This presentation by Patrick Berarducci, Deputy GC of ConsenSys, Co-Chair of The Brooklyn Project, Contributor to Global Digital Finance took place at the Workshop on Digital Financial Assets at the OECD in Paris on 16 May 2018. Find out more at http://www.oecd.org/finance/2018-workshop-digital-financial-assets.htm

1. Taxonomy of Digital Financial Assets
Patrick Berarducci - Deputy GC of ConsenSys;
Co-Chair of The Brooklyn Project; Contributor
to Global Digital Finance
OECD Workshop on Digital Financial Assets:
Opportunities and Challenges
May 15, 2018

2. © 2018 ConsenSys
Agenda
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Background of ConsenSys, The Brooklyn Project
Background of Global Digital Finance
Our proposed taxonomy
Why “consumer” instead of “utility” tokens?
Unique considerations: Good & Bad

3. © 2018 ConsenSys
ConsenSys & The Brooklyn Project
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ConsenSys: 800+ staff in 28 countries worldwide
● Developer tools
● Ethereum protocol development
● Incubation of 50+ projects
● Venture financing
● Education - developers and lawyers
● Policy
The Brooklyn Project:
● Open-source style initiative by ConsenSys and Cardozo Law School to help industry reach
full potential
● Developing thought-leadership, technical tools, and products
● Engaging with all parts of industry -- developers, entrepreneurs, academics, lawyers,
regulators, policymakers

4. © 2018 ConsenSys
UK-based non-profit industry organization driving for efficient, fair, & transparent token markets
Why?
● Legitimise “tokens” as an asset class and “tokenisation” as a process
● Enhance consumer and investor protection through the promotion of best practices
● Ensure all token and tokenised markets are efficient, transparent, and fair
● Promote ethical conduct and best practice
How?
● Convening the Industry of Digital Asset and Crypto Assets globally
● Building a taxonomy of Natively Digital Assets and Digitised Assets
● Creating a Code of Conduct and Best Practices for tokenised Assets
● Bridging policy makers and the industry
Global Digital Finance
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5. © 2018 ConsenSys
Declining trust in blockchain industry led to creation
of The Brooklyn Project, Global Digital Finance
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- Transparency of projects
- Codes of conduct
- Self-regulatory structures
- Information asymmetry
- Scams
- Regulatory uncertainty
PUBLIC
TRUST
2016 2017 2018
Medium
Low
Project Launches Erosion
of trust
(Re-)building
of trust

6. © 2018 ConsenSys
Description
- Similar to traditional currencies
- Usable as a store of value
- Exchangeable for any goods/services
- Assets such as financial instruments
and “securities”
- For example: equity, (convertible) debt
- Digital consumer goods/services
- Consumptive in nature
- Not a general payment instrument
Our proposed taxonomy for categorising tokens
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Payment
Tokens
Consumer
Tokens
Asset &
Financial
Tokens
Intrinsic Features and Primary Use
To serve as a store of value or a medium of
exchange for any goods, services, or assets
To serve as an investment for financial profit
To serve as, or facilitate the use and
consumption of a particular set of goods,
services, or content
DRAFT

7. © 2018 ConsenSys
Why “consumer” instead of “utility” tokens?
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● Token-powered networks will succeed or fail based on their
consumer network -- i.e., the number and quality of actual users
● Financial investors do not use underlying technology may detract
“value” from network and increase adoption cost for would-be users
● Securities and financial instrument laws typically do not apply to
sales of consumer goods to consumers
● Specification of boundaries will allow professionals to provide
competent and consistent advice
● Alternative vehicles for consumer-token fundraising are emerging:
○ Less disruptive to consumer networks
○ More consistent with current financial markets laws
○ Aligned with traditional structures for VC investment
Consumers
drive success
Regulatory
clarity
Fundraising
trends

8. © 2018 ConsenSys
Unique Considerations: Good & Bad
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● Many different taxonomies may be appropriate and useful for the same digital assets
● Tokenisation truly a global phenomenon
● Regulators and policymakers working hard to coordinate, but global nature of industry does
strain traditional regulatory jurisdictions -- geographic and substantive
● Most people in the industry want to do the right thing
● Transparent, trustworthy nature of blockchain technology can be harnessed to help build trust
in the industry
● Potential for voluntary consent and inclusive, transparent coordination to achieve “self” or
“collaborative” regulation involving industry and governments