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21 B.U. J. Sci. & Tech. L. 1 (2015)
Is Bitcoin a Security?

handle is hein.journals/jstl21 and id is 9 raw text is: ARTICLE IS BITCOIN A SECURITY? JEFFREY E. ALBERTS & BERTRAND FRY * TABLE OF CONTENTS INTRODUCTION .................................................. 1 1. THE NATURE OF BITCOIN................................. 2 II. THE IMPLICATIONS OF BITCOIN BEING A SECURITY .............. 4 A. The Securities Act of 1933 ............ .................. 4 B. The Securities Exchange Act of 1934...................... 7 C. The Investment Company Act of 1940. .......... ............ 7 III. THE DEFINITION OF SECURITY ............8.........8 IV. COMMON TYPES OF SECURITIES .............. ............. 9 V. INVESTMENT CONTRACTS ........................ 14 A. Investment ofMoney............................ 15 B. Common Enterprise................................... 15 1. Horizontal Commonality ..................... 16 2. Broad Vertical Commonality ........................ 18 3. Strict Vertical Commonality ............ ................. 19 C. Expectation of Profits Solely From Efforts of the Promoter ......... 20 VI. CONCLUSION ............................... ........... 21 INTRODUCTION Investor interest in the cryptocurrency' Bitcoin has exploded over the past two years.2 The market capitalization of Bitcoin rose from less than $150 * Jeffrey Alberts and Bert Fry are partners in the New York office of Pryor Cashman LLP. They regularly represent entities in connection with legal issues related to virtual currency and financial technology. Mr. Alberts is a former federal prosecutor and now leads Pryor Cashman's White Collar Defense and Investigations Group. Mr. Fry has extensive experience with securities law and alternative investment vehicles and is co-head of Pryor Cashman's Investment Management Group. The authors would like to thank Satoshi Nakamoto for making this article possible. The term cryptocurrency refers to a digital currency that relies on the principles of cryptography to process and validate transfers. 2 See, e.g., Michael J. Casey & Paul Vigna, Bitcoin and the Digital-Currency Revolution, WALL ST. J. (Jan. 23, 2015, 12:44 PM), http://www.wsj.com/articles/the- 1

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