The SEC has announced that it has published a crypto token guidance.
This is a 13-page pdf containing a new regulatory framework for ICOs (Initial Coin Offerings).
The announcement was made on the SEC’s official website by Bill Hinman, director of the corporate finance division, and Valerie Szczepanik, senior consultant for digital resources and innovation.
In the statement, the SEC explains that blockchain technology and distributed ledgers can catalyse a wide range of innovations. In some cases, these technologies are used to create financial instruments, in the form of tokens or cryptocurrencies that can offer investment opportunities. Depending on the nature of the digital asset offered, this could fall under the definition of title, i.e. security, under the relevant US federal laws, especially if it intends to transfer rights to its owners.
It is precisely in this regard that FinHub has published guidelines for analysing whether an ICO is offered and sold as an investment contract, thus falling within the definition of security.
This framework, however, does not currently consist of a comprehensive overview of the law, but only of an analytical tool to help the market assess which ICOs should be covered by federal security laws.
The SEC also warns that, as financial technologies and market structures continue to evolve, those wishing to participate in this space should be aware that these activities could fall within the jurisdiction of the institution.
Even if no specific registration is required, activities falling under this category may be subject to SEC regulation and supervision.
However, this framework only represents the views of the staff and is not a rule, regulation or official statement of the SEC Commission, which has neither approved nor disapproved of its content. Therefore, this is a non-binding framework, which does not modify or replace any current law, or regulation.
If an ICO is issued, the report suggests a careful legal analysis of the nature of the tokens and cryptocurrencies, and the way in which they are offered and sold, to determine whether they are securities, to the extent that FinHub also provides a contact form for assistance or any questions.
In short, these guidelines are a consultation tool that is not sufficient to ensure that a given ICO falls within the security category or not, but they can be useful to those who want to participate in the ICO itself in order to understand if they are going to buy a token that could fall into this category or not.