American authorities finally issue some guidance on cryptocurrency and ICOs, clarifies its position
The SEC in the United States has finally offered some parameters on cryptocurrencies and ICOs…
As it continues to turn its deliberations into actions where cryptocurrencies are concerned, the American Securities and Exchange Commission (SEC) has now issued some firm guidance on crypo.
Under the header ‘Statement on digital asset securities issuance and trading’, there’s not an awful lot of surprise to be found in its words. The statement comes in the light of recent rulings on firms such as Paragon, Crypto Asset and AirFox, with remedies agreed with some of those organisations.
Those are detailed in the statement, and boil down to – for example – AirFox and Paragon having to register their tokens as securities, rather than them be allowed to exist as decentralised entities. Furthermore, those who have invested in both must now contact investors to give them the information they would have had, had the tokens concerned been registered as securities from the start.
“These two matters demonstrate that there is a path to compliance with the federal securities laws going forward, even where issuers have conducted an illegal unregistered offering of digital asset securities”, the SEC writes.
It now requires that any platform trading “in digital asset securities and operates as an ‘exchange” must register with the SEC as a national securities exchange. That, or be exempt for some reason from registration.
Furthermore, anyone providing a marketplace for bringing together buyers and sellers of securities must work out if, under US law, they are falling under the definition of an exchange. If they are, they also have to register. Irrespective of technology, the SEC declares that it’ll be taking a “functional approach” – specifically giving itself leeway to include circumstances – when identifying what it regards as an exchange.
ICOs don’t escape, either. Any entity issuing ICOs or undertaking secondary trading in digital asset securities will need to register with the SEC. Furthermore, they have to become part of a self-regulatory group as well.
The SEC statement – and you can read the full document here – ends with declaring that its divisions are looking to “encourage and support innovation”. The 19 footnotes that follow that assertion suggest it’s not that straightforward…
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