What are some of the biggest challenges that face people who are looking to launch a security token?
It is a regulatory framework. That is not designed to accommodate a digital asset in the sense that secondary markets have not yet developed to adequately transfer or create liquidity once you've offered the token.
That's a real challenge for someone engaging in an offering. There are some limitations perhaps on marketing depending on what exemption or what route you take in terms of the offering registration requirements.
But, thereafter it's liquidity with respect to that security that creates issues because the process of transfer, the process of custody in terms of exchanging those assets has not fully developed yet.
Over time the security token truly will be a token, a utility token that allows someone within the ecosystem that we've created to exchange that token for some other item of value similar to a ticket at an amusement park.
To use an example, if you want to do a securities token offering to raise money to build your amusement park and you go out and you sell these tokens and you take the capital and you build the amusement park ... Those people have those tokens and they're going to be using them in your amusement park a year later.
Is it fitting what your actual business and what your goals are into the framework and that's still being worked out?
The SEC is sensitive to it and they're accepting of the concept of an evolving instrument. They've talked about it in the context of Ether and the Ethereum blockchain and how it may have been a security when offered but now functions as a decentralized unit of value for a unit of exchange.
The SEC there foresaid, at least at their inception, they represented a security under the Howey test that Jesse mentioned.