Kodak's Crypto Coin Might Not Be a Security ... Or It Might Be

(Bloomberg) -- The long-awaited roadmap for Eastman Kodak Co.’s digital token is finally here, and it’s a little confusing.

WENN Digital, the company licensing Kodak’s name to do an initial coin offering, sent emails to prospective investors Thursday with a link to a “light paper” detailing its plan for KodakCoin. The document said that the digital token probably won’t be a security ... but it could be.

“While WENN Digital intends for the KODAKCoin issuable under the SAFTs to be classified as utility tokens rather than securities tokens, WENN Digital will be required to make a final determination of the tokens’ status as one or the other prior to the time that the KODAKCoin are issued,” the firm said. “In conjunction therewith, WENN Digital may decide to seek formal or informal input from the staff of the US Securities and Exchange Commission.”

Kodak's Crypto Coin Might Not Be a Security ... Or It Might Be

The announcement follows the SEC’s warning Wednesday that cryptocurrency marketplaces offering digital assets that are securities will need to register with the agency as an exchange, or qualify for an exemption. It also comes a week after a person with direct knowledge of the matter said the regulator issued subpoenas to firms and individuals behind specific ICOs that the agency believes might be breaking the law.

As part of the SEC’s latest crackdown, it’s reportedly focusing in part on “simple agreements for future tokens,” or SAFTs, which are investment contracts issued by some startups that are conducting ICOs. The agreements essentially promise buyers future access to tokens that don’t exist yet.

Kodak’s paper said it hopes to sell 100 million KodakCoins under SAFT agreements to accredited investors. The company first announced the ICO on Jan. 9, saying it would use blockchain technology to help photographers protect the rights to their work.

©2018 Bloomberg L.P.