NEW YORK (Reuters) – The U.S. Securities and Exchange Commission on Wednesday issued guidelines to help market participants determine whether a digital asset qualifies as a security under federal securities laws and needs to be registered with the regulator.
The SEC has ramped up enforcement actions related to digital assets and initial coin offerings, which work much like initial public offerings for companies, but instead of selling shares, they raise capital by selling digital tokens or cryptocurrencies.
Federal - Securities - Laws - Offers - Sales
Federal securities laws require all offers and sales of securities to fall in line with conventional offering rules, such as registering as an IPO, or qualifying for an exemption from registration under the private placement or crowdfunding rules.
To help decide whether a digital asset is a security, the SEC said both it and the federal courts have looked to see whether the asset has any characteristics of an “investment contract.”
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An investment contract “exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others,” the SEC said in a...
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