If I set up a Silver mining operation and sell you a promise that if I extract some silver, you get a percentage of the Silver I extract, then that is pretty clearly a Security.
Many in the ICO community want their ICO’s NOT to be labeled (and regulated) as Securities. They argue because the underlying asset is some sort of commodity (or a specific, pre-named “thing”), the ICO’s are not Securities but are Commodities. And therefore the ICO is a lot more like a futures/options contract than a Security.
Options and Futures have a lot less regulations to deal with than Securities. In fact, Over-The-Counter (“OTC”) derivatives are the last tranche of tradeable instruments that are not executed/reported on an exchange (though many are soon to be reported to a clearing agency post-trade)
But since there is no guaranteed commodity/”thing” to be given to the buyer of the ICO, then is sure sounds like a Security to me. The buyer of the ICO is taking a risk that the underlying plan will be legally and efficiently executed by the ICO sellers. Futures contracts are bought and sold on regulated Exchanges which are built and managed on the premise that there could (and sometimes is) an exchange of tangible assets at the expiration of a contract. Options are similar.
OK. What if instead of of a tangible commodity/”thing” promised to the ICO buyer, the buyer receives a digital token with it’s own set of rights and claims against the issuer? Such as, “These GoogleTokens are worth 10 click-throughs anytime in the next 10 years.” Well then it is really a company (in this fictitious case, Google) that is booking revenues early, not a financing transaction for the company.
There will be some instances of an ICO that could be thought of as a Commodity. But the vast majority of ICO’s are really just a way to fund a business idea with little oversight.