Memorandum of Law — Utility Token Classification
This memorandum provides legal analysis regarding the classification of digital tokens issued by Verity One Ltd. and Made in USA Inc. under U.S. securities laws.
"Based on our analysis of the functional characteristics, distribution mechanisms, and intended use cases of the V Token and USA Token, we conclude that these digital assets are properly classified as utility tokens and do not meet the definition of a 'security' under the Securities Act of 1933 or the Securities Exchange Act of 1934."
The tokens fail to satisfy the four-prong Howey Test established by the U.S. Supreme Court, which is the primary framework for determining whether an asset constitutes an investment contract (and thus a security).
For an asset to be classified as a security under SEC v. Howey (1946), it must satisfy ALL four prongs. Our tokens fail multiple prongs.
Tokens are purchased for utility access, not as an investment
No pooling of funds for collective investment purpose
Tokens provide functional utility, not profit expectations
Value derived from utility, not management efforts
Conclusion: Tokens do NOT meet the Howey Test definition of a security
Tokens are designed and marketed for their functional utility within the Veritize platform — certification fees, blockchain anchoring, service access — not as investment opportunities.
Tokens do not represent an investment contract, equity stake, profit-sharing arrangement, or any right to company earnings or assets.
Tokens are consumed when used for their intended purpose (paying for certifications, blockchain fees, etc.), following the "consumptive use" doctrine that distinguishes utility tokens from securities.
Under CFTC guidance, utility tokens that do not meet the Howey Test are generally classified as commodities, not securities, and fall outside SEC jurisdiction.
Primary Function: Platform utility token for the Veritize ecosystem
Use Cases: Transaction fees, staking for governance participation, service discounts, inter-module payments
Classification: Utility Token (Commodity)
"The V Token functions as an internal currency for platform operations. Holders use tokens to access services, not to receive returns from company profits. This consumptive model is inconsistent with securities classification."
Primary Function: Certification utility token for Made in USA® and Product of USA® programs
Use Cases: Certification application fees, audit payments, blockchain anchoring, QR verification services
Classification: Utility Token (Commodity)
"The USA Token provides discounted access to certification services. It does not represent ownership in Made in USA Inc., does not entitle holders to dividends, and provides no profit participation. For equity ownership, see OTC: USDW."
This summary is provided for informational purposes only and does not constitute legal advice. The full legal opinion is available upon request for qualified parties. Regulatory classifications may vary by jurisdiction. This analysis is based on U.S. law as of the opinion date and may not reflect subsequent regulatory developments. Consult qualified legal counsel for specific situations.
Qualified investors and partners may request the complete memorandum of law.