Welcome to my first Superpage!

What is a SuperPage?

• My vision of a SuperPage is an article which will have multiple parts, and each a number and different topical aspect of one subject.
• This article will grow as new information is added in an attempt to create a definitive guide to a topic.
• The purpose is to provide large amounts of information and multiple links to other webpages with useful information.
• Here in part one we will focus on the definition, explanation and vocabulary needed to understand the topic of this SuperPage: Asset Backed Cryptocurrency Tokens or ABCTs.
• #taskmaster4450le
• I got the idea for a SuperPage after reading or rather listening to a post by @taskmaster4450le about his vision called a SuperPage devoted to Hive as an extension or evolution of Leoglossary.
• I think the idea has a lot of merit, and that content creators can mold and adapt this concept to their own unique creations.
• I hope you enjoy the topic and the format.

Part 1 of ABC Tokens : Definitions and vocabulary.

ABC Tokens are Asset Backed Cryptocurrency Tokens

• They are also called Security Tokens or Digital Asset Tokens. I prefer the term Asset Backed Cryptocurrency Tokens because it is unique and more descriptive of what the token means.

Brief Introduction to Asset Backed Cryptocurrency Tokens

• The first two things you need to understand about these tokens is First, these are created by people who are intentionally creating a cryptocurrency to function like a security. So these token projects follow all regulations and laws regarding securities.
• Second, these tokens are are backed by a ownwership stake or percentage of real world assets. They are the virtual representations of real and usually physical assets.
• These are also called Security Tokens and Digit Asset Tokens.

Vocabulary and Definitions

• I think ABC Tokens are best defined as cryptocurrency representing a ownership portion in a real world asset.

Investopedia definition:
As an investment asset, .. this is a digital asset that represents ownership or other rights, and transfers value from an asset or bundle of assets to a token. In plain language, .. these tokens are the digital form of traditional investments like stocks, bonds, or other securitized assets.
source

My definition:
These are cryptocurrency tokens, which are backed by fractional ownership of an asset like real estate, art, gold or a debt instrument like a mortgage or a lease. These tokens are registered with the SEC as securitites and their creation, sale and distribution follow all applicable securities laws.
source

Investopedia gives further clarity by example:
For example, a company that wishes to raise funds for an expansionary project can decide to issue fractionalized ownership of their company through a cryptocurrency token instead of issuing stock. It could then offer this token to investors on an exchange that allows the sale of ABCTs, security tokens or digital asset tokens.
source

Important things to know about security tokens versus other types of cryptocurrency tokens.**

ABCTs don’t need to have utility. An ABCT represents some kind of ownership, most commonly a share of the company issuing the token. The concept is the same as buying shares of stock on a traditional stock exchange. For this reason, security tokens are sometimes referred to as equity tokens.source

• ABC tokens are regarded as securities by financial regulatory authorities. This makes these tokens subject to the same regulations of ordinary stocks and bonds.*source

This characteristic attracts investors who come from the world of traditional finance and they celebrate the fact that ABC tokens offer all the legal protections and regulatory clarity to which they are accustomed.source

Securities and Exchange Commission, and the Howey Test

• No discussion of the securities in the United States would be complete without a discusion regarding the agency responsible for enforcing securities laws in the US, the SEC. And a discussion of the main law responsible for determining if something is a security, the Howie Test.

• Stated succinctly the Securities and Exchange Commission oversees securities exchanges, securities brokers and dealers, investment advisors, and mutual funds in an effort to promote fair dealing, the disclosure of important market information, and to prevent fraud.

Facts about the SEC

• Agency Name Securities and Exchange Commission
• Acronym: SEC
• Website:https://www.sec.gov/about/what-we-do
• Contact the Securities and Exchange Commission
• Main Address:
  100 F St., NE
  Washington, DC 20549
• Phone Number: 1-202-551-6551
  1-202-551-4119 (Disability Program)
  Toll Free:
  1-800-732-0330 (Investor Information)
• Government branch: Independent Agency

Mission Statement of the Securities and Exchange Commision:
The federal securities laws we oversee are based on a simple and straightforward concept: everyone should be treated fairly and have access to certain facts about investments and those who sell them.
To achieve this, we require public companies, fund and asset managers, investment professionals, and other market participants to regularly disclose significant financial and other information so investors have the timely, accurate, and complete information they need to make confident and informed decisions about when or where to invest.
We protect investors by vigorously enforcing the federal securities laws to hold wrongdoers accountable and deter future misconduct.
We provide investor education and resources through our Office of Investor Education and Advocacy.
source

Howey Test

• This is a test used by the US Government to determine if an asset is a security, and therefore subject to US Securities Laws.

In the United States, anything that meets the definition of a “security” falls under the regulatory purview of the Securities and Exchange Commission (SEC). This includes security tokens. While this seems straightforward, there are still quite a few tokens that have characteristics of securities while also being utility tokens, leaving their future uncertain.
source

The Howey test has a four-part parameter:
1. Investment of money… meaning that someone has invested in goods or services.
2. In a “common enterprise”… meaning that investor’s funds are either interwoven (horizontal commonality) or there’s a direct correlation between the promotion of the investment and its success or failure (vertical commonality)
3. With an “expectation of profit”… an expectation of profits can be either from fixed returns or capital appreciation.
4. “Solely on the efforts of others”… meaning that if any profit involved stems from the efforts of the people who promoted the investment, it fulfills the fourth part of the Howey Test. source

It boils down to this: when someone invests money into something in the hopes of profiting from the efforts of another person, that investment can be considered a security.
source

This is the end of the first installment of the security Token Superpage
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@shortsegments

About @shortsegments

Shortsegments is a writer focused on cryptocurrency, the blockchain, non-fungible digital tokens or NFTs, and decentralized finance for over four years.

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References Part 1:

Other places you can find information about Asset Based Tokens:
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