Digital Assets & Web3

The test is from 1946: an investment of money, in a common enterprise, with an expectation of profit from the efforts of others. A token sold before the network works, to buyers who are told what the team will build, meets it; a token used on a functioning network, bought to use rather than to hold, may not. The SEC's 2025 staff statements set out facts on which memecoins, proof-of-work mining and certain fully reserved stablecoins fall outside the securities laws, and each statement stops applying when the facts change. We write the analysis as a memo against your token's actual economics and distribution, redesign what has to be redesigned before launch, and sell under an exemption what cannot be. We have represented clients in matters before the SEC.

Depending on the activity, a digital-asset business can fall within the reach of the SEC, the CFTC, FinCEN, and the IRS at the federal level, alongside state money-transmission and licensing regimes, and overseas regulators where the project operates across borders. We help map which frameworks apply to your specific products and markets, and we represent clients in matters before the SEC, the CFTC, and the IRS where a regulator is involved.

Usually as an operating company that employs the developers and owns the code, a separate vehicle that issues the token and holds the treasury, and a license between them. The issuer is often a Cayman foundation company, which can have no shareholders and since 2017 may exist to serve a purpose rather than owners, or a Swiss or Singapore foundation where the community sits there. Two rules keep the picture honest: a foreign vehicle run by people in the United States can be carrying on a US trade or business, with US tax to match, and a token sold to US persons is sold under US law wherever the issuer is formed. We design the structure so the cap table and the token table do not contradict each other, and we engage locally admitted counsel in each jurisdiction used.

In the United States a business that exchanges or transmits convertible virtual currency for others is a money services business. It registers with FinCEN within 180 days of starting, renews every two years, and runs a written program with a designated compliance officer, staff training and independent testing of its controls. It verifies customers, keeps transmittal records and files a suspicious activity report within 30 days of detecting the activity. Most states add a money transmitter license, each with its own bond and examination. We decide first whether the activity triggers the regime at all, since a non-custodial protocol may not, and then build the program to the size of the business.

As property, since 2014. Every sale, swap and purchase made with a digital asset is a disposition with gain or loss, and staking rewards are ordinary income when the taxpayer gains control of them, at that day's value. From 1 January 2025 basis must be tracked wallet by wallet rather than across all holdings, and brokers report gross proceeds on Form 1099-DA, with cost basis to follow for later years, so the IRS now sees the sales before the return arrives. Tokens received for services are compensation at receipt unless they vest later, in which case the 30-day election decides when. We set the reporting method before the first transaction and represent clients in matters before the IRS when a return is questioned.

Before four things happen. Before the token contract is deployed, because it is typically immutable afterward and its supply, vesting and transfer mechanics are the securities analysis. Before 30 days have passed since any founder's token grant, after which the election to be taxed at grant is lost. Before the first US customer, because the 180-day FinCEN registration clock and the state licensing analysis start with that customer. And before anyone on the team says anything in public about the price, because that sentence is what the regulator will quote. A first conversation costs a call; each of those four costs a restructuring.