Myself and a couple partners have created a blockchain project that we will be releasing shortly. The one major roadblock we have now run into is making sure all our bases are covered legally. The Bitcoin/cryptocurrency/blockchain world is the wild-west right now, with the potential for laws to change high, while also being open to a global market. I'm not going to explain the details of the product here, more just the technical details on how it relates that may be required to determine if the US government would view it as a security.

We're centered in Canada and will be a BC Canadian Ltd. Our product is a website service which uses the Ethereum blockchain.

Under the hood our system has a cryptocollectable token and a cryptocurrency token (a 'cryptocollectable' is a blockchain unique item, like a stamp, whereas a cryptocurrency is a blockchain stackable item, like Bitcoin). People can choose to buy a cryptocollectable in either Ethereum or in our own cryptocurrency (we accept either as payment). People can trade these cryptocollectables amongst eachother, as well as use them in the system (as it has inherit uses that are vital to how it all works).

To interact with the system, you need the cryptocollectable. It's a utility token to power the system. Think of a chuck-e-cheese token being needed to use their game machines, where you pay in these tokens to use the machines. The cryptocurrency is generated from the cryptocollectable at a constant rate and paid out to people who use them (basically, people in our cryptocurrency to use the chuck-e-cheese machine, and that machine pays out tokens to the people who play with it. The amount in vs out isn't the same, as the amount created is generated at a constant rate, and coins put in dissapear forever, they are not recycled).

Now, anyone can interact with the cryptocollectables, however users can (as stated above) purchase cryptocollectables and be the owners (kinda like if individuals could buy certain machines inside chuck-e-cheese). Owners have the ability to make it public or private (share earnings with the public or use the game privately, alone). Machines don't earn cryptocurrencies when being used greedily in private mode, however they have other uses in the system in such cases. When a owner lets the public play with the machine and generate the currencies, the owner gets 50% of the generated currency (owner gets 50% of the generated chuck-e-cheese tokens, which can be used to play with the other machines, but cannot directly go back to $CAD or Ethereum through our system, so you can't cash out the generated cryptocurrency through us).

We were told to follow the Howie Test before. Under this, we still are not fully sure either. We've also found differing versions of the Howie Test, some that we've seen we feel we may be a security under, others that we have seen point otherwise. We're just very uncertain on this.

Thanks for your time and patience with this explanation. Now, to come back to our question, we want to know if the US government will see this as a security? Certain cryptocurrencies which release with ICOs (initial coin offerings) which do not have a proven utility in the system seem to be deemed a security, however not all do, so we're a little lost on how to go about this.

We did speak to an accountant about this, however they were not familiar with the US in this respect. We will be visiting a lawyer shortly, however being from Canada we can't guarantee they'll know this stuff either.

Thank you for your time