Re: I want to introduce an SEC compliant crypto currency (possible?)
If your token has the character of a security, it will not cease to do so if you use your own exchange to allow people to convert it to fiat.
The crucial part is if "investors" are profiting from the cryptocurrency (e.g. through premined tokens/units distributed in an ICO, or even by founders' rewards), and if the value of this currency depends on your own efforts.
One way to make a SEC compliant cryptocurrency is distributing the units in a totally decentralized way, e.g. via Proof-of-work, but all tokens have to be distributed that way, even 1% premine can make it a security. Another way is to use it as an utility token which cannot grow in value, i.e. offering your own services for this crypto, but at a fixed rate, so it passes the Howey test because people can't use it to "invest" and profit from it. From your description your plan looks like a kind of utility token, but the fixed rate is the important part. Think of it like flight miles, then it should be ok.
I am not a lawyer, but these topics were extensively discussed in this forum. However, I think you're in the wrong subforum as the thread is not so much about technical aspects, better move it to "Legal" or "Altcoin discussion".
The crucial part is if "investors" are profiting from the cryptocurrency (e.g. through premined tokens/units distributed in an ICO, or even by founders' rewards), and if the value of this currency depends on your own efforts.
One way to make a SEC compliant cryptocurrency is distributing the units in a totally decentralized way, e.g. via Proof-of-work, but all tokens have to be distributed that way, even 1% premine can make it a security. Another way is to use it as an utility token which cannot grow in value, i.e. offering your own services for this crypto, but at a fixed rate, so it passes the Howey test because people can't use it to "invest" and profit from it. From your description your plan looks like a kind of utility token, but the fixed rate is the important part. Think of it like flight miles, then it should be ok.
I am not a lawyer, but these topics were extensively discussed in this forum. However, I think you're in the wrong subforum as the thread is not so much about technical aspects, better move it to "Legal" or "Altcoin discussion".
Thanks for chiming in, D!
I started here to get the technical aspect of the concept realized first, with input from the community (my blockchain knowledge is limited), I just wasn't sure I'm on the right path. I think my topic title was also slightly misleading to the true intent of this post (although that's the ultimate goal). But I think your input above has given me just enough to get me to the next stage. To move this thread to Legal, I just DM the moderator, yes?
Btw, here is what I have in mind:
Lets assume we go the utility token route and I mint a billion tokens. I then turn around and reserve those tokens for rewards to our creators, say a fixed amount of 1000 tokens per video submitted + 1 token per view. At the end of each month, I take 15% of the revenue generated by the company and distribute it across those billion tokens to calculate a fixed token price for the month. We then list that price on our exchange as the "going rate" rate for that month, buying them back from the creators and ultimately, burning them. We continue this process every month until every one of those billion tokens has gone through the cycle (earned, exchanged, burnt). I still need to think through when the next round of minting will take place, but the goal is to limit the number of content creators and content being generated (for quality purposes).
Example:
Lets say we net income was $10 million in March and we take $1.5 million and distribute it across the 1 billion tokens:
= $1,500,000 / 1,000,000,000 tokens
= $0.0015 per token
So, the fixed price on our exchange for March would be $0.0015 per token.
If a creator decides to hold on to their tokens and decides to sell em at $0.01 in June instead, would that still qualify as a utility?
Thanks again for your time, I owe you a few tokens
Adam