In 1933 in the USA W. J. Howey Co lawyers sued the United States Securities and Exchange Commission in order to figure out which of the financial transactions should be considered as an investment contract. None of the participants in the trial could expect that the outcome of the case would have an impact on the blockchain-community supporters in the 21st century.
The “Howey test”, according to which a decision is made whether to accept an agreement as a security or not, gave great importance to the trial. The test determines whether the transaction is related to the investment contract. And the investment contract is a type of security.
In 1994 Nick Szabo proposed the idea of smart contracts based on cryptography that could replace traditional contracts based on law. Equitable and accurate smart contracts will be protected from unfair judgments of courts and ambiguous interpretations of conditions, will also provide better security and reduce transaction costs.
Practically, the implementation of the idea became possible in 2008 thanks to the blockchain technology, and when the Ethereum platform appeared, smart contracts were put into practice. Today governments of states still weakly regulate the cryptocurrency and token market.
However, more and more countries start paying attention to the explosive growth of the popularity of blockchain and smart contracts because in fact, all the larger financial flows pass by the state treasury. Therefore, the USA, Singapore and Canada have already recognized digital tokens as a security. This definition imposes a number of responsibilities in the conduct of the ICO, which intend to attract citizens of these countries.
This situation scarcely can satisfy the “blockchain-evangelists” and blockchain-enthusiasts who see smart contracts as a possibility of creating an international economic syste...