But many lawyers in the industry have been warning entrepreneurs that just because a coin is intended to serve as a payment method does not mean that it cannot also be categorized as a security.
Nick Morgan, formerly a lawyer in the SEC’s enforcement division, said the security label was likely to apply to any coin an investor buys with the expectation that it will increase in value as a result of the efforts of the entrepreneurs who created it.
That definition could be a problem for many coins because the excitement around initial coin offerings has been driven almost entirely by investors who have bought coins in the hope that they will become more valuable over time as the underlying software is improved.
‘Enforcement 40’ for 2020
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