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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

Go deeper

2 hours ago - Health

CDC panel endorses Pfizer vaccine for 12- to 15-year-olds

Illustration: Brendan Lynch/Axios

An advisory panel for the Centers for Disease Control and Prevention on Wednesday endorsed the Pfizer-BioNTech coronavirus vaccine for 12-to 15-year-olds, following the FDA's emergency use authorization.

Why it matters: Approval from the CDC panel was the final step needed before inoculations could be offered at any vaccination site for this age group.

  • Pfizer has said its vaccine is 100% effective at protecting against COVID-19 in a trial of more than 2,200 children between the ages of 12 and 15.

GOP lawmakers downplay Capitol riot at House hearing

Photo: Jon Cherry via Getty Images

Republican members of Congress sought to minimize the Capitol insurrection at a House hearing on Wednesday, with statements calling pro-Trump rioters "patriots" and other lawmakers falsely denying demonstrators were supporters of the former president at all.

Driving the news: The hearing comes shortly after House Republicans voted to oust Rep. Liz Cheney (R-Wyo.) from leadership over her criticism of former President Trump's actions leading up to and on Jan. 6.

McConnell, McCarthy say 2017 tax law is "red line" in infrastructure talks

The top Republicans in the House and Senate told reporters after meeting with President Biden at the White House that "there is a bipartisan desire to get an outcome" on an infrastructure package, but stressed that revisiting the 2017 tax cuts is a "red line."

Why it matters: Wednesday marked the first time that Biden has hosted Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.) at the White House.