The release comes at a time when Coinbase has made overtures to developers releasing so-called 'protocol tokens' or 'digital assets', adding new offerings to its exchange over the course of 2016. To date, this has included ether, the cryptocurrency powering the ethereum protocol, and litecoin, a bitcoin alternative.
The release follows a notable uptick in market activity, with CoinDesk's Q3 State of Blockchain report finding that nearly $200m ($198.8m) has been raised through token sales in 2016 to date, with the majority ($152m) dedicated to the failed DAO project.
Bramanathan told CoinDesk:
"There was a view that any pre-sale makes it a security, and there's a strong argument for pre-sales to be non-securities in some cases."
That the technology – and its innovators – still face a risk when seeking to launch solutions in the market is front and center in a new legal framework released today.
Coinbase declined to speak about how the release would impact its product roadmap.
Still, the paper was critical of common practices in the space, such as the tendency for developers who use such issuance models to attempt to increase the value of tokens sold as a method of generating fundraising dollars.
Though a black-and-white issues for many enthusiasts, from a legal perspective, innovation with cryptocurrencies and blockchains remains in the regulatory gray.
"Tools like this ... should help get developers on notice about these risks and maybe shed some light on why these regulations matter and should be taken seriously," director of research Peter Van Valkenburgh wrote.
"One interesting thing that we found is that if your token is properly designed, then the fact that it is a pre-sale doesn't automatically make it a security," he said.
Yet, the work stops short of offering formal legal advice. Rather, Bramanathan positioned it as a primer, focused on US law, that enables developers to be prepared when seeking guidance.
Legal book image via Shutterstock
"There are precious few lawyers who understand this space," he said.
Reuben Bramanathan, associate counsel at Coinbase, said that while the US Securities and Exchange Commission (SEC) (and its counterparts globally) have been largely silent on the issue, there are likely to be roadblocks ahead given the lack of public education on concepts such as distributed applications and autonomous organizations.
That said, he also noted that there is a limit on available expertise. For example, Bramanathan said that the work challenged his own perceptions about how the technology could be used in the context of existing regulations.
Bramanathan described the current state of the market as a "free for all", but said that the five "principles" put forward, if followed, should provide public confidence in projects.
Bramanathan acknowledged that while some lawyers have written about the subject, the industry is still largely dependent on a handful of skilled professionals whose time and energies are falling short of the needs of what they say is a growing market.
Overall, the paper is bullish on the idea that blockchains that do not restrict user participation will enable the creation of new businesses that mirror Amazon and Facebook in design, while having a similar global impact.
In a blog post accompanying the release, Coin Center echoed a similar sentiment, indicating that it believes the resources can serve the greater good as the industry continues to test uncharted waters with applications that, while based on computer science, have been regarded as financial in nature by global regulators.
"This is most useful for developers of new tokens. Certainly, most developers are aware of the risks and it's only going to get bigger as the space grows."
Led by blockchain startup Coinbase, in collaboration with Coin Center, Consensys and Union Square Ventures, the 27-page framework, goes so far as to provide users with a "decision matrix" that those involved say can help mitigate design flaws that could have real-world legal consequences.
While new, the publication marks the latest addition to a canon of research that those involved admit has perhaps not kept up with innovation.
Bitcoin Price Eyes Triangle Breakout Above $6.4K
Bitcoin (BTC) is again trading in a narrowing price range above $6,400, but the lateral trading may soon give way to a rally, according to technical studies.
The price consolidation comes after Mon
Security firm G4S Has Launched a Crypto Custody Service
U.K.-based security services company G4S now offers a crypto custody service aimed to protect investors' holdings of digital assets.
Announcing the move in a press release on Oct. 16, the firm said
Gates Foundation Partners With Former Ripple CTO's Blockchain Project
The Bill and Melinda Gates Foundation has partnered with blockchain startup Coil as part of its mission to provide payment services for the unbanked.
The news comes via a tweet from Miller Abel, th
Mt Gox's Bitcoin Creditors Have 4 Days to Submit Rehabilitation Claims
Clients of the defunct crypto exchange Mt. Gox must submit claims for trapped funds by Oct. 22.
As previously reported by CoinDesk, the exchange first opened up the claims process in August, follow
Crypto Exchange Coinbase Open-Sources Its Security Scaling Tool
U.S.-based cryptocurrency exchange Coinbase is making a recently developed automated security scaling tool available to the public.
Called Salus, after the Roman the goddess of safety and well-bein
The SEC Is Setting Up a New Division to Talk to ICO Startups
The U.S. Securities and Exchange Commission (SEC) is launching a new division with the goal of making it simpler for fintech startups – including those launching initial coin offerings (ICOs) – to nav
Ripple's Head of Information Security Leaves for Token Startup
Ripple's head of information security is leaving the company.
Revealed exclusively to CoinDesk, Sujay Jaladi is departing the San Francisco-based firm, which is best known for its role in developin
Judge Orders Trading Firm, CEO to Pay $2.5 Million in Bitcoin Ponzi Case
The Commodity Futures Trading Commission has won a legal battle against a New York resident and his company for running a Ponzi scheme centered around bitcoin.
Between 2014 and early 2016, Gelfman