Since the first cryptocurrency, Bitcoin, was introduced in 2009, the crypto-world has exploded. There are now over 1,800 “crypto-currencies” (i.e., “digital assets,” “tokens,” or “coins”), many of which are traded on crypto-exchange platforms across the world, with a total market capitalization in excess of $350 billion.
A cryptocurrency is simply a set of code that is designed to serve a particular function. However, such functions differ considerably from coin to coin, and may even evolve for the same coin over time. Understanding a token’s function is critical from a regulatory perspective. As Commissioner Hester Peirce of the Securities and Exchange Commission (SEC) recently noted, some assets may take several forms (e.g., money may come in the form of a dollar bill or as “short term, revolving loans accessible through a credit card transaction”), but all forms of money are subject to the same regulation because they serve the same function.