Chat app Kik yesterday helped launch a legal battle that could result in greater clarity around whether digital tokens are currencies or securities.

Backstory: Kik in 2017 raised nearly $100 million in an initial coin offering for a token called Kin that would be used to buy and sell digital services. The SEC later reached out for more info and eventually sent Kik a Wells notice that indicates some sort of enforcement action will be forthcoming.

  • In short, Kik wants Kin to be viewed as a currency rather than a security. But, as Kik investor Fred Wilson notes, "the SEC is regulating by enforcement, not new rulemaking."
  • SEC officials previously declared both Bitcoin and Ether to be currencies, although its corp finance director did hint that the initial sale of Ether tokens should likely have been considered securities.

Kik's top argument is that Kin doesn't meet the Howey Test, which was created by the Supreme Court in 1946 to determine if certain transactions (like an ICO) are investment contracts (and, thus securities).

  • It's no slam dunk. Kik argues in its Wells notice response that Kin buyers had no expectations of profits from buying tokens, thus not meeting the Howey Test, but 2017 comments by Kik CEO Ted Livingston tell a different story.

Yesterday Kik launched a crowdfunding effort to take its fight to court, contributing an initial $5 million worth of digital tokens.

  • The crypto industry hope is that judges will decide this currency vs. security questions once and for all, effectively creating an updated Howey Test.
  • And it should be the SEC's hope as well, to both save it headaches and to establish common rules of the digital road.

The bottom line: Kik and other crypto-related startups aren't trying to operate outside of regulatory regimes, despite their industry's lawless reputation. They want specific rules. But, so far, the U.S. government hasn't complied.

Go deeper: The promise of Facebook's GlobalCoin

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Trump whisked out of press briefing after shooting outside White House

President Trump was escorted out of a coronavirus press briefing by a Secret Service agent on Monday after law enforcement reportedly shot an armed suspect outside of the White House.

The state of play: Trump returned to the podium approximately ten minutes later and informed reporters of the news. He said the suspect has been taken to the hospital, but was unable to provide more details and said Secret Service may give a briefing later.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Global: Total confirmed cases as of 5:30 p.m. ET: 19,952,057 — Total deaths: 732,689 — Total recoveries — 12,150,698Map.
  2. U.S.: Total confirmed cases as of 5:30 p.m. ET: 5,074,059 — Total deaths: 163,275 — Total recoveries: 1,656,864 — Total tests: 61,792,571Map.
  3. Politics: House will not hold votes until Sept. 14 unless stimulus deal is reached.
  4. Business: Richer Americans are more comfortable eating out.
  5. Public health: A dual coronavirus and flu threat is set to deliver a winter from hellAt least 48 local public health leaders have quit or been fired during pandemic.
  6. Sports: The cost of kids losing gym class — College football is on the brink.
  7. World: Europe's CDC recommends new restrictions amid "true resurgence in cases."
Updated 2 hours ago - Health

5 states set single-day coronavirus case records last week

Data: Compiled by Axios; Map: Danielle Alberti/Axios

Five states set new highs last week for coronavirus infections recorded in a single day, according to the COVID Tracking Project and state health departments. Only one state — North Dakota — surpassed a record set the previous week.

Why it matters: This is the lowest number of states to see dramatic single-day increases since Axios began tracking weekly highs in June, and marks a continued decrease from late July.