Digital Assets
Blockchain-based tokens - some are securities, some commodities, some neither.
What is Digital Assets?
Includes cryptocurrencies, stablecoins, and other tokens. Whether a given asset is a security depends on the facts, under the Howey test. Risks include extreme volatility, custody (lost private keys cannot be recovered), hacking, fraud, and evolving regulation. Crypto held on a trading platform does not have FDIC or SIPC protection.
Digital Assets: a worked example
A client wanting crypto exposure without handling private keys might use a registered exchange-traded product instead.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.