What Is the "Genesis to Functional" Theory in Crypto Regulation? ⎊ Path

What Is the “Genesis to Functional” Theory in Crypto Regulation?

The "genesis to functional" theory describes the potential evolution of a digital asset's regulatory status. At its genesis (initial offering), a token may be considered a security because investors are relying on the efforts of the promoters to build the network.

As the network matures, becomes decentralized, and the token gains widespread consumptive use, it is argued that the token "graduates" to a non-security status (e.g. a commodity or a true utility token). This theory is based on the idea that the Howey Test must be applied dynamically over the life of the asset.

Can a Utility Token Ever Become a Security Token?

What Is the Difference between a Utility Token and a Security Token from a Regulatory Standpoint?

What Is the Primary Difference between Regulation D and Regulation a Offerings?

How Does the SAFT Model Attempt to Satisfy the “Functional Network” Test?

What Is the Difference between an Initial Coin Offering (ICO) and a Security Token Offering (STO)?

What Are the Legal Implications of Fractionalizing a Security Token?

How Does the Regulatory Status of Stablecoins Impact Their Use in Institutional Settlement?

What Is the Legal Difference between a “Pre-Functional” Token and a “Consumptive Use” Token?