I’m interested in the regulation of RSR. I see that RSR is not being offered in the US (yet) due to the risk of it being classified as a security. It’s not difficult to see the risks; the tokenomics makes it very analogous to an equity holding (convertible for RSV streams) to my mind. You have governance rights attached to RSR. The fundamental driver behind the success of the project (and upside for RSR holders) is the increased uptake and circulation of RSV, leading to excess RSVs which can be bought for RSRs (and then arbitraged)(analogous to a share-buyback) and then the consequent reduction in supply of RSRs leading (in theory) to upward price pressure of RSR. When things aren’t going so well and demand for RSV falls, leading to a fall in price of RSVs, additional RSRs are issued to buy back RSVs to support the RSV price (analogous to a rights issue).
Just through a US lens, at this point in time in which the project remains centralised with control over the success of the RSV venture (roll-out etc) held and exercised by the Reserve team, it seems eminently arguable that the Howey test is met, in particular, the that expected profits from holding RSR is derived from the “efforts of a promoter or a third party” (i.e. Reserve team’s efforts in increasing the global usage of RSVs). I assume this is why it was thought too risky to offer it in the US. I haven’t looked into regulations in other countries, but I wouldn’t be surprised if RSR can arguably be characterised as a security/pseudo-equity holding in other jurisdictions in the future, when the project gains more traction and prominence.
It’s not about banning RSR or anything like that but these types of laws and regulations are in place to protect investors from asymmetry of information between those who are running the enterprise and the investors themselves.
My question is: (a) what would be Reserve’s answer to the characterisation above of RSR functioning like an equity holding; and (b) what would be the implications of RSR being treated and regulated as a security/equity in other jurisdictions in the future?
Many thanks in advance.