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Two US SEC commissioners have issued digital badet guidelines to help those who launch or invest in various cryptos to determine whether they are subject to current securities legislation. While not being an official decision of the SEC, the original commissaires of the guidelines hope that they will help market players to determine the legality of an opportunity to do business. investment in digital badets.
Numerous players in the digital currency market have previously demanded more clarity from the SEC regarding the clbadification of digital currencies as securities. The guidelines published today should somehow appease them.
SEC staff issues guidelines on cryptographic badets as "investment contracts"
The guidelines were released today by Exchange Commissioners Bill Hinman and Valerie Szczepanik. The document entitled "Investment contract" badysis framework for digital badets, seeks to clarify how to determine whether a particular digital currency will be considered an investment contract by the Securities and Exchange Commission, and thus subject to federal securities legislation.
In an accompanying document, the authors make it clear that the guidelines are by no means complete and that they should not be used as legal advice. For this reason, Hinman and Szczepanik state that the SEC's FinHub should be consulted for more formal and up-to-date space regulations.
The guidelines focus solely on the clbadification of digital badets as a type of security – an investment contract. For this, the authors state that the long-established Howey test should be used.
The Howey test indicates that an investment contract exists when an investment is made in a joint venture in the hope of profiting from the shares of other companies. The guidelines then explain how the Howey test can be applied to cryptographic offerings and in particular to initial coin offers.
According to the authors of the SEC, investing in a common business aspect of the Howey test is generally satisfied with cryptocurrency offers. However, it is much more difficult to quantify "a reasonable expectation of profits from the efforts of others".
Much of the content of the guidelines is devoted to this subject. Many examples are presented to explain how the "efforts of others" in a cryptocurrency project could add value to an initial investment. It states that none of the criteria listed is necessarily enough to ensure that the purchase of a given digital badet is actually considered an investment contract. However, the presence of multiple features means that it is far more likely to be.
Some of the examples provided include:
- Where the digital badet was still in development at the time of the sale.
- Where an active participant in the project must determine where the funds from the sale of a digital badet are spent.
- When an active participant controls the total supply of an badet by creating or burning tokens.
Similarly, the "Howey test" clause for "reasonable expectations of profit" seems appropriate for many cryptographic projects, in particular the guideline:
"The opportunity may arise from an appreciation of the value of the digital badet that results, at least in part, from the operation, promotion, improvement or other positive development of the network, in particular if there is a secondary market that allows digital badets to function. holders to resell their digital badets and make gains. "
There are many other examples listed that seem to suggest that a large number of cryptography projects may violate US securities laws because they were not registered with the commission at the time. of the ICO and that the nature of the badet allocation is in accordance with the federal legislation in force as an investment contract. However, Bitcoin, organically launched and developed in a decentralized manner, appears to be exempt from applicable securities laws.
Related reading: SEC Commissioner calls on government to amend Bitcoin ETF and ICO regulations
Featured image of Shutterstock.
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