The regulators have awoken. SEC Director William Hinman introduced novel concepts to the securities law analysis such that sellers of digital assets may have an escape valve. Yes, even if their initial sale triggered securities laws, later sales may not. The industry should not move forward without careful exploration of these concepts.First order of business: Can digital assets change their colors? As outlined by Global Digital Finance, a digital asset can be a financial asset token (potentially coded as a security), a payment token (Hinman used the term “coin”), or a consumer token (Hinman used the term “token”). The relevant question is not whether an asset can change its token type, but whether the latter two types — a “coin” or “token” in Hinman’s words — can ever become securities. Whisky as a Security?Director Hinman’s discussion of Scotch proves instructive.The SEC director carefully teased out a distinction between a consumer item and its manner of sale. The ultimate takeaway: Whisky is never a security, but its sale can trigger securities laws. It would be ridiculous to say whisky morphs into a security because of how it is sold; it always remains a non-security consumer item. Replace “whisky” with “coin” or “token” and the logic remains sound. It makes no sense, then, to say a consumer or payment token can morph into a security. That is, unless the code itself changes such that the code itsel... For Further Information Click on Below Button