SEC publishes crypto token guidance

posted 2 months ago
The SEC published fresh regulatory guidance for token issuers, nearly half a year in the making. The guidance helps token issuers determine whether or not their cryptocurrency would qualify as a security offering and what federal securities laws they should comply with.

Factors of consideration include:
*Expectation of profit
*Whether a single or central group of entities are responsible for specific tasks within the network
*Whether a group is creating or supporting a market for a digital asset
*Howey test, which asks about reliance on the efforts of others
*How developed the network is, what the tokens’ use cases might be
*Whether there is a correlation between a token’s purchase price and its market price
*Whether the “distributed ledger network and digital asset are fully developed and operational” (meaning individuals can immediately use the token for some function)
*Whether the token actually operates as a store of value

It’s worth noting, this “guideline” is not a legally binding document. Also, broker-dealer custody is a key issue, firms “need to show that they have possession and control and that could be hard to demonstrate with a digital asset…[defined as]… controlled by whoever possess the private key, and it’s hard to prove a negative."
Tags: blockchain, bitcoin, news