebay script auto search , web script auto dealer custom , ask expert website script , script auto loader , irc script auto respond , need someone develop script. Hello, I hope you are doing great. I have good experience with doing similar jobs. Good day. Hope this proposal finds you in the best of your health.
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