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From YouTube: Devcon2: Regulatory Considerations for Dapp Development
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https://archive.devcon.org/archive/watch/2/regulatory-considerations-for-dapp-development
Dapp development and token distribution particularly, pose unique questions for regulators and law enforcement. Ethereum Foundation Executive Director, Ming Chan, will introduce the topic of regulatory issues when creating Dapps, followed by Peter Van Valkenburgh introducing Coin Center. Peter will give a brief summary of Coin Center's advocacy work and the current legal landscape surrounding these technologies.
Speaker(s): Ming Chan, Peter Van Valkenburgh
Skill level: Beginner
Track: Society and Systems
Keywords: coincenter, education, policy, legal, securities, assets, tokens, regulations
Follow us: https://twitter.com/efdevcon, https://twitter.com/ethereum
Learn more about devcon: https://www.devcon.org/
Learn more about ethereum: https://ethereum.org/
Devcon is the Ethereum conference for developers, researchers, thinkers, and makers.
Devcon 2 was held in Shanghai, China on Sep 19 - 21, 2016.
Devcon is organized and presented by the Ethereum Foundation, with the support of our sponsors. To find out more, please visit https://ethereum.foundation/
A
We
live
in
a
real
world
where
there
are
real
concerns
for
any
type
of
blockchain
company,
startup
organization
and
every
jurisdiction
is
different
and
we
operate
in
a
number
of
them.
So
it's
something
that
I
strongly
believe
people
should
take
seriously
for
your
own
benefit
for
your
own
protection
and
for
to
be
able
to
further
the
innovation
technology
that
we
all
do
here
that
we
all
support.
A
We
are
not
that
organization
that
is
more
like
a
501
C
4.
We
are
truly
a
you
know:
we're
Swiss
stiff
tongue,
which
is
closer
to
a
501
C
3,
and
we
support
research
and
development
and
the
education
and
outreach
that
surrounds
it.
However,
we
still
have
to
deal
with
regulatory
considerations
and
I've
personally
invited
coin
Center
to
come
and
make
this
presentation
so
that
we
can
address
it
and
get
it
out
of
the
way
and
enjoy
the
rest
of
the
the
technical
presentations
that
we
have
lined
up
for
the
retina
next
three
days.
A
B
Thank
you.
So
it
is
a
tremendous
honor
to
be
sharing
the
stage
with
all
of
you.
I
didn't
know,
you'd
still
be
here,
but
honestly
the
work
you
all
do
is
incredibly
inspiring
to
me
a
humble
regretting
liberal
arts
graduate
who
foolishly
went
to
law
school,
but
thank
you
so
Thank
You
Ming
and
thank
you
to
the
etherium
foundation.
B
B
Sorry,
if
you
need
a
lawyer,
you
should
hire
a
lawyer.
Does
this
clicker
work?
It
doesn't?
Oh,
okay!
So
what
the
hell
is
coin.
Center
coin
Center
is
a
nonprofit,
that's
based
in
Washington,
DC
and
I'm,
going
to
put
our
mission
up
here,
but
it's
probably
better.
If
I
just
talk
about
a
little
bit
of
my
background,
so
I
as
I
said
decided
to
go.
The
liberal
arts
route
went
to
law
school
while
I
was
in
law.
School
I
started
becoming
very
interested
in
Bitcoin.
B
So
I
got
a
Google
fellowship
to
go
work
in
Washington
DC
in
policy.
I
worked
first
for
a
think
tank
that
was
doing
copyright
and
surveillance.
This
was
around
the
time
of
the
snowden
links
and
then
a
guy
named
Jerry
Brito,
who
I
share
on
the
number
of
mutual
friends
with,
came
up
to
me
and
said:
hey
Peter:
do
you
want
to
be
the
director
of
research
at
a
Bitcoin?
Think
tank
and
I
laughed
I
laughed
at
that
and
I
said,
that's
ridiculous.
B
B
Our
passion
is
defending
these
open
networks.
So,
in
a
nutshell,
mission
aside,
we
want
to
be
to
decentralized
computing
networks,
with
open
consensus
mechanisms
to
crypto
currencies
in
general.
What
the
e
FF
was
to
the
developers
of
the
early
Internet,
a
point
where
you
can
find
a
go-between
with
policy
makers
in
DC,
where
we
can
communicate
the
value
of
the
technology
where
we
can
set
an
anchor
bias
in
some
policy
makers
so
that
they
don't
see
this
as
just
another
way
to
sell
drugs
or
subvert
authorities.
B
We
have
a
full-time
professional
staff
with
three
attorneys
on
staff.
We
have
support
from
the
number
of
key
businesses
in
the
space,
some
of
the
big
Bitcoin
startups
among
them,
but
also
some
of
the
venture
capital
firms
that
are
financing
a
lot
of
the
work
in
this
space,
but
actually
over
half
of
our
support
comes
from
individuals
who
are
passionate
about
this
technology
and
want
to
see
it
flourish.
B
Additionally,
I
should
point
out
that,
like
the
e
FF
were
not
a
trade
association,
we
set
our
own
agenda.
We
don't
represent
specifically
any
of
these
companies.
As
I
said,
we
want
to
help
smooth
the
path
to
decentralizing
all
the
things,
and
so
if
people
want
to
support
us
in
our
mission
and
believe
in
the
work,
we
do
we
take
their
support.
Now.
What
do
we
do?
B
We
develop
policy
research
that
advocates
for
a
way
to
enforce
that
law
that
allows
regulators
to
still
meet
their
statutory
obligations,
because
that's
what
Congress
put
them
there
to
do,
that's
what
their
legislatures
and
their
respective
states
put
them
there
to
do,
but
still
provides
the
freedom
to
innovate
as
much
as
is
possible,
so
we're
trying
to
find
a
peaceful
way
forward.
Basically,
we
have
a
series
of
plain
language
explainers
of
discrete
topics.
In
this
space
we
have
a
fantastic
background:
herbai
vitalik,
explaining
Bitcoin.
B
In
a
way
I
mean
it
takes
whoa
explaining
aetherium
in
a
way
that
will
make
sense
to
policymakers.
We
deal
with
a
number
of
different
topics,
also
at
the
legal
intersection
of
these
technologies.
Some
of
these
are
also
useful
resources
for
developers
aside
from
policymakers,
because
they
explain
a
difficult
beagle
construct
like
Oh
FAQ,
which
is
US
sanctions
law.
B
We
develop
policy
reports
that
deal
with
bigger
topics
like
securities
regulation,
access
to
banking
for
companies
and
consumer
protection
laws,
particularly
difficult
in
the
United
States,
with
the
state-by-state
money,
transmission
licensing
set
up
and
periodically
most
of
our
advocacy
is
done
face-to-face
meetings
with
policymakers,
but
we
do
periodically
file
and
regulatory
proceedings.
So
just
recently,
for
example,
we
filed
with
the
European
securities
and
markets
Authority
I
didn't
know.
If
any
of
you
have
seen
the
paper
they
put
out.
B
Personally,
I
think
there
is
value
in
permissioned,
Ledger's
I
think
there
is
low-hanging
fruit
in
reconciling
siloed
data
structures,
even
if
it's
through
a
consortium,
consensus
mechanism
but
I
think
that
the
conclusion
that
only
a
closed
consensus
mechanism
is
suitable
for
high-grade
financial
services
is
premature.
So
we
filed
a
comment
in
this
explaining
how
so
many
of
the
advances
that
are
essential
to
financial
services
are
being
developed
in
the
open
space.
B
The
pioneers
here
are
the
people
working
on
a
theory
and
are
the
people
working
on
Z
cash,
for
example,
with
zero
knowledge
proof
you
mentioned
ring
signatures
earlier.
The
only
way
that
all
be
privacy
for
financial
services
data
is
through
the
things
that
are
being
developed
in
large
part.
On
these
open
networks,
we
testify
we've
briefed
members
of
the
European
Parliament
we've
had
several
different
engagements
in
our
two
years
and
we
love
etherium.
We
really
do
so
in
the
early
days.
We
focus
mostly
on
Bitcoin
and
there's
a
reason
for
that.
B
This
was
about
two
years
ago.
It
was
hard
enough
to
get
a
meeting
with
someone
in
Washington
DC
to
discuss
Bitcoin,
but
at
least
Bitcoin
was
something
they
already
knew
about,
and
they
already
wanted
some
answers
about.
That
is
beginning
to
change
now,
and
we
start
to
talk
more
about
just
open
consensus
mechanism,
driven
networks
and
what
they
can
do
and
the
idea
I,
think
of
having
a
general-purpose
decentralized
computing
system
is
incredibly
exciting.
B
So
again,
thank
you
for
all
the
work
that
you
do
and
explaining
that
to
policymakers
is
one
of
the
most
worthy
things.
I
think
I
can
do
with
my
time
in
DC,
so
with
that
I'm
going
to
turn
to
the
less
happy
side
of
the
talk
and
talk
about
some
regulatory
considerations
for
people
who
are
developing
decentralized
applications,
and
that
means
this
talk
is
going
to
be
about
securities
laws.
B
B
Additionally,
a
lot
of
crowd
sales
and
pre-sales
may
subject
developers
of
these
technologies
to
securities
regulation.
Several
scams
over
the
years
have
drawn
attention
to
this
area
already
and
several
vocal
pundits,
many
of
them
from
the
closed-door
consortium
consensus
mechanism.
Side
of
the
technology
will
freely
tell
you
that
they
think
that
all
app
coin
or
crypto
crowd
sales
qualify
as
unregistered
securities
issuance
and
I.
Think
that's
wrong
and
I
think
we
need
to
correct
those
misunderstandings
now
why
US
securities
laws
there's
a
couple
things
here.
B
If
you
have
any
purchasers
for
a
say,
an
app
token
in
the
US
any
of
them,
you
are
potentially
subject
to
US
securities
regulations
and
if
you're
in
a
country
you're
based
in
a
country
that
has
friendly
relationships
with
the
US
extradition
could
be
possible.
So
this
is
some
serious
stuff.
The
US
securities
laws
are
by
far
the
most
broadly
applied
of
all
securities
laws
and
there's
a
couple
reasons
for
that.
B
So
in
other
jurisdictions,
there's
generally
a
statute,
a
piece
of
legislation
that
enumerates
specifically,
which
financial
products
are
regulated
as
securities
and
then
usually,
which
are
not
what
are
excluded
in
the
u.s..
There
is
no
such
enumerated
list
in
the
statute.
There's
an
undefined
term
that
says
investment
contracts
and
the
federal
courts
have
interpreted
that
term
and
continue
to
interpret
that
term
to
apply
to
various
different
schemes.
B
Additionally,
the
US,
Securities
and
Exchange
Commission
is
already
investigating
the
scamming
cryptocurrency
pay
coin,
take
point
fence,
and
the
Dow
I
can
say,
has
gotten
the
attention
of
staff
at
the
SEC
and
they
are
actually
surprisingly,
well-informed.
We've
tried
to
help
correct
some
misapprehensions.
They
had
about
it
and
generally
flesh
out
their
information,
but
they
are
surprisingly
well
in
for
so
why
are
US
security
laws
broadly
applied?
The
definition
of
security
includes
an
undefined
term.
As
I
said,
the
term
has
been
defined
by
federal
courts.
B
Courts
have
sought
to
ensure
that
the
definition
is
inclusive
in
order
to
reach,
and
this
is
a
quote
from
a
case-
the
countless
and
variable
schemes
devised
by
those
who
seek
the
use
of
the
money
of
others
for
the
purpose,
the
promise
of
profits
and
that
language
comes
from
a
case
called
the
SEC
versus
Howie,
and
it's
from
that
case
that
we
get
the
Howey
test
for
what
is
a
security
or
not
so,
in
order
to
really
understand
these
issues,
we
need
to
quickly
actually
look
at
the
Howie
case.
I.
B
This
is
working
him
and
he
would
invite
rich
New
Englanders
down
to
his
hotel
in
Florida
and
give
them
a
tour
of
the
orange
groves
and
he'd
say:
look
behold
the
the
beauty
of
Florida's
orange
fields
and
then
inevitably,
the
New
Englander
would
say
something
along
the
lines
of
oh
the
orange
groves,
they're,
so
beautiful,
and
how
he
would
say
la
it's
funny.
You
asked
that
the
orange
groves
are
for
sale
and
then
he'd
proceeded
to
sell
him.
B
One
acre
of
the
many
acre
orange
groves
that
he
that
he
owned
basically
was
partitioning
his
property
into
a
number
of
parcels
into
a
number
of
parcels
and
and
selling
them
as
property.
Now,
when
you
bought
this
property,
you
would
also
be
pressured
into
signing
a
contract
and
that
contract
would
say
how
how
no
I
think
now
I'm
gone.
Yes,
we'll
just
go
with
this,
so
you'd
be
signing
up.
B
You'd
be
signing
a
contract
that
says
you
look
to
Howie
in
order
to
maintain
the
fields,
the
soil,
to
pick
the
oranges,
to
sell
them
at
market
for
a
profit.
It's
working
now,
okay,
good,
louder,
okay,
good!
So
you
look
to
Howie
to
maintain
the
soil,
the
trees
pick,
the
oranges
sell
them
for
a
profit,
and
he
will
give
you
the
profits
from
the
land
that
you
bought
so
it.
Needless
to
say,
the
orange
grove
turned
out
to
be
less
profitable
than
many
might
have
expected.
B
There
was
a
lawsuit,
it
went
all
the
way
up
to
the
Supreme
Court
and
the
Supreme
Court
says
this
is
the
exact
kind
of
thing
that
we
want
the
Securities
and
Exchange
Commission
to
have
jurisdiction
over.
So
that's
why
this
is
the
formative
case
and
from
that
they
created
the
Howey
test,
which
has
a
number
of
elements.
B
I
won't
go
into
specifically,
but
what's
notable
is
that
it
is
immaterial
whether
the
shares
in
the
enterprise
are
evidenced
by
formal
certificates
or
by
nominal
interests
in
the
physical
assets
employed
by
the
enterprise
and
sales
of
such
nominal
interests
in
physical
assets
have,
since
that
case,
panics
into
all
manner
of
things.
Sales
of
beaver
pelts,
sales
of
condos
sales
of
minks,
of
gold,
bullion
of
golf
course,
memberships
and
condominiums.
B
All
of
these
has
been
have
been
interpreted
as
issuance
of
securities
rather
than
just
sales
of
a
physical
object
or
asset
and
with
the
SE
C's
interest
in
pay
coin.
It
is
not
unreasonable
to
assume
that
crypto
currencies
or
some
crypto
currencies
may
be
added
to
that
list
of
sales
of
nominal
assets
or
transfers
of
nominal
rights
to
assets
that
qualify
as
securities
and
it's
because
of
their
interest
in
pay
coin,
that
we
created
a
framework
for
securities
regulation.
B
So
if
you
are
interested
in
this
area,
I
highly
recommend
you
go
to
our
website
coin
Center
org
and
you
look
at
the
whole
framework.
It's
posted
there
and
you
read
it.
If
you're
a
developer,
you
will
not
need
to
read
the
first
two
sections
which
explain
these
technologies
to
policy
makers.
You
can
skip
to
the
third
which
draws
legal
conclusions,
pay
the
applicable
legal
tests
and
the
aspects
of
the
technology
that
are
salient
to
that
test.
B
So
I'm
going
to
skip
through
this
here
are
the
key
findings
for
people
who
are
developing
app
coins
or
DAP
tokens.
The
following
are
less
likely
to
be
treated
as
securities
if
the
token
was
purchased
for
its
use
value,
rather
than
merely
with
the
expectation
of
profits.
So
the
line
of
cases
here
that
build
on
the
Howey
test
deal
with
condominiums.
Actually,
so
in
New
York,
for
example,
plenty
of
people
will
buy
a
share
of
a
housing
co-op.
B
Now
is
the
person
issuing
those
shares
issuing
a
security,
the
Supreme
Court
and
some
of
the
federal
circuit
courts
have
found.
No,
that
is
not
the
case,
because,
while
people
may
expect
the
condominium
that
they
buy
to
go
up
in
value,
they
also
may
be
buying
it
to
live
in
it
to
rent
it.
It
has
utilitarian
value
and
those
are
not
the
things
we
regulate
as
securities.
B
Another
factor
the
token
was
purchased
at
by
the
way
on
this
previous
one.
The
utilitarian
value,
if
theoria
more
ether,
is
a
very
good
example
of
this.
So,
yes,
lots
of
people
speculate
as
to
the
price
of
ether.
Why
isn't
a
theory
and
security?
Well,
one
reason
is
that
ether
is
essential
to
using
the
etherium
virtual
machine.
You
can't
run
contracts
unless
you
fund
them
with
gas.
B
Basically
and
there's
this
utilitarian
core
value
proposition
that
saves
it
potentially,
among
other
factors,
from
being
a
security
token
was
purchased
after
application
is
already
up
and
running,
so,
in
other
words,
pre-sales
are
going
to
be
more
suspicious
and
the
line
of
cases
here
comes
actually
from
golf
courses
and
Country
Club
memberships.
So,
basically,
if
you
were
a
developer-
and
you
were
building
a
golf
course-
and
you
wanted
to
sell
memberships
to
the
golf
course,
but
the
golf
course
wasn't
built
yet
you
were
actually
going
to
likely
be
found
as
an
issuer
of
a
security.
B
On
the
other
hand,
if
the
golf
course
is
already
built-
and
you
were
selling
memberships
in
those
cases,
courts
have
said
that
that
is
not
a
security.
So
I
don't
know
if
this
is
interesting
to
other
people
or
if
it's
just
my
being
a
huge
dork
for
the
law.
But
these
are
two
things
that
the
commute
actually
I
think
would
agree
on
as
far
as
ways
to
prevent
scams
or
as
ways
to
judge
what
is
real
and
what
is
a
scam.
B
So
if
you
haven't
built
anything,
if
you
have
no
hope
of
necessarily
proving
anything
but
you're
asking
for
money,
more
likely
to
be
a
scam
and
if
you
are
selling
something
that
is
purely
speculative,
that
has
no
obvious
use
case
more
likely
to
be
a
scam,
so
the
law
actually
lines
up
pretty
well.
Finally,
the
tokens
value
is
dependent
on
the
purchasers,
own
efforts
or
the
efforts
of
a
large
number
of
other
unaffiliated
investors,
users
or
developers.
B
The
intuition
here
is
that,
if
I
buy
gold
bullion
from
an
open
market,
I
am
NOT
buying
a
share
of
the
gold
bullion
industry
of
the
gold
industry.
There's
multiple
people
who
make
gold
valuable
people
who
dig
it
out
of
the
ground,
people
who
will
find
industrial
uses
for
it,
people
who
find
jewelry
type
uses
for
it.
So
if
there's
really
a
widespread
community,
that
gives
value
to
the
thing
less
likely
to
be
a
security
and
then
the
last
thing
I
want
to
talk
about
is
some
things
to
avoid.
B
So
one
big
one
is
just
using
language
that
suggests
that
this
is
a
securities
issuance.
This
shouldn't
ever
happen.
Initial
coin,
offering
that
comes
from
initial
public,
offering
it's
almost
like
you're
playing
a
joke
on
the
SEC,
which
is
funny
to
some
people,
I
guess,
but
as
a
community
I
think
we
should
find
it
more
frustrating
or
annoying
profit.
Sharing
is
another
term
that
commonly
comes
up
in
securities
issuance.
B
So,
in
conclusion,
please,
please
please,
please
think
about
your
regulatory
risk
appetite
when
you
develop
these
things
when
you
contemplate
having
a
crowd,
sale
or
a
pre-sale,
and
please
feel
free
to
contact
me
personally
at
Coyne
center.
If
you
have
questions
related
to
this
we'd
love
to
learn
what
your
building
and
talk
about
the
path
forward,
because
there
are
definitely
legal
ways
to
go
forward
by
structuring
the
way
you
actually
develop
your
technology
from
a
issuance
point
of
view.
Thank.