Tokens, Vaults, Ties and Taxes

Tokens and securities.

A couple of years ago, a startup called the Sand Hill Exchange launched a website that allowed people to trade futures on the values of well-known private companies. This is the sort of thing that is normally regulated by the Commodity Futures Trading Commission or the Securities and Exchange Commission, but Sand Hill had found a way around that regulation: Their trades would occur on the blockchain, where the rules do not apply. No, just kidding, the rules totally apply! "Just because you mumble the word 'blockchain' doesn't make otherwise illegal things legal," I wrote at the time, and a few months later the SEC shut down and fined Sand Hill. (Sand Hill co-founder Elaine Ou went on to become my Bloomberg View colleague.)