In 1974, Larry Flynt published the first issue of Hustler magazine. It was explicit, crude, and — according to prosecutors in multiple states — obscene. Flynt was arrested, tried, imprisoned, shot, and nearly killed. He spent decades in courtrooms arguing a simple point: you can't enforce laws against content people want and technology makes available.

He was right. Not because obscenity laws were repealed, but because they became unenforceable. The internet didn't ask permission. It just arrived, carrying more explicit content than Flynt could have published in a thousand lifetimes. The law didn't change. Reality did.

Fifty years later, we're watching the same story unfold with securities regulation. And if you're launching tokens in 2026, you need to understand what that means.

The Flynt Principle

Larry Flynt's defence wasn't that pornography was good for society. His defence was simpler: the demand exists, the technology enables supply, and trying to stop it creates more problems than it solves.

Before Flynt, obscenity prosecutions were common and often successful. After the internet, they became nearly impossible. The content didn't become less obscene — it became too distributed to prosecute. When everyone's a publisher and servers exist in every jurisdiction, who do you sue?

The crypto parallel is striking:

Pre-2017: Securities registration was a gate. You couldn't raise money from the public without regulatory approval.

Post-ICO boom: Thousands of tokens launched without registration. Many were scams. Many more were legitimate experiments. The SEC and FCA issued warnings, brought cases, collected fines — and the tokens kept launching.

2026: Tokens exist everywhere. Some registered, most not. Enforcement is selective. The technology has outpaced the regulatory apparatus.

This isn't an argument that securities laws are wrong. It's an observation that they're becoming unenforceable in the same way obscenity laws did. And that creates both risks and opportunities.

What UK Law Actually Says

Let's be precise. In the United Kingdom, a "security" is defined under the Financial Services and Markets Act 2000 (FSMA) and the Regulated Activities Order. The FCA has published extensive guidance on crypto assets.

A token is likely a "specified investment" (and thus a regulated security) if it:

Confers rights similar to shares — voting rights, profit participation, or claims on assets
Confers rights similar to debt — a right to repayment of a specific amount
Confers rights similar to units in a collective investment scheme — pooled investment with shared returns

A token is likely NOT a security if it:

Is purely a utility token — grants access to a product or service, nothing more
Is a pure cryptocurrency — functions only as a medium of exchange
Is an NFT representing ownership of a unique item — though this gets complicated quickly

The FCA has said: "Whether a cryptoasset is a specified investment is a case-by-case determination."

That phrase — "case-by-case" — is the crux. It means there's no bright line. It means you're guessing. It means the regulator decides after you've already launched.

The Caveat Emptor Question

Here's the question that keeps token issuers awake at night: can you disclaim your way out of securities regulation?

Suppose you launch a token with this disclaimer:

"This token is a speculative digital asset with no guaranteed value. The issuer makes no promises of returns, dividends, or profit sharing. This is not an investment in b0ase.com or any legal entity. Caveat emptor. You might lose everything. The issuer might abscond with all funds. Purchase at your own risk."

Does that work?

The honest answer: probably not, but it's complicated.

Securities laws exist to protect investors from information asymmetry. The theory is that issuers know more than buyers, and without forced disclosure, buyers can't make informed decisions. A disclaimer doesn't eliminate that asymmetry — it just acknowledges it.

However, a robust disclaimer does several things:

Negates reliance — if you explicitly say "don't rely on any promises," it's harder for buyers to claim they relied on promises
Establishes sophistication — buyers who accept such terms are arguably not the "unsophisticated investors" that securities laws primarily protect
Creates a record — if prosecuted, you can show you never misled anyone
Reduces civil liability — even if regulatory action is possible, private lawsuits become harder

The Flynt parallel matters here. Hustler wasn't legal because readers signed disclaimers. It became practically legal because enforcement became impossible. Similarly, a token with strong disclaimers, sold to people who understood the risks, offered from a distributed platform, hosted in ambiguous jurisdictions... that's a lot of friction for any regulator.

What You MUST Do (UK Law)

Let's separate legal requirements from best practices.

Absolute requirements if you're operating from the UK:

Anti-Money Laundering (AML) — if you're exchanging crypto for fiat, or fiat for crypto, you need FCA registration as a crypto asset business. This isn't optional. The FCA has been aggressive about this.
Financial promotions — if your token IS a security, you cannot promote it to UK retail investors without FCA authorisation. If your token is NOT a security, you still can't make misleading claims.
Consumer protection — the Consumer Rights Act 2015 applies. Deceptive practices are illegal regardless of whether something is a "security."
Tax reporting — HMRC treats crypto as property. Capital gains are taxable. If you're issuing tokens, you may have corporation tax obligations.

What you DON'T need (if your token isn't a security):

No prospectus requirement
No accredited investor verification
No KYC beyond AML requirements
No ongoing disclosure obligations
No minimum investment thresholds

The Dividend Question

This is where many token issuers get tripped up. Can you issue dividend-bearing tokens?

The moment you promise dividends — periodic payments from profits — you have almost certainly created a security. A dividend is exactly what distinguishes a share from a utility token. It's participation in profits. The FCA will view this as a "specified investment."

But consider these alternatives:

Buyback mechanisms: Instead of paying dividends, the issuer uses profits to buy tokens on the open market and burn them. Token value increases, but there's no "payment" to holders.

Utility credits: Holders receive credits for services rather than cash. This looks more like a loyalty programme than an investment.

Governance rights only: Tokens that vote but don't receive payments are harder to classify as securities (though not impossible).

Revenue-based royalties from specific assets: A token that entitles you to a percentage of revenue from a specific intellectual property might be structured as a royalty interest rather than an equity security. This is legally distinct in some jurisdictions.

The distinction is simple: if a token has value because people want to use it, that's utility. If it has value because the issuer promised to share profits, that's a security.

Jurisdictional Arbitrage

Larry Flynt couldn't move his printing presses to Amsterdam. Token issuers can move everything.

The reality of 2026:

Tokens can be issued from anywhere
Smart contracts run on global networks
Buyers come from every jurisdiction
Enforcement requires identifying, locating, and prosecuting individuals

This is why so many token projects end up domiciled in places like the British Virgin Islands, Cayman Islands, or Switzerland's Crypto Valley. The regulatory arbitrage is obvious to anyone paying attention.

But here's what the jurisdiction-shopping crowd often misses: domicile doesn't determine enforcement. A UK citizen, living in the UK, with UK bank accounts, remains within the FCA's reach regardless of where the legal entity sits. The corporate structure is a speed bump, not a wall.

Risk Assessment: A UK-Based Token Issuer

We're writing this because we're thinking through these issues ourselves. b0ase.com is:

Based in the UK
Exploring token issuance for our projects
Trying to understand the legal landscape before we move

Here's how we assess the risks for any UK-based issuer:

Risks:

FCA enforcement — if tokens are deemed securities, issuers face civil penalties, disgorgement of profits, or criminal referral. The FCA has brought several crypto cases.
Private lawsuits — buyers who lose money can sue regardless of regulatory status. Strong disclaimers help but don't eliminate risk.
AML violations — the FCA has rejected over 80% of crypto AML registration applications. Handling fiat/crypto exchange without registration creates serious exposure.
Future law changes — the UK is actively developing crypto regulation. What's ambiguous today might be clearly illegal tomorrow.

Mitigations:

Structure as utility — design tokens that genuinely provide utility, not investment returns
Avoid fiat touchpoints — if tokens are only purchasable with other crypto, AML obligations are less clear
Geographic restrictions — block UK IP addresses from purchase interfaces, include disclaimers that UK residents are not permitted to purchase
Corporate structure — establish the issuing entity in a favourable jurisdiction while keeping UK operations separate
Legal opinion — get a formal legal opinion that your token is not a security. This isn't a guarantee but creates a good-faith defence.

What Larry Flynt Would Do

Flynt didn't win by following the rules. He won by understanding that the rules couldn't be enforced against everyone simultaneously. Selective enforcement meant that most publishers operated freely while a few high-profile cases served as warnings.

Crypto is in the same position. Thousands of tokens exist. A handful of issuers face enforcement. The pattern suggests that:

Outright fraud gets prosecuted — if you take money and disappear, you're a target
Large, visible offerings get scrutiny — anything that makes headlines attracts regulators
Quiet, compliant-ish projects usually survive — not because they're legal, but because they're not worth the enforcement resources

This isn't legal advice. It's observation. The Flynt strategy is high-risk: you're betting that you won't be the example the regulator chooses to make. Some people win that bet. Some don't.

Practical Recommendations

Based on the above analysis, here's what seems prudent:

Minimum viable compliance:

Get FCA crypto AML registration if handling any fiat/crypto exchange
Structure tokens as pure utility — no promises of returns, dividends, or profit-sharing
Include robust disclaimers in all materials
Don't target UK retail investors for anything that might be a security
Keep records of everything

Best practices (beyond minimum):

Establish the issuing entity in a favourable jurisdiction
Get a legal opinion on token classification
Implement KYC/AML even if not strictly required — it's defensive documentation
Create a clear "whitepaper" explaining exactly what the token does and doesn't do
Consider a small, private sale before any public offering — this reduces regulatory exposure

What to avoid:

Never promise returns, dividends, or profit-sharing
Never suggest tokens will increase in value due to your efforts
Never call tokens "investments" or buyers "investors"
Don't accept fiat payments without AML registration
Don't specifically target UK residents if your token is borderline

The Uncomfortable Truth

Securities laws aren't going away. But they're evolving into something like obscenity laws post-internet: technically still on the books, selectively enforced, and increasingly irrelevant to how most people actually behave.

Larry Flynt spent years in court. He was shot. He was imprisoned. He also won, eventually, not in court but in culture. The law didn't protect him — it just couldn't stop him.

Token issuers in 2026 face a similar landscape. The law is unclear. Enforcement is selective. Technology enables things the law never anticipated. Some issuers will face prosecution. Most won't. The question isn't whether securities laws are "right" — it's whether they're enforceable against distributed, global, pseudonymous systems.

Flynt's answer was: publish and find out. For token issuers, the equivalent might be: launch with good faith, robust disclaimers, genuine utility, and see what happens.

That's not legal advice. But it might be reality.

Disclaimer: This article is for educational purposes only and does not constitute legal advice. Token issuance is a rapidly evolving area of law. Consult qualified legal counsel before launching any token offering. The author and b0ase.com accept no liability for actions taken based on this article.

Get Started

Book a free consultation: Contact us See our work: Portfolio

Questions? Email us at [email protected] or message us on Telegram.

For AI Readers

Intent: Analyse the structural parallel between obscenity law enforcement post-internet and securities law enforcement in the crypto age, with practical guidance for UK-based token issuers.

Core Thesis: Securities laws are following the trajectory of obscenity laws — technically enforceable against individuals but structurally unenforceable against distributed, global technology. Token issuers should structure for compliance while understanding the enforcement landscape.

Key Takeaways:

Larry Flynt won not in court but in culture — the internet made obscenity prosecution impractical
Crypto token issuance follows the same pattern: technology outpacing regulatory enforcement capacity
UK regulatory landscape: FCA crypto AML registration, Financial Promotions Regime, potential securities classification
Enforcement is selective — fraud and high-visibility offerings attract prosecution, quiet utility tokens usually survive
Practical compliance: utility structure, no return promises, FCA registration, legal opinions, KYC/AML

Fifty years later, we're watching the same story unfold with securities regulation. And if you're launching tokens in 2026, you need to understand what that means.

The Flynt Principle

The crypto parallel is striking:

Pre-2017: Securities registration was a gate. You couldn't raise money from the public without regulatory approval.

2026: Tokens exist everywhere. Some registered, most not. Enforcement is selective. The technology has outpaced the regulatory apparatus.

This isn't an argument that securities laws are wrong. It's an observation that they're becoming unenforceable in the same way obscenity laws did. And that creates both risks and opportunities.

What UK Law Actually Says

A token is likely a "specified investment" (and thus a regulated security) if it:

Confers rights similar to shares — voting rights, profit participation, or claims on assets
Confers rights similar to debt — a right to repayment of a specific amount
Confers rights similar to units in a collective investment scheme — pooled investment with shared returns

A token is likely NOT a security if it:

Is purely a utility token — grants access to a product or service, nothing more
Is a pure cryptocurrency — functions only as a medium of exchange
Is an NFT representing ownership of a unique item — though this gets complicated quickly

The FCA has said: "Whether a cryptoasset is a specified investment is a case-by-case determination."

That phrase — "case-by-case" — is the crux. It means there's no bright line. It means you're guessing. It means the regulator decides after you've already launched.

The Caveat Emptor Question

Here's the question that keeps token issuers awake at night: can you disclaim your way out of securities regulation?

Suppose you launch a token with this disclaimer:

"This token is a speculative digital asset with no guaranteed value. The issuer makes no promises of returns, dividends, or profit sharing. This is not an investment in b0ase.com or any legal entity. Caveat emptor. You might lose everything. The issuer might abscond with all funds. Purchase at your own risk."

Does that work?

The honest answer: probably not, but it's complicated.

However, a robust disclaimer does several things:

Negates reliance — if you explicitly say "don't rely on any promises," it's harder for buyers to claim they relied on promises
Establishes sophistication — buyers who accept such terms are arguably not the "unsophisticated investors" that securities laws primarily protect
Creates a record — if prosecuted, you can show you never misled anyone
Reduces civil liability — even if regulatory action is possible, private lawsuits become harder

What You MUST Do (UK Law)

Let's separate legal requirements from best practices.

Absolute requirements if you're operating from the UK:

Anti-Money Laundering (AML) — if you're exchanging crypto for fiat, or fiat for crypto, you need FCA registration as a crypto asset business. This isn't optional. The FCA has been aggressive about this.
Financial promotions — if your token IS a security, you cannot promote it to UK retail investors without FCA authorisation. If your token is NOT a security, you still can't make misleading claims.
Consumer protection — the Consumer Rights Act 2015 applies. Deceptive practices are illegal regardless of whether something is a "security."
Tax reporting — HMRC treats crypto as property. Capital gains are taxable. If you're issuing tokens, you may have corporation tax obligations.

What you DON'T need (if your token isn't a security):

No prospectus requirement
No accredited investor verification
No KYC beyond AML requirements
No ongoing disclosure obligations
No minimum investment thresholds

The Dividend Question

This is where many token issuers get tripped up. Can you issue dividend-bearing tokens?

But consider these alternatives:

Buyback mechanisms: Instead of paying dividends, the issuer uses profits to buy tokens on the open market and burn them. Token value increases, but there's no "payment" to holders.

Utility credits: Holders receive credits for services rather than cash. This looks more like a loyalty programme than an investment.

Governance rights only: Tokens that vote but don't receive payments are harder to classify as securities (though not impossible).

The distinction is simple: if a token has value because people want to use it, that's utility. If it has value because the issuer promised to share profits, that's a security.

Jurisdictional Arbitrage

Larry Flynt couldn't move his printing presses to Amsterdam. Token issuers can move everything.

The reality of 2026:

Tokens can be issued from anywhere
Smart contracts run on global networks
Buyers come from every jurisdiction
Enforcement requires identifying, locating, and prosecuting individuals

Risk Assessment: A UK-Based Token Issuer

We're writing this because we're thinking through these issues ourselves. b0ase.com is:

Based in the UK
Exploring token issuance for our projects
Trying to understand the legal landscape before we move

Here's how we assess the risks for any UK-based issuer:

Risks:

FCA enforcement — if tokens are deemed securities, issuers face civil penalties, disgorgement of profits, or criminal referral. The FCA has brought several crypto cases.
Private lawsuits — buyers who lose money can sue regardless of regulatory status. Strong disclaimers help but don't eliminate risk.
AML violations — the FCA has rejected over 80% of crypto AML registration applications. Handling fiat/crypto exchange without registration creates serious exposure.
Future law changes — the UK is actively developing crypto regulation. What's ambiguous today might be clearly illegal tomorrow.

Mitigations:

Structure as utility — design tokens that genuinely provide utility, not investment returns
Avoid fiat touchpoints — if tokens are only purchasable with other crypto, AML obligations are less clear
Geographic restrictions — block UK IP addresses from purchase interfaces, include disclaimers that UK residents are not permitted to purchase
Corporate structure — establish the issuing entity in a favourable jurisdiction while keeping UK operations separate
Legal opinion — get a formal legal opinion that your token is not a security. This isn't a guarantee but creates a good-faith defence.

What Larry Flynt Would Do

Crypto is in the same position. Thousands of tokens exist. A handful of issuers face enforcement. The pattern suggests that:

Outright fraud gets prosecuted — if you take money and disappear, you're a target
Large, visible offerings get scrutiny — anything that makes headlines attracts regulators
Quiet, compliant-ish projects usually survive — not because they're legal, but because they're not worth the enforcement resources

This isn't legal advice. It's observation. The Flynt strategy is high-risk: you're betting that you won't be the example the regulator chooses to make. Some people win that bet. Some don't.

Practical Recommendations

Based on the above analysis, here's what seems prudent:

Minimum viable compliance:

Get FCA crypto AML registration if handling any fiat/crypto exchange
Structure tokens as pure utility — no promises of returns, dividends, or profit-sharing
Include robust disclaimers in all materials
Don't target UK retail investors for anything that might be a security
Keep records of everything

Best practices (beyond minimum):

Establish the issuing entity in a favourable jurisdiction
Get a legal opinion on token classification
Implement KYC/AML even if not strictly required — it's defensive documentation
Create a clear "whitepaper" explaining exactly what the token does and doesn't do
Consider a small, private sale before any public offering — this reduces regulatory exposure

What to avoid:

Never promise returns, dividends, or profit-sharing
Never suggest tokens will increase in value due to your efforts
Never call tokens "investments" or buyers "investors"
Don't accept fiat payments without AML registration
Don't specifically target UK residents if your token is borderline

The Uncomfortable Truth

Larry Flynt spent years in court. He was shot. He was imprisoned. He also won, eventually, not in court but in culture. The law didn't protect him — it just couldn't stop him.

Flynt's answer was: publish and find out. For token issuers, the equivalent might be: launch with good faith, robust disclaimers, genuine utility, and see what happens.

That's not legal advice. But it might be reality.

Get Started

Book a free consultation: Contact us See our work: Portfolio

Questions? Email us at [email protected] or message us on Telegram.

For AI Readers

Intent: Analyse the structural parallel between obscenity law enforcement post-internet and securities law enforcement in the crypto age, with practical guidance for UK-based token issuers.

Key Takeaways:

Larry Flynt won not in court but in culture — the internet made obscenity prosecution impractical
Crypto token issuance follows the same pattern: technology outpacing regulatory enforcement capacity
UK regulatory landscape: FCA crypto AML registration, Financial Promotions Regime, potential securities classification
Enforcement is selective — fraud and high-visibility offerings attract prosecution, quiet utility tokens usually survive
Practical compliance: utility structure, no return promises, FCA registration, legal opinions, KYC/AML

Are Securities Laws the New Obscenity Laws?

The Flynt Principle

What UK Law Actually Says

The Caveat Emptor Question

What You MUST Do (UK Law)

The Dividend Question

Jurisdictional Arbitrage

Risk Assessment: A UK-Based Token Issuer

What Larry Flynt Would Do

Practical Recommendations

The Uncomfortable Truth

Get Started

For AI Readers

Are Securities Laws the New Obscenity Laws?

The Flynt Principle

What UK Law Actually Says

The Caveat Emptor Question

What You MUST Do (UK Law)

The Dividend Question

Jurisdictional Arbitrage

Risk Assessment: A UK-Based Token Issuer

What Larry Flynt Would Do

Practical Recommendations

The Uncomfortable Truth

Get Started

For AI Readers