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It’s been nearly six months in the making and now the US Securities and Exchange Commission (SEC) has finally published its regulatory guidelines for token issuers. Though many questions remain unanswered, crypto enthusiasts have finally got some clarity on the issue of “tokens as securities.”
The SEC Guidelines focus on tokens and how and when they may be classed as a security. It includes examples of networks and tokens that fall under security laws, as well as examples of those that don’t.
It outlines a number of elements of a project that token issuers must consider to see if a token qualifies as a security. The following are some examples, (but not all):
- an expectation of profit;
- who within the project is responsible for what specific tasks within the network;
- and whether a group is creating or supporting a market for a digital asset.
The SEC guidelines also look at tokens that have already sold. It gives an evaluation guideline for investors to see if these tokens should have been registered as securities, as well as whether “a digital asset previously sold as a security should be reevaluated.”
Examples of reevaluation criteria include checking if:
- The blockchain network and tokens are fully developed and useable straight away;
- The token has a focus or use and isn’t speculative;
- There is a limitation for the “Prospects for appreciation” in the token’s value; and
- It says it is a currency that the token actually works as a store of value.
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A Longtime Coming
As stated, the SEC guidelines have been in the works for almost six months. SEC Director of Corporation Finance, William Hinman, first revealed plans for the guidelines last November. At the time he said the SEC guidelines would help token issuers easily determine whether or not their cryptocurrency would qualify as a security offering.
However, investors and issuers should note that while it provides some legal clarity, the SEC guidelines is not a legally binding document. Back in February, the SEC released its ICO guide.
You can read the latest SEC guidelines in full here.
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